It’s a wide-ranging document filled with ambitious proposals, but the business community’s “Road to Recovery” platform is designed to help Delaware’s economy emerge from the ravages of COVID-19 while fixing some long-term challenges to growth.
The wish list, presented to the Carney administration and the General Assembly just before the Carney unveiled his 2022l budget proposal at the end of January, urges the administration to create the right conditions for businesses to recover and thrive, and to help workers acquire the skills they need to compete in a post-COVID economy.
“As we begin 2021, we can more clearly see the indelible impact the pandemic has had on Delaware’s economy,” the Delaware State Chamber of Commerce and the Delaware Business Roundtable said. “We recommend a laser-like focus on several areas to help ensure Delaware is on an expedited road to recovery as we deal with the pandemic’s impact.”
The business groups urged, among a raft of requests, retraining for the thousands who have permanently lost their jobs; a much quicker permitting process from some agencies; increased availability of lab space for the state’s growing life-sciences industry; better reuse of former industrial sites, and tax credits for employers who hire graduates and certify that they have signed up for training in approved occupations.
They also called on the administration and the General Assembly to help rebuild Delaware’s childcare industry after many closures forced by the need for social distancing in the pandemic, and the increased ability of many parents to care for their children while working from home.
"We're projecting a pretty significant budget surplus so it's definitely not the time when you want to be putting tax increases on individuals or businesses."State Rep. Mike Smith
And they urged the administration of Gov. John Carney to exempt people who received unemployment benefits during 2020 from state income tax on the payments – a request that was approved by the General Assembly and signed by Gov. Carney for inclusion in the state’s 2022 budget.
The state’s ability to rebuild the economy is being helped by an expected $495 million budget surplus in the current year that’s expected to carry over to fiscal 2022, according to the Delaware Economic and Financial Advisory Council (DEFAC).
An earlier budget surplus was wiped out in the early months of the pandemic but Delaware was able to respond without raising taxes, cutting services, or borrowing because of its reserves, Carney said in his State of the State address on Jan. 26. “Like every state in the country, we faced a looming deficit. But unlike most other states, Delaware was ready,” he said.
The state’s fiscal health means there should not be any need to raise taxes to pay for economic-stimulus measures, said State Rep. Mike Smith, (R-Hockessin and Newark). “We’re projecting a pretty significant budget surplus so it’s definitely not the time when you want to be putting tax increases on individuals or businesses,” he said in an interview.
Smith endorsed a call by the business groups to step up the “Ready in 6” initiative, which aims to ensure that economic development projects that will retain or create jobs will be permitted by agencies in six months, rather than the 12 or 18 months that it often takes.
“If you think about economic development, you hear a lot about states offering incentives for companies,” said Bob Perkins, executive director of the Delaware Business Roundtable. “Delaware doesn’t have the same size checkbook as all these other states.
“We’re a small state so we have to find our competitive advantage elsewhere. Because we’re so small, you would think that we could be nimble and quick and move these permits through the process because for business time is money, and if you want jobs, you’re going to need to do it quickly.”
The worst offenders are the Department of Transportation and particularly the Department of Natural Resources and Environmental Control, each of which can take up to 18 months to approve a project, Perkins said.
"Because we're so small, you would think that we could be nimble and quick and move these permits through the process because for business time is money."Delaware Business Roundtable exec. director Bob Perkins
He said DelDOT has taken some steps toward streamlining its approval process but “there’s a lot of work to do.”
The business groups urged the state to hire a “Project Concierge” who would drive the “Ready in 6” initiative, and report directly to the Governor.
Carney said the permitting issue is also being addressed by a group called Government Efficiency and Accountability Review (GEAR) which is looking at ways of achieving the permitting goals set by the business groups.
“We need to have sites ready to go when a business makes a decision to locate here in our state,” Carney said this week during his regular COVID-19 press briefing.
Meanwhile, the Department of Labor’s “Forward Delaware” program, funded by the federal CARES Act, offers rapid retraining in five areas – healthcare, construction, hospitality, logistics and information technology – that have the greatest potential in a post-Covid economy.
Trainees include Dana Patterson of Dover, a former Amazon warehouse worker, who in mid-February was near the end of a free six-week course at DelTech to obtain a nursing assistant certificate that she hopes will launch a new career. Patterson said she was fired by Amazon last year after taking sick time to get tested for COVID – even though the test turned out negative.
“I’ve always wanted to become a Certified Nursing Assistant because I want to work my way in the healthcare field and become a registered nurse,” she said.
Among the industries participating in the DOL program is the hard-hit restaurant industry which lost two-thirds of its workers at the low point of the pandemic, and whose headcount is still 20 percent below pre-pandemic levels, according to the Delaware Restaurant Association.
The trade group is offering 10 free courses in food-service skills to “upskill and retrain” laid-off workers, and expects to offer 5,300 courses by the summer of 2021.
Laid-off restaurant workers were among the most numerous victims of a record-high peak in unemployment to 15.9 percent in May. Although the jobless rate dropped to 5.3 percent in December, the latest month for which official data are available, the headline number is likely only about half of the actual rate, said James Butkiewicz, an economist at the University of Delaware.
A national measure that includes the headline jobless rate plus part-timers and others who are “marginally” attached to the work force suggests that unemployment is actually about 11 percent, which Butkiewicz said is likely “more spot on” for Delaware.
"People will go back to stores but will they come back in the same numbers and the same dollar amount of purchases? The answer to that is probably not."UD Economics professor James Butkiewicz
Still, the state’s labor market is “doing reasonably well” considering the huge economic shock of the pandemic, he said, but further growth will depend in part on how employers plan for the post-COVID workplace.
Retailers, for example, will have to decide how much of their business will remain online and how much will return to physical stores, he said.
“People will go back to stores but will they come back in the same numbers and the same dollar amount of purchases?” he said. “The answer to that is probably not.”
The outlook for the retail industry is one reason why the IT industry will offer many opportunities for workers who lost their jobs during the pandemic, he said.
“A lot of the jobs that were lost in hospitality were those where you had a physical presence, dealing with customers,” he said. “To the extent that people lost those jobs and want to go somewhere else, they probably would be well served to enhance or develop strong computer skills.”
While retraining and other measures are needed to revive the economy, the highest priority now is widespread vaccination, the business groups said.
“The business community offers its assistance to the Department of Health and the entire Carney administration,” they said. “Delaware has a long history of cooperation between the public and private sectors. Now more than ever, a collaborative approach makes sense.”
