Gov. John Carney recently released his Fiscal Year 2023 budget and it’s largely what we’ve come to expect from the Democratic leader who cut his teeth as the Carper administration’s finance secretary: acutely balanced, cautious in spending and deliberate in its priorities.
Editor
Delaware Business Times
That’s not a bad thing, and most business owners would pine to achieve such assurances while setting aside a few percentage points of revenue annually for a rainy day. Carney’s fiscal prudence is a big part of why Delaware has fared so spectacularly through the rollercoaster COVID-19 pandemic and even beforehand, avoiding the budgetary pratfalls that were common in the early 2000s.
As the saying goes, however, are we now being penny-wise and pound-foolish?
As of the last public accounting, Delaware’s fiscal analyst board estimates that we’ll end the current fiscal year on June 30 with a surplus of about $577 million – not too shabby in any year. The Delaware Economic and Financial Advisory Council also reported that the Carney administration would have nearly $825 million in extraordinary spending power in Fiscal Year 2023, falling between the benchmark minimum operating budget and the legal maximum 98% of anticipated revenues.
With that in mind, the governor has proposed an operating budget that is 4.6% larger than last year, above DEFAC’s last advisory benchmark level of 4% and setting a new record. It will build libraries and schools, invest in college campuses, conserve open space and ensure clean water, deploy body-worn police cameras and provide grants to move economic development projects forward.
With that last piece in mind though, I am left with a feeling of whether we’re getting all of the value for this extraordinary spending. As has been Carney’s prerogative throughout his tenure, he has invested primarily in bricks-and-sticks projects rather than programs or people. It’s cheaper in the long run to make such one-time investments rather than be stuck in the politically vulnerable and fiscally difficult position of a program that isn’t getting its desired results.
One initiative that straddles the line between capital and operating investment, however, is Ready in 6. Long promoted by the Delaware Business Roundtable and the Delaware State Chamber of Commerce, the initiative would streamline the building and permitting process in the state to ensure a qualified project could break ground within six months of contact.
When the organizations commissioned a study of Delaware’s competitiveness in project development in 2019, consultant KPMG found that the First State took about 18 to 24 months for a project to get the necessary approvals, without any rezonings that could slow the process further. Similar projects in Maryland or Pennsylvania could get underway closer to that key six-month mark.
In the more than two years since that report was released, state, county and local jurisdictions have clearly moved more expeditiously for high-profile, impactful projects. Dermody Properties developed the 3.7 million-square-foot Amazon center in Newport in less than two years and Delmarva Corrugated Packaging did the same for its high-tech manufacturing plant in Dover. The lesson learned is that responsiveness is possible.
But there are plenty of other projects that our team tracks that have taken far longer, often working through concerns over traffic, stormwater, protected areas, and more. These are projects of lesser prominence but equal consequence for their owners and operators, including niche manufacturers looking to expand, developers looking to build speculatively, and mom-and-pop businesses looking to branch out. The public planners’ concerns are warranted, but most of these issues are resolved in the long run.
I recently asked the governor if he was satisfied with the responsiveness of the state government in regard to economic development potential.
“I’m never completely satisfied, but I am particularly happy with what DelDOT has done,” he replied, noting that the department has “tightened up the timeframe” for communication between project and state engineers.
“We’re really competing well out there,” he said, noting the significant competitive economic development win of landing the massive WuXi STA Pharmaceutical campus in Middletown over sites in neighboring states.
Carney also said that the influx of federal spending through the American Rescue Plan Act and the Bipartisan Infrastructure Law will help Delaware fix problematic roadways, install necessary infrastructure, and invest in alternative transit that will help ease future permitting issues for many projects.
The governor may very well be right, but I can’t shake the feeling that now may be an opportunity to make an impact on Delaware’s future that will last long past his tenure. Carney’s decision to shake-up economic development as one of his first official acts in office, axing the Delaware Economic Development Office in favor of a public-private approach under the current Delaware Prosperity Partnership, has turned out to be one of his greatest achievements.
Might reassessing the state’s permitting and review process under the Office of State Planning Coordination, while integrating greater online access for project teams and data tracking for state officials, bear similar results? I think so.
