There are three trends at the National level that will continue to impact Delaware, I think, among them…
- Historically Low Interest rates, which many of us guess will be bumped up by the Federal Reserve in 2015 and bring some slowing in economic activity;
- Delaware’s recovery from the Great Recession has lagged behind the region and the nation and key economic segments an employers have not fully recovered; and
- Federal Tax Policy, finally, creating the Inversions of which we saw nine in 2014, continues to be an issue that requires resolution.
Impact of the latter is that while AstraZeneca would not likely invert, a prospective acquirer of AZ – e.g., a Pfizer — likely would, removing hundreds of jobs from Delaware’s economy, and it would have a negative ripple effect on hundreds of other businesses. If we want to “re-shore” jobs and be more competitive in the global economy, particularly in manufacturing, we need substantial federal tax reform on the corporate level to encourage some of
the big corporations not only bring back jobs but stay in the United States.
Some areas in Delaware where policymakers have the chance to create impactful change are fiscal policy (tax and spending) and public education.
Our tax structure is attractive since we have no sales tax and rather low property taxes but a reduction in the personal and corporate tax rates would help attract additional business to Delaware and generate additional economic activity. We need to have a meaningful discussion about how to finance our roads and infrastructure.
We all agree our transportation network needs to be improved, but how can we get the biggest bang for our buck to build and maintain roads? A case can be made for a gas tax increase if viewed as a user fee, but it absolutely must be tied to a lock box approach so the gas tax is used for infrastructure as intended and we must establish a plan to stop dipping into the Transportation Trust Fund to fund non construction activity. In addition we need to reform the way we calculate prevailing wage.
Recently announced changes at DuPont have implications for Wilmington’s economy. The decision was not a vote of confidence for the City. The City must improve its business climate to attract and retain corporate operations like a headquarters. We need to develop a more detailed understanding of the activities of the “new” DuPont and the newly established Chemours so we can support economic opportunities at places like Chestnut Run, the Experimental Station, Stine Haskell and the downtown Wilmington.
It is hard to believe but the 2016 cycle has started and we will have a significant leadership change as we elect a new President and Governor. In addition there will be elections for Mayor of Wilmington and County Executive. There is a potential for entire new leadership team to be elected in these four important positions. A key issue in this election will be economic development, primarily in the area of workforce development and education.
The future of our economy is going to be based on the quality of our public education system and having an adequate supply of workers for growth industries. Today’s employers look for a good workforce to hire employees and they also want a good place to send their kids to school. Improving our public education system is a complex and politically difficult situation. The new leadership team in 2016 will need to make unpopular short term decisions in order to get long term results. So let’s get the campaign discussions started in 2015.
(Mark Kleinschmidt is New Castle County Chamber of Commerce president.)
