DOVER — Gov. Matt Meyer’s budget proposal does continue many of the existing grant programs used to attract and keep large employers, but the governor’s administration indicates it will be a flexible tool for small and large businesses alike.
Meyer’s proposed budget includes an annual allocation of $5 million for the Strategic Fund, which provides grants to businesses that create or retain jobs or make significant investments in projects here. That includes grants for jobs added or retained, as well as capital infrastructure needs. While the Strategic Fund is most known for how it’s used as part of incentive packages for big companies looking to come to Delaware, it’s also where the Encouraging, Development, Growth and Expansion (EDGE) program pays out grants for start-up companies.
With the $5 million allocation proposed in Meyer’s budget, Delaware will have $21.5 million in the next fiscal year. The goal is to use $3 million for the EDGE grant program, or more than double the amount allocated in the past, according to Delaware Secretary of State Charuni Patibanda-Sanchez.
“We believe that the $5 million will go a long way, and we believe that even with doubling the EDGE grants to $3 million, that we’ll still have plenty of flexibility and leeway in attracting businesses through the Delaware Prosperity Partnership,” Patibanda-Sanchez told the Joint Capital Improvement Committee earlier this week.
The EDGE grant program was first launched in 2019 under Gov. John Carney and from his final award ceremony, it issued $7 million grants to 110 companies. The awards are offered through a competitive pitch contest, with entrepreneurship grants capped at $50,000 while STEM businesses can receive up to $100,000 each.
Right now, there is $750,000 set aside for the EDGE grant and it’s set to be disbursed in the next award ceremony in May.
A spokeswoman for Meyer said that the governor was “looking to maximize the Strategic Funds to ensure that we get maximum return on investment.”
“As many small business owners know — which is demonstrated by the number of applicants we receive per application cycle — EDGE continues to be a flagship program. We’ll have more details soon as we finalize plans,” said Mila Myles, director of communications for the governor.
In the Meyer Budget
For weeks, Meyer has suggested that he would focus more on the small businesses in the First State than larger companies. In his first address to the business community at the annual Delaware State Chamber Dinner, he criticized the use of “taxpayer funds to entice companies to set up shop here,” calling it a “myopic view.”
In comparison, Carney had proposed funding the strategic fund at $25 million for fiscal year 2024 and replenishing another $12.5 million for fiscal year 2025. In his final recommendation, he recommended allocating another $12.5 million for fiscal year 2026.
In other economic development funds, Meyer has proposed an allocation of $9.5 million in the Site Readiness Fund which backs planning, site work and infrastructure installation as a means to attract new development projects. That would bring the total in the budget to $25.7 million.
Other programs like the Graduated Lab Space Program and the Sports Tourism Fund received no funding in the Meyer budget, though the Graduated Lab Space Program still has $17.2 million.
The Transportation Infrastructure Investment Fund (TIIF), which backs changes to the state’s roads, railway and more to support large development projects, is allocated another $3 million, bringing the total to $16.4 million.
The key difference between past years and now is that Carney has enjoyed unprecedented federal funding through several pandemic recovery efforts. Meyer, on the other hand, is facing the threat of deep federal funding cuts and hopes to mitigate it by creating a new federal contingency fund with $21.9 million.
When asked about cutting the Sports Tourism Fund, Patibanda-Sanchez told the bond committee that “difficult decisions had to be made.”
Past successes
Between 2018 and 2024, the Council on Development Finance has approved more than 90 applications, offering around $136 million, according to a Delaware Business Times analysis. Those incentives range from the Strategic Fund as well as the Site Readiness Fund, the Graduated Lab Space fund and the Transportation Infrastructure Investment Fund.
Companies that are offered funds have to make the investment and offer documentation before the state reimburses them. If the project does not come to fruition, there are laws that make it possible for Delaware to claw the funding back.
These projects vary in amount, with some coming in as little as $44,500 while others soar as high as $30 million like the funds offered for the possible Merck & Company site near Greenville. Some programs have a flat cap, like the level 1 Site Readiness Funds which have a ceiling of $1 million. The DPP reports that a little more than half of the grant awards are for less than $1 million.
The DPP touts that it helped support 7,425 new jobs and $2 billion in capital investment through its efforts, bringing the state millions in income and property tax as a result.
DPP President and CEO Kurt Foreman told DBT that his office was supportive of anything Meyer and the legislators can do to support the economy in the state, and that the process was still ongoing. The final budget typically is signed in June after weeks of negotiations and discussions among legislators and the governor’s office.
“The Strategic Fund is an important tool, but the governor’s team is thinking about that in a different way, and we will see how that evolves,” Foreman told DBT. “Site readiness is also important for us to be continued, to be able to win or compete for opportunities. If we don’t have [sites] for people, it doesn’t matter whether we’re a wonderful place to live and work if you can’t put [a building] somewhere.”
Foreman did note that the demand for lab space “ebbs and flows” and he did think that the current allocation in the Graduated Lab Space program was enough to meet the current demand.
Fred Sears II, the chairman of CDF, which hears the applications for the various grant programs, declined to comment to DBT for this story.
Rep. Ed Osienski (D-Newark), one of two legislators who sits on the CDF, said that while Meyer’s proposed budget offers a slight cut to these grant programs, he was pleased to see that the governor is committed to continued funding.
“I wasn’t really sure because I haven’t seen anything brought up. I know that he said he wanted to improve other things that would attract businesses, such as reducing permitting delays and workforce development. I do think that any improvements on those two would be beneficial, but alone, I don’t think it would be enough to attract businesses,” Osienski said.
Other neighboring states offering highly competitive incentive programs, like New Jersey which awarded $104 million in tax credits to Nokia Bell Labs while Pennsylvania set aside $500 million for site development. Osienski, a Newark area democrat, said that Delaware could not compete against those numbers, “and we probably shouldn’t because to focus on education is a better investment.”
“It’s a tough subject. Unfortunately, it’s so common that if we did not participate in this, we probably would not have been as successful,” Osineski said, pointing to Merck’s interest in the Wilmington area and the recent $5 million award for a high-tech Aldi distribution center in New Castle.
“I mean, those facilities are located in are going to be paying school taxes, which probably would prevent tax increases,” he added. “I’m not much of a poker player, but I hate to call the bluff on some of these applicants and lose what they brought to Delaware.”
