In June, the New Castle County Chamber of Commerce has identified the a number of pieces of legislation as important to the Chamber, its 1,200 members, and the State of Delaware. Following below is a status update on those items, following a a vigorous advocacy effort by your Chamber.
1. Coastal Zone Act: The Chamber SUPPORTS passage of House Bill 190, legislation which would encourage the redevelopment of vacant industrial sites in the Coastal Zone. We believe allowing for the redevelopment of these sites will not only facilitate their clean-up, but allow for future responsible expansion of Delaware’s industrial base. THE CHAMBER COORDINATED WITH MEMBERS, OTHER BUSINESS ORGANIZATIONS AND THE GOVERNOR’S OFFICE TO BRING ABOUT PASSAGE OF THIS BILL IN BOTH HOUSES.
2. Angel Investor Job Creation and Innovation Act: The Chamber SUPPORTS passage of House Bill 170 that would establish a refundable tax credit for qualified investors in innovative, Delaware-based small businesses, to spur job creation and innovation. We have long advocated for such legislation to spur business investment and job creation. While we support this legislation, we encourage the General Assembly to broaden the scope to incent angel investment across the board as opposed to only a narrow segment of businesses. In addition to competing with other states, Delaware must compete in the global marketplace to attract jobs and investment. An important part of that is cultivating early-stage companies with the investment and support that they need to grow. THE CHAMBER SUCCESSFULLY ADVOCATED FOR PASSAGE OF THIS LEGISLATION IN THE HOUSE. IT AWAITS COMMITTEE ASSIGNMENT IN THE SENATE. WE WILL WORK WITH THE SPONSORS TO IMPROVE THIS LEGISLATION IN THE COMING YEAR TO ALLOW IT TO BENEFIT A BROADER CROSS-SECTION OF DELAWARE’S ECONOMY.
3. Restructuring of DEDO: The Chamber SUPPORTS the creation of a Public-Private Partnership (P3) which will create a new framework for economic development in the State of Delaware. We are confident that this new P3 will provide a much needed boost to business recruitment, retention, and expansion; building a stronger entrepreneurial and innovation ecosystem; and identifying and developing a talented workforce. THE CHAMBER COORDINATED WITH OTHER BUSINESS GROUPS AND WITH THE CARNEY ADMINISTRATION TO PASS THIS BILL IN BOTH HOUSES. WE LOOK FORWARD TO WORKING CLOSELY WITH THE NEW PUBLIC-PRIVATE PARTNERSHIP AND WITH OUR ECONOMIC DEVELOPMENT COLLEAGUES AT THE DEPARTMENT OF STATE TO GROW DELAWARE’S ECONOMY.
4. Minimum Wage Increase: The Chamber OPPOSES Senate Bill 10 which would increase Delaware’s minimum wage by $2.00 per hour in increments of 50 cents per year between 2017 and 2020, and would index future increases to the COLA under the Social Security Act. The Chamber has historically opposed such increases which would place an undue burden on small businesses and hinder their ability to expand and create new jobs. Delaware’s economic recovery has lagged behind that of other states in our region. The General Assembly is already considering hundreds of millions in tax increases for the coming year, this is a particularly bad environment in which to increase labor costs as well. THE CHAMBER SUCCESSFULLY OPPOSED THIS LEGISLATION. IT IS OUT OF COMMITTEE IN THE SENATE, BUT DID NOT COME UP FOR A VOTE BEFORE THE FULL BODY.
5. Apprenticeship requirements for Contractors: The Chamber OPPOSES Senate Bill 76, legislation which would impose apprenticeship requirements on contractors and subcontractors doing construction work for the State of Delaware. This legislation would impose and undue burden on contractors and subsequently eliminate them from competition for state contracts if they are unable to meet the specified requirements. This will lead to more work being awarded to out-of-state contractors. Additionally, the requirements will tend to increase the costs of state projects at a time when the state can ill afford additional financial burdens. Increasing the expense of state construction projects and implementing policies which favor out of state firms does not make good business or public policy sense in an environment where the state is struggling to meet existing financial obligations. THE CHAMBER SUCCESSFULLY OPPOSED THIS LEGISLATION. A SUBSTITUTE BILL, SS1 to SB 76, REMAINS IN THE SENATE LABOR COMMITTEE.
6. Protecting the Transportation Trust Fund: The Chamber SUPPORTED Senate Bill 20, which constituted the second leg of an amendment to the Delaware Constitution, completing the requirement to become a part of the Delaware State Constitution. The Delaware Constitution now imposes a requirement for a three-fourths vote in order to shift any new operating expenses to the Transportation Trust Fund. It has long been the Chamber’s position that the trust fund should only be utilized for capital projects. This constitutional amendment is a step in the right direction. While we are encouraged by this important step, there is still work to be done to preserve Transportation Trust Fund resources to ensure that they are dedicated to their intended purpose. Reform of our prevailing wage system in Delaware is an appropriate next step in ensuring that there are sufficient resources to improve and maintain our state’s transportation infrastructure. THIS AMENDMENT TO THE DELAWARE CONSTITUTION WAS A LONG-STANDING CHAMBER AGENDA ITEM.
7. Data Privacy Legislation: The New Castle County Chamber of Commerce OPPOSES House Bill 180 as currently written. This legislation, intended to provide data privacy protections to Delawareans, would instead impose crushing burdens on small businesses and expose them to substantial civil liability for circumstances beyond their control. Data and internet privacy legislation is best handled at the federal level. The complexities of modern commerce necessitate a unified national legal and regulatory framework rather than a 50-state patchwork of varying and, at times, conflicting standards. THIS LEGISLATION PASSED BOTH HOUSES, AS A SUBSTITUTE BILL WITH NUMEROUS AMENDMENTS. WHILE THE BILL WAS IMPROVED BY THE AMENDMENTS, WE CONTINUED OUR OPPOSITION DUE TO CONCERNS ABOUT THE IMPACT ON SMALL BUSINESSES IN DELAWARE. WE WILL BE MONITORING IMPLEMENTATION AND SEEKING TO EDUCATE OUR MEMBERS ON NEW REQUIREMENTS IMPOSED BY THIS BILL.
8. A Balanced Approach to a Balanced Budget: The Chamber was encouraged by Governor Carney’s recommendation for a balanced approach (cuts and revenue) to craft the Fiscal Year 2018 budget. However, as of the beginning of June, discussions seem to have reached an impasse. The Chamber urges members of both parties to work together to strike a balance that will preserve essential government services while not adversely impacting economic growth. This is not an easy task. However, we believe it is possible. We are committed to working with policy makers on both sides of the aisle and the Carney Administration to achieve this goal. AFTER CONSIDERABLE CONTENTIOUS NEGOTIATION AMONG THE FOUR CAUCUSES AND THE ADMINISTRATION, A BALANCED BUDGET WAS PASSED THAT CAME CLOSE TO THE ONE-HALF CUTS/ONE-HALF REVENUE GOAL. A RE-CAP OF THE BUDGET FOLLOWS BELOW.
FY 2018 BUDGET RECAP
The First Session of the 149th General Assembly concluded around midnight on July 2, with the budget bill signings going into the early hours of July 3. After one of the most contentious sessions in memory, Democrats and Republicans reached agreement on a revenue package to close what remained of a $365 million budget gap.
All told, the FY 2018 operating budget amounts to $4.1 billion, a budget in which spending growth was held to 0.56 percent. The capital budget (bond bill) came in at $590 million, while the substantially trimmed grant-in-aid budget amounted to $37.2 million.
Ultimately, the gap was closed with $192 million in budget cuts and roughly $172 million in tax increases. A substantial portion of the new revenue will be generated by an increase in the corporate franchise tax on corporations with $750 million or more in assets or annual revenue. This item, House Bill 175, is expected to bring in roughly $114-116 million.
Next in magnitude, from a revenue standpoint, was a surprise one-point increase in the Real Estate Transfer Tax. This tax was 3 percent on real estate transactions, with the State of Delaware receiving 1.5 percent and the counties receiving 1.5 percent. Prospectively, with the new 4 percent rate, the State of Delaware will receive 2.5 percent while the counties continue to receive 1.5 percent. This increase is projected to yield the State of Delaware $45 million this year and $72.9 million next year.
Taxes were also increased on tobacco and alcoholic beverages. On tobacco, House Bill 242 did the following (expected to yield $11.2 million in additional revenue):
- Increase the tax on cigarettes from $1.60 to $2.10 per 20 cigarette pack.
- Increase the tax on all tobacco products other than vapor products, moist snuff, and cigarettes from 15% of the wholesale price to 30% of the wholesale price.
- Impose a tax of 5 cents per fluid millimeter of vapor product.
- Increase the tax on moist snuff from 54 cents per ounce to 92 cents per ounce.
- Increases the fees charged for retail tobacco product licenses and tobacco product vending machine licenses.
On alcoholic beverages, House Bill 241 w/ House Amendment 1 did the following (expected to yield $5.2 million in additional revenue): increase the tax on a six-pack of beer from nine (9) cents to 15 cents; increase the tax on a standard (755 ml) bottle of wine from 19 cents to 32 cents and increase the levy on a 755 ml bottle of spirits (whisky, etc.) from 74 cents to 89 cents.
Ultimately, a personal income tax increase was not made a part of the revenue package. Therefore, Delaware personal income tax rates remain the same, as does the ability to take itemized deductions for items such as mortgage interest and charitable contributions.
A more detailed account of the final FY 2018 budget, as well as a detailed synopsis of key issues during the First Session of the 149th General Assembly will be available on our Chamber Blog in coming weeks.