Qiana Jones’ catering business, founded in late 2018, really took off last year. But when the coronavirus pandemic hit in early 2020, Jones was forced to return $15,000 worth of payments for canceled events, sending her bank account into the negative.
Jones did not receive her unemployment insurance until the week of July 4. Two weeks before she was paid, she was handed a 60-day eviction notice and moved in with her brothers.
“I’m 48 and sleeping on an air mattress in a living room, and I’m trying to find a place now,” Jones said through tears. “It’s difficult. It’s really hard.”
Jones is among the 12.5% of Delawareans who are unemployed as of June. For some, the $600 per week enhanced unemployment benefit is all that is keeping them afloat. But with those benefits due to expire at the end of the month, many Delawareans who still cannot return to work are wondering how they will go on.
A Better Delaware has consistently spoken out against poor leadership regarding economy and business in Delaware during the COVID-19 pandemic. We were not the only ones. The Delaware State Chamber of Commerce, the Central Delaware Chamber of Commerce, the Delaware Small Business Chamber of Commerce, the Delaware Prosperity Partnership, legislators, and business owners and leaders have all called for more attention to this critical issue Delaware faces.
On April 13, three weeks after the mandatory stay at home order issued by Governor Carney, and after much outcry from the business community for a lack of attention, Delaware entered a multi-state task force to address reopening with New York, New Jersey, Connecticut, Rhode Island, Massachusetts, and Pennsylvania.
As if Delaware leadership was controlling the task force itself, transparency has been missing from the efforts of the task force. At the time of publication, we could not locate a website or report for the Covid-19 Regional Advisory Council. What we do know is that New York and New Jersey have recently turned their backs on Delaware despite the alliance.
On June 1, perhaps after realizing the futility of this partnership, Delaware announced its own entity that would, through a subcommittee, address business issues related to COVID-19. It took 69 days, a weak regional effort, and continued pressure from various stakeholders to finally establish Delaware’s Pandemic Resurgence Advisory Committee.
So far, the committee itself has taken little action, despite meeting twice a month and having supplemental weekly subcommittee meetings. The Business Subcommittee has met several times, and the most they have accomplished is asking for data on the impact of COVID-19 on Delaware’s agriculture industry and requesting better communication and more transparency (sound familiar?).
Frankly, Delaware’s efforts to help its own businesses have been next to nonexistent, spare the H.E.L.P. loans that are only available to the hospitality industry. It’s not that we can’t afford to help our small and family-owned businesses: we just gave $2.5M to a British bank that only a year ago took 500 jobs out of Delaware, and the state also received close to $900M in CARES Act funding that has yet to be allocated. We have simply chosen not to help.
Delaware can and mustdo better. Below is a list of what other states have done to help their small businesses, and shows what could be done for our own in the First State.
Arkansas: $7M for zero-interest loans from Arkansas’s Quick Action Closing Fund
California: $50M loan guarantee program
Washington DC: $33M Small Business Recovery Microgrants program
Florida: $49M for Small Business Emergency Bridge Loan Program
Illinois: $500M Small Business COVID Relief Program, $20M from Community Development Block Grant funds for small business grants, $60M for small business grants
Indiana: $30M for Small Business Restart Fund (funded by CARES Act)
Iowa: Iowa Small Business Relief Fund, Iowa Targeted Small Business Sole Operator Fund
Louisiana: $50M loan guarantee program for small businesses, $300M of CARES for small businesses
Maryland: Emergency Relief Grant Fund for small businesses, Emergency Relief Loan Fund for small businesses
Massachusetts: $10M Small Business Recovery Loan Fund, Empowerment Grant for Small Businesses
Michigan: Michigan Small Business Relief Program, $100M of CARES Act funding for Michigan Small Business Restart Program
Minnesota: Small Business Emergency Loans (interest free), $62.5M in CARES Act funds for a small business grant program
Mississippi: $300M of CARES Act for a grant program for small businesses, with priority for businesses that did not receive federal PPP loans
Montana: Will use some CARES Act funds for business stabilization, deploying funds over an immediate- to mid-term time frame for forgivable loans, and low- or zero-interest loans
New Hampshire: $400M of CARES Act funds for small business grants
New Jersey: $10M for New Jersey Small Business Assistance Loan program, $5M for the New Jersey Small Business Assistant Grant Program, $6M for Small Business Lease – Emergency Assistance Grant Program
New York: $100M for New York Forward Loan Program for small businesses
Pennsylvania: $60M for Working Capital Access Program for small business loans, $225M for micro-business grants
South Dakota: $10.5M for a Small Business Relief Fund
Tennessee: $200M of CARES Act funds for the Tennessee Business Relief Program
Vermont: $400M in CARES Act funds for an economic relief and recovery package
Washington: $10M for the Working Washington Small Business Emergency Grant program
Wisconsin: $75M for a small business assistance grant program
Wyoming: $50 million in grants through the Wyoming Business Interruption Stipend
Delaware ranks 39th for “Highly Affected Industries & Workforce”
Delaware ranks 51st overall for “GDP Generated by Highly Affected Industries as Share of Total State GDP”
Delaware ranks 46th for “Accommodation and Food Services”
Delaware ranks 47th for “Entertainment and Recreation”
Delaware ranks 50th for “Retail Trade”
Delaware ranks 42nd for “Educational Services”
Delaware ranks 51st for “Other Services (except government and government enterprises)”
We may be the First State, but we’re last where it counts.
If we look back at studies released in the past two years, it’s clear that Delaware’s economy and business climate were not suited for the corona-crisis.
The coronavirus forced people out of work and businesses to close their doors—some forever. At first, the effect of or economy was reminiscent of the Great Recession in 2008.
According to the Federal Reserve Bank of Philadelphia, Delaware’s business conditions recovered from the Great Recession at a noticeably slower pace than the rest of the nation, taking three more years to stabilize than the average.
This would mean that a return to our dismal economic position isn’t likely until at least 2023. Unfortunately, it is now clear that the economic impact of COVID-19 is worse than 2008.
What will that mean for Delaware moving forward from this crisis?
First, we hope that this will push Delaware to be more focused on the small and family-owned businesses right here in the state. Instead of being used to play a losing game of corporate welfare, taxpayer dollars could help the businesses in their own communities.
The COVID-19 pandemic should lead to wiser saving and spending habits from our state leaders in the future. During the next legislative session beginning in January 2021, A Better Delaware is looking for more serious consideration and evaluation regarding funding, programs, and expenses, as well as a codified savings plan.
If we use this as a much needed wake up call, we have the chance to truly make Delaware better in the future.
The imminent merger/acquisition of Wesley College, a private college, by Delaware State University, a public university, has once again brought into focus the determined effort by our state government to resist the transparency and openness necessary to allow public awareness and accountability. Delaware has historically ranked near the bottom for its lack of transparency and accountability.
Delaware’s shaky financial disclosure and ethics system is one big reason why the state earned a failing grade on the State Integrity Investigation, an assessment of state government accountability and transparency by the Center for Public Integrity and Global Integrity.
A report released in November 2015 shows that Delaware received a 56, or grade of F, ranking it 48th among all states. See the report here: publicintegrity.org/politics/state-politics/state-integrity-investigation/delaware-gets-f-grade-in-2015-state-integrity-investigation/.
In assessing the systems in place to deter corruption in state government, some of the categories that Delaware failed in were public access to information (grade F, rank 24th), political financing (grade F, rank 27th), executive accountability (grade F, rank 36th), legislative accountability (grade F, rank 48th), state budget process (grade D, rank 42nd) and ethics enforcement agencies (grade F, rank 43rd). These statistics do not present a very flattering picture of the “Delaware Way.”
Recent examples of Delaware’s embracement of government secrecy and lack of public accountability abound.
Gov. John Carney, the Department of Health and Human Services and the Division of Public Health have refused to release or post data as to the specific locations of coronavirus outbreaks, despite repeated requests by myself and other legislators. This information would be invaluable as we reopen child care centers and plan to reopen schools.
Delaware’s State Department has failed to require identification of beneficial ownership as regards nearly 1 million Limited Liability Company licenses issued yearly, and the Legislature has failed to pass legislation to require oversight that would be in the public’s interests.
The recent case involving the closed-door negotiations between the governor and the Wilmington business community that resulted in the dismantling of the Rodney Square bus terminal and the secretive bidding process and awarding of contracts for construction and management of the new Wilmington Bus Hub exemplifies an unwillingness to allow public access or scrutiny to major policy decisions. Repeated Freedom of Information Act requests on the particulars were rejected.
We’ve witnessed the abuse of the “epilogue language” process in the recently passed budget bill that allows select schools to keep money specifically allocated by law for student transportation expenses. Although existing state law requires that the money not used for transportation expenses be returned to the taxpayers, the epilogue language inserted into the budget bill contravenes existing code, and my amendment to remove it failed on the House floor.
Delaware’s Legislature created the Delaware Partnership for Prosperity, a public/private entity that recommends disbursement of tens of millions of taxpayer dollars to some of the richest corporations in America. Some recent recipients of note were Amazon Inc. and Barclays banks. Despite written FOIA requests by me for details, the DPP has claimed it is exempt from FOIA rules, even those submitted by a sitting lawmaker on behalf of his constituency.
These continued abuses of the public trust have cemented Delaware’s reputation as a secretive operation that feels it has no responsibility or obligation to the taxpaying public that it is sworn to represent.
Corporate welfare, or financial assistance from government to private businesses, has long been a game that is played in Delaware economic development. Unfortunately, this is a game that the state struggles to win.
Perhaps the most notable failure was Fisker Automotive, an California hybrid electric car company that received $21.5M in 2009. The deal, announced by Gov. Jack Markell and Vice President Biden, was intended to bring around 2,500 green jobs to the state. As time went on, the state had to cover utilities for the flailing company, and it was clear the deal had been a mistake.
Determined to continue giving away money, the state passed a bill in 2011 that put Delaware on the hook to energy company Bloom Energy until 2032. Part of this deal was a $12M grant given in 2012, on top of nearly $130 million in energy surcharges paid be Delawareans in the first 5 years alone.
Dan Simmons, former vice president of policy at the Institute for Energy Research, believed Delaware’s deal was unusual:
“Bloom was given a whole bunch of incentives and the surcharge, which is very strange. It looks like Delaware was doing everything it could to give Bloom money.”
But for the First State, aggressive incentives for major businesses is par for the course. In 2017, when the company was forced to repay the state $1.5M for failing to meet the proposed goals of the grants, legislators called the deal an “economic disaster” and “a hell of an expensive lesson picking winners and losers.”
That lesson faded quickly from memory.
Solenis,Amazon, and many more were given taxpayer dollars from Delaware’s Strategic Fund after it was clear that the massive Bloom deal was bust in 2017. Most recently, the state awarded $2.5M to British bank Barclay’s to bring 323 call center jobs into Delaware.
This announcement came as many businesses within the state are still awaiting help related to COVID-19, and some are forced to close their doors permanently. It’s a slap in the face.
While the state’s history of sweetheart-deals-gone-bad is enough to question the practice, since 1997, Delaware has given almost $500M in taxpayer dollars for business subsidies and grants, despite evidence showing that the main factors in a business’ decision to locate or expand in a state are the state’s business climate, tax codes, regulatory structure, labor force and education systems.
A Better Delaware would tend to these factors instead of continuously blowing money bribing companies to pick our state, only to under-perform or up and leave shortly after. Fixing these issues would improve the state overall, and use taxpayer dollars to help the taxpayers, as well as economic development.
NEWARK – GE Aviation is laying off nearly its entire workforce in Delaware as it copes with a devastating drop in airline travel amid the COVID-19 pandemic, the company reported.
A subsidiary of the conglomerate giant General Electric, GE Aviation is one of the world’s largest manufacturers of commercial airplane engines for companies like Boeing and Airbus. Its Newark plant, located at 400 Bellevue Road, employs around 200 workers, who build advanced aircraft engine components made of ceramic matrix composites (CMCs).
On June 29, the company notified the state that it intended to permanently lay off 194 workers in Newark. A company spokesman told Delaware Business Times that the layoffs will be implemented in a few phases, with most occurring in July and continuing to the end of 2020.
“These actions are consistent with previously-announced plans to reduce our workforce and consolidate operations due to the unprecedented impact of COVID-19 on the commercial aviation industry,” said Richard Gorham, spokesman for GE Aviation. “We appreciate the commitment of all our employees during this difficult time, and we regret having to take this action. We remain focused on protecting the safety of our employees, continuing to serve our customers, and preserving our capability to respond as the industry recovers.”
Despite laying off nearly all of the plant’s employees, Gorham said that GE Aviation does not plan on closing the facility. A small number of production staff will remain in Newark in order to fulfill the terms of military contracts that GE has secured, Gorham said.
This chart from Opportunity Insights Economic Tracker (https://tracktherecovery.org) shows the drop in spending in Delaware and its three counties. Sussex County has seen the slowest recovery. The data is drawn from private companies – from credit card processors to payroll firms – to provide a real-time picture of consumer spending.
DOVER — After three-and-a-half months, it is readily evident that the pandemic has hurt local businesses in a big way.
But, according to a Delmarva economy expert from Salisbury University, it is too early to assess their fates.
“There are so many unknowns that are holding question marks over us, in terms of which businesses are going to be harmed in what ways,” said Memo Diriker.
“What we do know is that a certain percentage — a significant percentage of businesses — are going to find it very difficult to be in business this time next year.”
Consumers were starting to spend a little more freely once restrictions eased, but will that curtail greatly again as cases and concerns about COVID-19 rise?
Can businesses pivot to a model that better relates to contactless service?
Can businesses hold on with the help of government stimuli, such as the Paycheck Protection Program?
What if a second wave of the coronavirus arrives with flu season?
“What we’re seeing, really, is that this is the weirdest ‘dominos falling’ scenario,” said Dr. Diriker. “Some of the things will happen almost in slow motion.
“There have been some businesses that were operating at the edge of profitability, or at the edge of sustainability, and those are the ones that are currently most vulnerable — PPP or not.”
Consumer spending
Dr. Diriker is director of the Business, Economic, and Community Outreach Network (BEACON) at the Franklin P. Perdue School of Business at Salisbury University.
One of his immediate gauges of Delmarva’s economy is actual sales.
“The most important thing is consumer spending power,” said Dr. Diriker. “In the state of Maryland, sales tax revenues are dipping compared to the previous year of the same period.
This Fourth of July weekend, beaches in coastal destinations like Miami, Fort Lauderdale and Los Angeles County will be closed in an effort to stop beachgoers from spreading the coronavirus among family, friends and strangers there – and when they return home.
But in Delaware, the beaches will remain open – with a lot of new restrictions in place, including for the businesses beachgoers often frequent.
“Over the last couple weeks we have experienced an uptick, a resurgence of COVID-19 cases in the beach areas specifically,” Gov. John Carney said during a press briefing on Tuesday. “We also have witnessed – across our state, but particularly in the beach communities – complacency with respect to mask wearing and social distancing.”
DOVER – The Delaware General Assembly completed its work on the fiscal year 2021 budgets over the past week, delivering something that is smaller than what Gov. John Carney proposed in January due to the impact of the COVID-19 pandemic.
Among the cuts imposed on the annual budgets were several initiatives that aimed to speed up Delaware’s ability to provide space for employers.
The governor proposed a record-setting $4.63 billion operating budget and $893 million capital budget appropriation that was ultimately undone by the financial havoc wrought by the COVID-19 pandemic. In the months since the virus spurred widespread shutdowns of state businesses and limited commerce, Delaware has seen a revenue forecast decline of more than $530 million.
Over the last days in June, state lawmakers approved a $4.54 billion operating budget, about 2.1% larger than the last fiscal year due almost entirely to fixed “door opener” cost increases like pensions, debt service and school enrollment funding. Even though it fell short of Carney’s original proposal, the operating budget is still the largest in the state’s history.
Mike Jackson, director of the state’s Office of Management and Budget, described the FY 2021 budget as one where “no one loses, but no one really wins.”
One reason why the budget was able to largely match the FY 2020 appropriation level was that state officials used half of the Budget Stabilization Fund, which was created under Carney’s tenure to plug smaller budgetary gaps through an annual 2% savings program. Lawmakers were able to use only $63.1 million from that fund to offset losses, while also not touching the state’s long-protected “rainy day” Reserve Fund.
“In a year such as this, to be able to continue to maintain that level of discipline, but also fully funding the state’s ‘rainy day’ fund is a pretty remarkable achievement,” Jackson said at a June 30 press conference where Carney also signed the budget bills.
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.
This chart from Opportunity Insights Economic Tracker (https://tracktherecovery.org) shows the drop in spending in Delaware and its three counties. Sussex County has seen the slowest recovery. The data is drawn from private companies – from credit card processors to payroll firms – to provide a real-time picture of consumer spending.