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In The News

Commentary: Delaware government must serve and protect public

From the News Journal

By Richard Gebelein and Robert Marshall

As two former Delaware public servants with a combined 75-plus years of experience in Delaware government, spanning the executive, legislative and judicial branches, we are concerned with the state of our state as it faces the challenges of 2020.

Delaware needs to address the effects of the COVID-19 pandemic and the highest number of unemployed people in our history, as well as structural issues in government and taxation. Decisions made this year will significantly alter how Delawareans live in the coming decades. Those decisions should be made through a process that meets both the letter and the spirit of our sunshine laws.

We come from different political parties, and we have different views on many issues. During our public service careers, we have debated those issues. In many cases, compromise was possible, and we could join to support positive change. When we did this, the process was aired publicly in legislative and administrative hearings. The media covered those public hearings, and the process was open. Investigative reporters sought out dissenting views, reported on them and uncovered improprieties where they existed.

Today, Delaware faces unprecedented challenges, and yet, there is little public discussion of the steps to be taken to address these matters. The “People’s Hall,” aka Legislative Hall in Dover, is closed to the public.

As an example of decisions to come, it appears that the governor and one judge have determined that there must be a reassessment of the value of real property for tax purposes. Any reassessment will have serious tax and property value implications for everyone who owns a home, a business property, etc. This reassessment will mostly impact those middle-class families whose biggest asset is their home. Historically, a rise in real estate taxes may be accompanied by a decrease in the actual value of the property.

Just as in the catastrophic real estate collapse of 2008, middle-class homeowners could be forced from their homes. How to conduct a reassessment, limit the size of tax increases and/or seek alternative funding for schools should be publicly debated to allow for input from the public. Many of these impacted homeowners have been negatively affected by COVID-19 already and may not be able to bear a tax increase, as well.

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Delaware Senate passes bond bill, grant-in-aid after coronavirus forces last-minute cuts

From the News Journal

The Delaware Senate on Thursday unanimously approved hundreds of millions in funding for capital projects and nonprofits across the state for next fiscal year.

The $55 million nonprofit grant-in-aid bill and the $708 million capital bond bill now head to the House, which is scheduled to vote on Tuesday.

The approval comes after the 21-person upper chamber on Tuesday failed to pass both of those bills, which require three-fourths of senators’ approval. Several Republicans refused to vote, saying they wanted more time to review the bills that the General Assembly wants to fully pass by the end of the fiscal year, June 30.

Sen. Nicole Poore, D-New Castle (left), and Sen. Jack Walsh, D-Stanton sit during the Senate Elections, Government and Community Affairs Committee hearing on Jan. 15, 2020.

Lawmakers on Wednesday were able to pass their biggest agenda item: a $4.5 billion operating budget for next fiscal year. The state planned for a $4.6 billion budget and an $893 million bond bill — the biggest in the state’s history — at the start of this year, but both suffered cuts after the state’s revenue forecast dropped by $400 million between December and June. Construction costs and building renovations are delayed, and not all state employees are getting pay raises as originally promised.

The whittled-down bond bill includes millions in cuts to clean water initiatives and business incentives for next fiscal year. Some pools of money, such as $20 million to aid private and public colleges, have been cut entirely for next year.

Dover resident Thomas Moore walks in front of Legislative Hall at the Delaware State Capitol, which sit quiet on Monday, March 30 amid the coronavirus pandemic.

The state meanwhile is relying on a hefty aid package from the federal government to pay for costs related to the coronavirus pandemic, such as testing and benefits to masses of unemployed Delawareans. Lawmakers returned to work via Zoom video conferencing in late May after a two-month hiatus due to the coronavirus pandemic, which shut down Legislative Hall.

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Delaware House passes $4.5 billion budget; other big money bills still being debated

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Corona impact: Delaware’s restaurants third hardest hit in the nation

From Town Square Delaware

Delaware’s restaurant industry has been one of the hardest hit in the nation and is projected to suffer significant losses for the next six months.

According to newly-released national labor data, more restaurant jobs have been lost in Delaware than any other state in the country except New York and Vermont amid the Covid-19 shutdowns.

“Can you even imagine? This is a dire situation for our local restaurants,” said Delaware Restaurant Association President and CEO Carrie Leishman.

The National Restaurant Association data comes from the Bureau of Labor Statistics. Their report says that Delaware lost 66% of its eating and drinking place jobs between February and April, and it ranks Delaware third in the country for losses.

Delaware’s restaurant trade association group also says the financial impact has also been devastating. Between March 15 and June 15, Delaware lost $472 million in annual restaurant sales, according to the Delaware Restaurant Association. And the trend continues as some restaurants remain closed and others are operating well below capacity.

A driving force in Delaware’s economy, restaurants have lost nearly three times more jobs than any other industry due to the pandemic.

“It’s really a sting. It goes to show you the value and impact that restaurant jobs have on the state of Delaware’s economy,” says Leishman. There are about 1,900 restaurants in the state.

This comes at a time when Delaware usually boasts the third-highest (by percentage) increase in summer jobs, according to the DRA, because of the large numbers of beachgoers and seasonal tourism throughout the state.

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Committee approves capital bond bill totaling $708 million, down 18% from this year

From Delaware State News

DOVER — Lawmakers completed drafting the capital bond bill Thursday, setting it up to be voted on by the full General Assembly next week. The committee approved a $708 million spending plan for the fiscal year beginning July 1.

That total represents a decline of about $155 million (18%) from the current fiscal year and $185 million (21%) from the governor’s January proposal, a precipitous decrease that can be clearly backed to the COVID-19 outbreak.

With coronavirus triggering a big economic hit and preventing the legislature from meeting at all for months, lawmakers were pressed to approve spending plans for the operating and capital budgets by their deadline at the end of this month.

The Joint Committee on Capital Improvement, one of two money committees that handles the annual spending bills, did the latter Thursday by passing a modified bill that closes the gap with cuts to various areas. The cuts themselves were identified beforehand by budget officials in consultation with the committee co-chairs and some others.

The bond bill, which still must be passed by both chambers by July 1, includes $364 million for transportation-related items and $344 million for other needs, such as state facilities.

The $893 million sum proposed by the governor would have been the largest bond bill in state history, surpassing the $863 million total allocated in the current fiscal year.

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Record unemployment rate in Delaware gets even higher

From Delaware State News

DOVER — Delaware’s April unemployment rate shattered the old record. Its mark for May is even higher.

The state’s unemployment rate climbed 14.9% to 15.8% from April to May, an indication of just how far from over the COVID crisis is. Nearly one in six Delaware workers did not have a job last month, according to the data.

Out of the estimated civilian labor force of almost 473,000 Delawareans, about 75,000 were not employed in May, according to data from the Delaware Department of Labor and U.S. Bureau of Labor Statistics.

The unemployment rate rose from 3.9% in February to 5.1% in March, the largest month-to-month increase since September 1990, before April’s astronomical climb.

Delaware’s first coronavirus case was announced March 11, and businesses were under serious restrictions by the end of the month, while residents were urged to remain at home.

Nationally, the unemployment rate actually fell in May, declining from 14.7% to 13.3%. Still, 13.3% is the highest the rate has been since the Great Depression, and the Federal Reserve this month predicted unemployment will be around 9% at the end of the year.

For comparison, the unemployment rates for May 2019 were 3.6% nationally and 3.7% locally.

Delaware’s unemployment record before COVID was 9.8%, set in 1976, the first year job records for the state are available. During the Great Recession, the First State’s nadir was 8.8%.

The May unemployment rates for New Castle, Kent and Sussex counties, respectively, are 14.9%, 17% and 16%. However, unlike the state rate, the county figures are not seasonally adjusted.

Over the past 12 months, Delaware has lost almost 73,000 jobs, with about 41% of the losses in leisure and hospitality.

The state has seen in excess of 100,000 unemployment claims in three months, more than triple the number from all of 2019.

Delaware is currently in the second phase of its three-part “rolling” economic recovery. There’s no timetable for when the next step will begin.

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Reopening Phase Two begins Monday: Increased capacities, larger gatherings allowed

From Delaware State News

DOVER — Certain businesses can begin to increase capacity and larger public gatherings will be allowed starting at 8 a.m. today as Delaware enters the second phase of its reopening plan from the shutdown imposed to help limit the spread of the COVID-19 pandemic.

Locations that operated at 30% of fire occupancy requirements for Phase One, can move to 60% of fire occupancy requirements (excluding staff). The indoor gathering limit is raised to 50 people and fully unenclosed outdoor gatherings of up to 250 people are permitted if public health precautions are in place.

However, exercise facilities and personal care services such as hair care, tanning, tattoo, massage therapy services, nail care, brow care, spas, waxing services and similar services are required to remain at 30% of fire occupancy requirements.

Cloth face coverings must still be worn in accordance with the State of Emergency Order and social distancing must still be observed at all gatherings.

Gov. John Carney emphasized during his press conference on Friday how important it is to still wear masks as Delaware reopens. He pointed to 12 states that have seen sharp increases in COVID-19 cases after reopening Memorial Day weekend.

Gov. Carney said a rebound in COVID-19 cases would be the worst possible situation for the state and urged residents to not get complacent and keep observing the guidelines to help prevent the spread, calling this time “the new normal” until there’s a vaccine or effective treatment.

“What we do know, as we move forward, it (a face covering) will be helpful in maintaining the health of the community,” Gov. Carney said.

“The virus has not gone away,” he added. “The virus has opportunities to spread with people not using the precautions in terms of social distancing and mask-wearing.”

Businesses and locations allowed to increase capacity to 60% are: casinos, food and drink establishments, houses of worships, commercial lodging establishments, arts and culture centers, malls, retail stores and community pools.

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Republicans blast Carney for handling of COVID crisis, insist state should move on

DOVER — A handful of Republican lawmakers lambasted Gov. John Carney and the state’s approach to COVID-19 Friday, claiming his policies have left citizens removed from government, created a “culture of fear” and represent “the biggest source of the transfer of wealth … from Main Street to Wall Street” since at least the early 1980s.

Speaking at the Central Delaware Chamber of Commerce’s annual legislative luncheon, five Republicans from Kent or northern Sussex counties argued the government’s approach to the coronavirus outbreak has devastated the state’s economy, which could have been avoided. Furthermore, they claimed, the governor has acted almost like a dictator at times, disregarding legislative input and ruling with an overly heavy hand by executive order.

“It has not been a republic for three months,” Rep. Jeff Spiegelman, R-Clayton, said.

Jeff Spiegelman

He said Republican complaints, suggestions and inquiries have been ignored, noting he’s learned of new policies from lobbyists.

Delaware has been in a state of emergency for three months, with most businesses being shut down in March after the first confirmed coronavirus case here. The state has begun slowly lifting restrictions, but it’s not enough for some people, who insist the time has come to return to normalcy.

Last month, 15 of the General Assembly’s 24 Republican lawmakers sent a letter to Gov. Carney urging him to lift limitations and open the state almost immediately. Three of the legislators who signed onto that letter also sent a message to U.S. Attorney General William Barr asking him to investigate “broad, unconstitutional overreaching by the governor of Delaware and the wholesale violation of the important rights guaranteed” to every American.

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Delaware to borrow hundreds of millions for jobless benefits

DOVER, Del. (AP) — Delaware officials plan to borrow hundreds of millions of dollars from the federal government to pay benefits on an avalanche of coronavirus-related unemployment claims and replenish the state’s depleted unemployment insurance trust fund.

Department of Labor officials said Thursday that the trust fund, which had a balance of $165 million before Gov. John Carney shut down businesses in March in an effort to stem the spread of the virus, will be depleted by mid-July.

Officials have submitted an initial request for $196 million to cover payments through August, and are expecting to borrow another $150 million in the fourth quarter.

“As soon as we get that money it goes out the door,” said state Labor Secretary Cerron Cade.

State Labor Secretary Cerron Cade

State officials currently estimate that roughly $530 million will be needed to pay benefits through the end of the year and restore the trust fund to its pre-emergency level.

The federal government’s coronavirus response package includes a provision allowing states to borrow money at zero interest for the rest of the year to cover unemployment benefit costs, as long as the loans are paid back by the end of the year. Remaining balances and any future loans would be subject to interest payments, although states are hoping that federal officials extend the interest-free provisions — or forgive the loans entirely.

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Delaware keeps top bond ratings and saves $5M in refinancing

WILMINGTON – The state’s top bond ratings were recently reaffirmed by three of the four rating agencies, as it also refinanced bonds to save on a lower interest rate.

State finance officials reported that $33.1 million in general obligation (GO) bonds were refinanced at a record low interest rate of 0.79%, saving the state $5.2 million over the bonds’ decade-long term. The savings were structured to help the state address the fiscal year 2021 budget challenges brought on by the COVID-19 pandemic and the state-mandated shutdown of commerce to stem its transmission.

Fitch, Moody’s and KRBA all reaffirmed Delaware’s Triple A rating in June reviews – Standard & Poor’s did not review the 2020B GO bond offering, which refunded old debt at the new lower rate – and credited the state with preparing for economic downturns through building reserves. All four agencies had last evaluated the state’s financial position in January, before the pandemic began.

In a statement announcing the reaffirmed ratings, Gov. John Carney said, “The COVID-19 emergency presents enormous financial challenges for every state, including Delaware. But I think all Delawareans can be proud of the work we’ve done with the General Assembly to boost the state’s finances prior to this unanticipated event, so our state is better prepared to weather the storm.”

Delaware Finance Secretary Rick Geisenberger added that the state’s refunding “shows the market’s confidence in Delaware despite the near-term challenges faced by every state.”

The agencies all highlighted the state’s budget cushions, including its $252 million reserve “rainy day” account and its $126.3 million Budget Stabilization Fund, as a big reason for its top ratings. They also complimented the state’s use of the independent, non-partisan Delaware Economic and Financial Advisory Council (DEFAC) to forecast revenue estimates.

The reviews did warn the state about drawing too much upon its reserves to help plug deficits in the FY 2021 budget though.

“Prudent use of reserves is anticipated, but a sustained deterioration in reserve levels would be a credit negative,” KBRA wrote in its review.

The General Assembly’s Joint Finance Committee recently reviewed a revised budget proposal from Carney’s administration that sought to utilize $76.3 million from the Budget Stabilization Fund, which was created under Carney’s tenure to plug smaller budgetary gaps through an annual savings program. The proposal does not use any of the state’s reserve fund, which is filled by unspent funds each year and capped at 5% of state revenue. States typically try to leave such savings funds untouched to boost credit ratings, and Delaware has never drawn from the reserve account since it was created in 1980.

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