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In The News

Carney tells nonprofits there may be loss of $500 million to $1 billion in state revenue

From The News Journal

Gov. John Carney told leaders of Delaware’s nonprofits Thursday that with so many businesses closed, the state may lose $500 million to $1 billion in state revenue.

Because of that, he said he can’t be sure what will happen with the state budget.

Carney and Lt. Gov. Bethany Hall-Long fielded questions from nonprofits during a virtual town hall focusing on the effects of the coronavirus pandemic. It was organized by the Delaware Alliance for Nonprofit Advancement.

One of the questions asked was what they could expect in the 2021 budget, particularly as it applies to bond funding and the grants-in-aid that keep many of them afloat.

Carney said that picture is not yet clear. The state normally would be getting a lot of revenue from casinos and other businesses now ordered shut to slow the spread of the coronavirus.

Because of that, there could be $500 million to $1 billion in lost revenue.

He said he hopes the Legislature can come together to create a budget by June 30. He also noted that federal stimulus money cannot be used to make up for that lost revenue.

Read more

Rob Martinelli: Let’s balance protecting public health with jump-starting our economy

From Delaware Business Times

I’ve watched Governor Carney’s press conferences about Delaware’s response to the coronavirus COVID-19. The Governor and public health officials are doing a professional job of talking about the trends and letting us know where Delaware stands. They fear that the next two weeks will be frightening in terms of positive cases and are working to preserve the necessary capacity at hospitals for the sickest patients.

The Governor admits that the forecasts in this area may be conservative. He credits working with hospitals and says, “they’ve had great ideas…This has been a great partnership.”

All Delawareans are thankful for the heroic efforts of our health care workers and first responders. We are also thankful for the type of partnership and cooperation with the health community that the Governor mentions that exists to fight this pandemic.

This column was originally going to focus on the need for a similar level of cooperation and partnership to finding finding a way to get Delaware working again as soon as possible. And as you probably read on our website, we learned just before going to press that that’s beginning to happen.

There are some who agree with New Castle County Executive Matt Meyer, who has made the argument that the best way to restart our economy is to test every Delawarean who hasn’t been tested. Dr. Fauci was on the Today show April 9th and said that the antibody test would be available in large numbers within weeks.

Meyer knows that weeks of sheltering in place will do great harm to our economy. We are a small state that prides itself on getting things accomplished. If this is a viable option that can be done cost-effectively and quickly, it would be great if we could become the First State of testing.

But I’m equally heartened by the news that Doug Gramiak and Tom McGonigle – two people with a distinguished record of serving our state – have been informally asked by Governor Carney to look into ways that we might jump start our economy.

Whether it’s serendipity or part of their effort, I am hearing that business leaders across the state are building lists that will support the efforts of Gramiak and McGonigle.

“If there was ever a time for the business community to work together, this is it,” Delaware Business Roundtable Executive Director Bob Perkins told me on April 9. “Now is the time, for example, to put the Ready in Six initiative on steroids” to help encourage business retention and attraction.

I believe there are a number of ideas beyond streamlining the permitting process statewide that we should consider, including expanding broadband internet services statewide – particularly in light of the number of people who might continue to work from home after the crisis – and finding ways to help restaurants restore customer confidence once they can reopen.

Read more:

https://delawarebusinesstimes.com/news/presidents-notebook/

How were Delaware businesses deemed essential? Answers unclear as open records law paused

From The News Journal

Walmart is able to sell shoes and clothes at its Delaware stores during the coronavirus pandemic, but shoe and clothing shops cannot.

A Dover hemp store is permitted to remain open and sell cannabidiol, while a nearby competitor – which also sells the marijuana derivative, in addition to pipes and T-shirts – cannot.

And pet stores are open to regular customers while gun shops are seeing customers by appointment only. 

The question of how Delaware deemed specific businesses or industries “essential” during the coronavirus pandemic is being asked by a growing chorus of employees, business owners and customers.

Yet, Gov. John Carney’s administration has not provided clear answers. With Freedom of Information Act requirements rescinded during a state of emergency, the public may not know for a prolonged period of time how the state settled on the economic restrictions.

Responding to a ballooning health crisis last month, Carney declared a state of emergency in Delaware, and with it published a list of industries he would allow to remain open while others would be ordered to close.

On Wednesday, The News Journal sent Carney’s office a list of questions on the topic, including inquiries about specific exceptions to the state’s essential-business list.

In an emailed reply, Carney administration officials repeated past proclamations but did not directly answer each question. The response said the economic restrictions “are intended to prevent a surge in (coronavirus) cases, preserve our hospital capacity and save lives.”

The governor took advice from health experts and agencies outside Delaware while considering which businesses could operate while limiting the spread of the virus, and which products the public needs to be safe, they said in the email.

“The first priority has always been the safety of Delawareans. Within that context, we did our best to balance public health with keeping businesses operating when possible,” the email stated.

Despite the assurances, an outspoken owner of a Dover hemp and smoke shop called the government’s process of deciding essential businesses “arbitrary and unfair.”

Read more:

https://www.delawareonline.com/story/news/2020/04/13/how-were-some-delaware-businesses-deemed-essential-answers-unclear/2941347001/

COVID-19 Strategic Response Fund announces $350,000 in grants

From Delaware Business Now

In its first round of grants, the Delaware COVID-19 Strategic Response Fund awarded $350,000 to 11 nonprofit organizations providing services to communities throughout the state.

Requests totaled $3.9 million.

The fund is managed by the Delaware Community Foundation. Click here for  further information and to donate.

The grants will address a  range of community needs during the pandemic.

Grants awarded

    • Modern Maturity: $50,000 to deliver additional meals to seniors at their homes.
    • Brandywine Counseling: $25,000 to meet the increased demand for recovery services.
    • Family Counseling of St. Paul: $22,000 to meet the increased demand for family counseling services.
    • Westside Family Healthcare: $50,000 for telehealth equipment to provide care for prenatal and chronically ill patients.
    • YMCA: $50,000 for childcare for essential workers statewide.
    • Easterseals of Delaware & Maryland’s Eastern Shore: $29,000 for telehealth equipment to provide child intervention services.
    • CHILD, Inc: $36,000 to provide housing for battered women and their children, meeting increased demand because of social distancing requirements.
    • CHEER: $38,000 delivering additional meals to seniors at their homes.
    • Housing vouchers for the homeless: $50,000
    • Friendship House for New Castle County – $30,000
    • Community Resource Center for Sussex County – $10,000
    • Catholic Charities for Kent County – $10,000

In this first round, 95 applicants requested a total of $3.9 million. The initial awards represent 23% of the total $1.5 million raised to date for the COVID-19 Strategic Response Fund, which is housed at the Delaware Community Foundation (DCF).

The fund will award an additional $350,000 in grants this week.

The goal is for the fund, which launched March 18, to provide grants for several months, said DCF President and CEO Stuart Comstock-Gay, who chairs the fund’s decision-making council.

Read more:

https://delawarebusinessnow.com/2020/04/covid-19-strategic-response-fund-announces-350000-in-grants/

Delaware businesses look to state government for survival as COVID-19 stifles revenue

From The News Journal

Eric Williams, who runs Mispillion River Brewing in Milford, said he’s lost about 60 percent of its business after the state prohibited dine-ins at food establishments to prevent the spread of coronavirus.

That’s lead him to have to lay off 10 of his 14 workers.

Now, Williams is one in a group of about 200 businesses in the First State who have applied for loans from state government to stay afloat during the during coronavirus shutdown. Half of them have been restaurants, according to the Division of Small Business.

Williams hopes the loans, which Gov. John Carney announced two weeks ago, can help cover his operating expenses and free up money to rehire his workers. The loans were initially created for certain hospitality-related businesses, such as restaurants, hotels and brewpubs.

“If we can save four, five or six people from going on unemployment with the support of our community, then that’s good not just for us … but it is good for our economy,” Williams said.

Carney closed down businesses to try to stop the spread of coronavirus after a March 11 positive test for COVID-19 in a University of Delaware professor. As of Friday, Delaware had 450 positive cases and 14 deaths.

Even though the virus has stopped people from coming in to enjoy a pint, costs such as rent, utilities and the cost of ingredients for beer haven’t gone away. His brewpub is still casing and selling to customers.

“We need to have beer when we open back up,” Williams said. “Especially coming out of a winter, because we’re fairly seasonal.”

Williams said the loans are only a “piece of the puzzle” to help businesses. He asks that Delawareans buy local, get takeout from their favorite restaurants when they don’t feel like cooking, and make sure to practice social distancing wherever you go.

Read more:

https://www.delawareonline.com/story/news/2020/04/06/coronavirus-delaware-businesses-look-state-help-revenue-plummets/5099073002/

Small Business Administration: Mobilization effort underway for CARES Act small business loan program

From Delaware Business Now

The U.S. Small Business Administration and Treasury Department announced what was described as a mobilization  effort of banks and other lending institutions to provide small businesses with capital.

The CARES Act establishes a new $349 billion Paycheck Protection Program. The Program will provide relief to millions of small businesses, a release stated.

“This unprecedented public-private partnership is going to assist small businesses with accessing capital quickly. Our goal is to position lenders as the single-point-of-contact for small businesses – the application, loan processing, and disbursement of funds will all be administered at the community level,” said SBA Administrator Jovita  Carranza. “Speed is the operative word; applications for the emergency capital can begin as early as this week, with lenders using their own systems and processes to make these loans. We remain committed to supporting our nation’s more than 30 million small businesses and their employees so that they can continue to be the fuel for our nation’s economic engine.”

The new loan program will help small businesses with their payroll and other business operating expenses.

It will provide capital to businesses without collateral requirements, personal guarantees, or SBA fees.

All loan payments will be deferred for six months. The SBA will forgive the portion of the loan proceeds that are used to cover the first eight weeks of payroll costs, rent, utilities, and mortgage interest.

Visit SBA.gov/Coronavirus for more information on the Paycheck Protection Program.

Read more:

https://delawarebusinessnow.com/2020/04/small-business-administration-mobilization-effort-underway-for-cares-act-small-business-loan-program/

President’s Notebook: Very few businesses have a contingency plan for a pandemic

From the Delaware Business Times

Commentary from Rob Martinelli

These have been the hardest weeks of my business career. I’ve been through the crash of ’87, the dot com bust of 2000, the big recession in ‘08 and ‘09.

Nothing compares to what is going on today.

I’ve put my life into building this business – Today Media – a company of 130 people serving four communities and a robust custom media operation serving many more.

I didn’t have a contingency plan for a pandemic.

On average, companies with fewer than 500 employees have less than a month of cash reserves, according to a study by the JPMorgan Chase Institute. Smaller businesses often have just a couple of weeks’ worth of cash to keep running. Today Media is better prepared than average businesses, but few businesses are adequately prepared for an event of this magnitude.

Thirty percent of Delaware restaurants have chosen to close completely instead of continuing operations focused on takeout and deliveries. More drop daily as carryout fails to sustain operations.

Local hotel occupancies have started to drop below 50% and the stats I am hearing are in the teens. A decline of 15% puts many owners in a cash-flow negative. Many industries face the same bleak picture.

Emergency SBA economic injury loans could play a big role. They offer low interest rates and a 30-year payback. But, getting these loans can take time.

The US Chamber of Commerce said, “The SBA also should be given the authority to streamline its disaster-loan approval process for amounts below $350,000 in order to provide emergency capital more quickly.” The group urged removing a requirement that small businesses show they can’t get credit elsewhere before turning to the SBA. We would support both of these much-needed initiatives.

The State of Delaware needs to do more. The HELP program for the hospitality industry is a step in the right direction, but it seems like a modest measure, considering that tourism contributes $3.5 billion to the State’s GDP.

To be eligible, hospitality businesses must have been open at least one year, have annual revenue of less than $1.5 million (since upped to $2.5 million), and operate in certain hospitality-connected industries. These limits would exclude a huge number of hospitality businesses and thousands of their employees. In other industries, except for essential businesses, the vast majority have now been asked to close.

Surrounding states and cities are doing much more. Delaware has a Rainy Day Fund. Let me tell you – it’s not only raining it’s a Cat 5 Hurricane, especially for small businesses…

Read more:

https://delawarebusinesstimes.com/news/coronavirus/presidents-notebook-pandemic/

Commentary: Belt tightening in the near future, but not like 2008

From Delaware State News

Commentary from Dr. John Stapleford, Caesar Rodney Institute’s chairman, and past director of the University of Delaware’s Bureau of Economic and Research

There are two views among economists regarding the direction of the U.S. economy. The first anticipates a substantial recession similar to 2008-09.  The second expects a severe dip in the second quarter of 2020 with a steady rebound thereafter. I favor the severe dip scenario.

The 2008-09 recession was prolonged because there were extreme price distortions in residential and capital markets that took time to correct. The wealth effect from stock market losses was compounded by a huge decline in residential housing equity.

The COVID-19 crisis, while painful to many families, will have a temporary sharp impact on the U.S. macro economy. The pandemic measures adopted will fall the most heavily on restaurants, hotels, and airlines. The wealth effect from the losses in the stock market will slow consumer spending in the short term, but the underlying prices and resource markets in the nation are sound and two consecutive quarters of declining GDP is unlikely.

How hard was Delaware hit by the 2008-09 recession? Employment dropped by 50,000 over 20 months, an 11% decline. Total wages and personal income declined for a year with losses of 3-4%, and output fell 6% over five quarters.

Structural changes in Delaware’s economy caused by the 2008-09 recession were profound. As happened following the 1973-75 recession, the 2008-09 recession dramatically altered manufacturing. Over $3.5 billion dollars of annual output was lost from the downsizing of the DuPont Co., Astra Zeneca, and the remaining automobile manufacturing, together with associated wholesale operations.

It took six years for total Delaware employment to recover to its 2008 peak level. And the state’s economy is still struggling. For five months now, based upon its leading economic index for Delaware, the Philadelphia Fed has been forecasting a second quarter 2020 contraction in Delaware’s economy.

Read more:

https://delawarestatenews.net/coronavirus/commentary-belt-tightening-in-the-near-future-but-not-like-2008/

Wilmington proposes business fee hikes amid coronavirus crisis

From The News Journal

Business owners across Wilmington face a hike in their annual license fees, while also facing the challenges of a pandemic.

City officials proposed an ordinance Thursday night to the City Council to raise fees for nearly all kinds of businesses that are licensed to operate in Wilmington, from contractors to financial institutions.

If passed by the City Council, the hike would take effect immediately, according to the legislation.

The proposal has been in the works for months, said John Rago, deputy chief of staff for policy and communications for Mayor Mike Purzycki. The city has not updated its fees in more than 15 years, he said.

The proposal was made separately from Purzycki’s proposed budget for the next fiscal year.

Some Wilmington business owners said the proposal was made with bad timing as bars, hair salons, some retail stores and numerous other nonessential businesses were shuttered either by the governor’s order or economic realities during a nationwide coronavirus outbreak. Restaurants are limited to takeout operations only.

“I’m hanging on off a prayer,” said Abundance Child, owner of the Riverfront vegan eatery Drop Squad Kitchen.

Sales have dropped more than 60% in the past week, she said, and the restaurant is making just enough to still pay staff, rent and utilities.

The city is proposing a more than 50% increase in the license fee, from $181 to $300 for restaurants.

“That’s a lot,” she said. “It’s just poor timing and poor judgment. Why would you have a 50% increase in a time of depression?”

Read more:

https://www.delawareonline.com/story/news/2020/03/27/wilmington-business-owners-face-fee-hikes-amid-coronavirus-crisis/2922379001/

Delaware gives $4.5 million to bring Amazon to former Newport-area auto plant site

From the News Journal

It’s now safe to say that Amazon, with the help of $4.5 million in Delaware taxpayer grants, is coming to the Newport area.

The company, which reported $3.3 billion in profits for the three months that ended in December, says it is bringing about 1,000 full-time jobs to the former General Motors plant site on Boxwood Road.

The state’s seven-person Council on Development Finance approved the grant on Monday.

A Nevada-based distribution company that counts Amazon as a client plans those jobs and more seasonal ones for a 3.7-million-square-foot logistics warehouse, according to a presentation from the company at the Buena Vista conference center in New Castle.

Amazon’s application was not readily available to the public before or during the hearing. Monday’s agenda offered little more detail on the application, only revealing that Amazon was seeking the $4.5 million to “establish its operations in Wilmington, Delaware.”

Read more:

https://www.delawareonline.com/story/news/2020/02/24/delaware-gives-4-5-million-bring-amazon-former-newport-auto-plant/4817576002/