Though state finances are in good order, there are plenty of issues remaining that affect your business in Dover this session

The fiscal outlook for state government continues to be positive.  Projections released at the March 19 meeting of the Delaware Economic and Financial Advisory Council indicate an additional $101 million in projected tax revenue over the December 2017 forecast.    The December forecasts indicated a positive trend with no projected budget shortfall. All told, to date, forecasts indicate that there will be an additional $77 million in additional revenue for the current fiscal year (2018), and an additional $139 million for Fiscal Year 2019, which begins July 1, 2018.

A substantial part of the additional revenue is expected to come from an increase in personal income tax revenue and a temporary slowdown in escheat refunds.  Increases in those two revenue lines will be more than sufficient to cover the projected decrease in corporate income tax arising from the enactment of the Tax Cuts and Jobs Act of 2017.  High performance in what has been a robust stock market during 2017 and the first part of 2018 has also contributed to the positive revenue picture via Delaware’s capital gains tax.

This is welcome news following last year’s highly contentious session wherein the General Assembly and the incoming Carney Administration grappled with a $400 million shortfall. However, even though revenue forecasts are positive, there are a substantial number of issues on the horizon which affect your bottom line. Two on which the Chamber engaged in the past week follow below. 

Minimum wage defeated on the Senate floor, Chamber lobbyist addresses full Senate

Senate Bill 10 (Marshall), legislation to increase Delaware’s minimum wage, came before the State Senate on March 20.  The bill as introduced would have increased the minimum wage by $2.00 per hour, in increments of 50 cents per year, over a four-year period.  The bill also included a cost of living adjustment (COLA) tied the formula in the Social Security Act at the federal level.

Prior to floor consideration, Senator Marshall introduced Senate Amendment 3 to Senate Bill 10.  The amendment, which was added to the bill during floor consideration in the Senate, struck the COLA provision and reduced the minimum wage increase to $1 over a two-year period. 

Chamber lobbyist Joe Fitzgerald, speaking on behalf of the New Castle County Chamber of Commerce and the Delaware Hotel Lodging Association, testified before the full Senate in opposition to the legislation. 

The bill fell one vote short of passage, as Senator Brian Bushweller abstained.  Abstentions are recorded as “not voting” and count with the nays on a given measure.    This is the first time in recent memory that a minimum wage increase was defeated in the Senate.   Generally, when defeated, the bills are usually stopped in the House.

Predictive scheduling legislation will be problematic for a large number of Delaware businesses.

Draft legislation is circulating which would impose certain restrictions and costs for employers where scheduling hourly employees is concerned.  The bill would create a new Chapter in Title 19 of the Delaware Code (Labor) which would be referred to as “Shift Worker Protection”.

The bill would require that employers who employ shift workers in the retail, hospitality and food service sectors, who have more than 500 employees worldwide (takes in franchisees) do the following:

1. Provide good faith written estimates of their schedules at the time of hiring.
2. Provide employees with a written work schedule at least 14 days in advance.
3. Permit employees to decline any shifts not included in their written work schedule.
4. Provide one hour of pay at the employee’s regular rate of pay when the employer adds more than 30 minutes of work to the employee’s shift, changes the date or the start or end time of the employee’s shift without advance notice.
5. Provide time and a half pay when the employer cancels an employee’s shift or changes an employee’s schedule resulting in the loss of work hours.
6. Allow for 10-hour rest periods between shifts, and pay time and a half for any work performed during that rest period.

Senator Margaret Rose Henry is the sponsor of the legislation.  We anticipate additional sponsors prior to introduction.

This legislation is highly problematic for employers in the affected sectors.  Labor costs would increase substantially under this proposal and full-time employment would likely decline.  From a macroeconomic standpoint increased labor market rigidity brings with it higher structural unemployment and underemployment. 

We are working to communicate our concerns to the sponsor and to leadership in both houses.

Your thoughts and concerns are welcome.  You can contact our lobbyist at fitzgeraldj@ncccc.com.