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What’s New

Are Black-owned businesses in Delaware being left behind?

Over the past few months, coronavirus and social justice demonstrations have highlighted the issues and disparities impacting black communities in health, criminal justice, and much more.

One area that should also be addressed is the inequality in business.

Just a few months ago, the requirements for the Payroll Protection Program (PPP) loans from the U.S. Small Business Association made it difficult for many to receive loans, but it was especially tough for minority-owned businesses. Combine that with the fact that Delaware was second to last in the nation in the first round of PPP loans issued, and Delaware’s black-owned businesses were left in the dust during the pandemic.

Coronavirus only worsened the landscape—it didn’t create it.

According to 2019 Census data, there are about 224,000 African Americans in Delaware, but only 553 black-owned businesses. The First State ranks 33rd in the nation for black owned business success.

Part of the issue is a lack of resources.

According to Guidant Financial, a lack of capital and cash flow is the biggest challenge for black small business owners. While those are the same problems most small business owners face, fewer African-American small businesses are approved for financing, and when they are, it is often for less money and with higher interest rates.

Delaware’s business resource page only lists one option specifically for black-owned businesses: the African American Chamber of Commerce. The AACC is actually regional and operates out of Philadelphia, serving Delaware, Pennsylvania, and New Jersey. Who in Delaware is fighting for Delaware’s black business owners?

Currently, only community level groups offer any support.

Among other issues, high business taxes and long wait times for permit approvals make it difficult for any entrepreneur to make it in Delaware. Add on the additional barriers for African Americans, and the cause of our low success rate for black-owned businesses becomes clear.

Better resources and advocacy for all businesses undoubtedly serves minority owned businesses as well. Lower business taxes, less regulations, and faster approvals from less bureaucracy would strengthen our business climate across the board.

However, when we have a group that clearly falls behind in the state and in the nation in their success, perhaps we should take the time to focus on their specific needs. Sure, helping all businesses is a step in the right direction for a lot of entities, and we at A Better Delaware have been advocating for that.

It is time to take steps to advocate and work for those who we have let fall further behind. It is time for Delaware to do better for its businesses—especially its black owned businesses.

If you are a minority business owner or entrepreneur, we want to hear from you. It is time someone asked what could be done so that our elected officials and communities could better serve those gaps.

Please email info@abetterdelaware.org to help us in the effort to create A Better Delaware for everyone.

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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Businesses Begin Slow Process of Reopening

White lines now block off socially distant personal workout space inside Legion Transformation Center in Middletown where coaches have eagerly awaited news of Delaware’s plan to reopen businesses.

The COVID-19 pandemic led to the gym’s physical closure along with businesses throughout the state when Governor John Carney announced a state of emergency and a stay-at-home order back in March.

In spite of the uncertainty surrounding the pandemic, coaches and General Manager Frank Purfield remained dedicated to their motivated members who did not want to lose out on the workouts they have come to love. They created online content to stay engaged with their membership, not knowing where the future might lead the business.

“We have a lot of content online for our members to continue to use. I think we had about 20 percent of our members at Middletown put their accounts on hold [during the pandemic], so obviously that hurt us a little bit. But we had a lot of people who, once they realized we had online stuff, pulled their account out of a frozen status. Right now, we have quite a few members that work out at home for now until they are more comfortable,” Purfield said.

The gym, like other exercise facilities, reopened in early June at 30% of its fire code occupancy rate per phase one of Delaware’s Economic Reopening Plan released by Gov. Carney. Phase one also eliminated the out-of-state quarantine and concerns with short-term rentals.

This week, he released phase two set to begin Monday, June 15, emphasizing that the public must remain cautious moving forward through the reopening process.

“As businesses reopen and more Delawareans head back to work, it’s important to remember that COVID-19 is still active in Delaware,” said Governor Carney. “Delawareans need to remain vigilant. Keep distance from others outside your household. Wash and sanitize your hands frequently. Wear a face covering in public settings, and act with a sense of community. This pandemic is not over. Now’s not the time to let up.”

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Transparency is more important now than ever

The coronavirus pandemic has rocked communities and businesses nationwide. While we may be starting to slowly return to normal, normal may never return for those who were forced to wait for help for too long.

On March 24, Governor Carney implemented a mandatory stay at home order, forcing businesses statewide to shut down indefinitely. Many business owners wanted to understand what measures the Governor used to determine if an operation was “essential” but never received an answer.

Transparency has been a glaring issue and missing piece from the policy decisions surrounding COVID-19. It is difficult to hold a government accountable if the people are unaware of or do not understand the decisions being made.

Unfortunately, this is not a new problem in the First State.

In the A Better Delaware October 2019 blog, Transparency and accountability: the “Delaware Way” can do better, it feels as if we peered through the looking glass to this situation:

“Delaware state government tends to minimize or even diminish the role of the citizen in decision-making, to the detriment of its constituency. Without transparency and accountability to influence better decisions, our officials are free to pass legislation to their own benefit, instead of that of its people.”

As federal CARES Act money makes it way to the states, with Delaware set to receive $1.25 billion, transparency is more crucial than ever as livelihoods hang in the balance. Taxpayers deserve to know how their money will be spent—and if it will benefit them.

Other states, like Vermont and Alaska have all announced plans to use part of the CARES money to help their own struggling businesses. Two weeks ago, Alaska announced that $290 million of the funds would go to help small businesses and nonprofits, as well as offering aid in the form of grants instead of loans.

Vermont Governor Phil Scott recently announced a $400 million economic relief and recovery package funded by the $1.25 billion the state received from the Federal CARES Act: $310 million for immediate emergency relief to the most impacted sectors and businesses, and $90 million in long-term recovery investments.

If other states’ leaders can work with businesses and business groups to forge a path for small businesses and nonprofits to get back on their feet, Delaware can too.

On May 6, Delaware business leaders authored a letter to Governor Carney requesting the opportunity to inform reopening decisions. Shortly after, the Central Delaware Chamber of Commerce and the Small Business Chamber spoke out about recovery and the Governor’s action, or lack thereof.

Open lines of communications with informed parties and with the public are both necessary to move forward. Only businesses know what businesses need right now.

As our leaders work to parcel the federal aid how they see fit, the opportunity for a new era of transparency in Delaware state government is now.