Business Roundtable’s agenda for growth could make 2016 a defining year for legislature
By Sam Waltz
The years 1865 and 1968 often are regarded by historians as the two pivotal years in American history over the last two centuries.
The end of the Southern War for Independence coupled with the emancipation of the slaves and the assassination of President Lincoln defined 1865.
Huge social progress in civil rights, the Vietnam War, urban riots, the assassinations of Robert F. Kennedy and Dr. Martin Luther King, coupled with Lyndon B. Johnson’s decision to “stand down” from the presidency and not seek re-election, opening the door to Richard Nixon’s triumph, were the defining events of 1968.
In Delaware, the counterpart in significance in at least the last half-century, perhaps decades longer, is 1981, which marked the passage of the Financial Center Development Act (FCDA). Conceived by Gov. Pierre S. du Pont IV, with broad bipartisan support, the FCDA brought home to Delaware the credit-card banks whose revenues in a period of high inflation were capped by the State of New York’s usury laws.
It was the FCDA, Delaware business and civic leaders agree, that transformed Delaware’s economy at a time when the maturing chemical industry began its gradual decline and shrinkage. It created thousands and thousands of jobs, turbocharging an economy that would be decimated over the next three decades by the loss of two major auto manufacturing plants as well as a “sea change” shrinking of the state’s chemical industry employment.
Today’s titans of Delaware’s business and civic community – perhaps not as titanesque as du Pont and Irving Shapiro and Al Giacco and the men who defined Delaware’s business leadership landscape 35 years ago, but titans nonetheless – hope that one day their successors will speak of 2016 with reverence similar to 1981.
Strategy remains to be written, according to Bob Perkins, chief staff officer at the Delaware Business Roundtable, but it will turn on a report scheduled to be delivered in March 2016 to the state’s business and civic leadership.
Theory Into Practice (TIP) Strategies of Austin, Texas, and Seattle, Wash., is tasked by the roundtable, chaired by Mark Turner, president and CEO of WSFS Bank, to create an economic development plan and growth agenda that is destined to be a priority for the Delaware General Assembly and a centerpiece of the 2016 electoral campaign, Perkins said.
“The plan will be built in a collaborative and creative way, involving dozens of people,” Perkins said in a recent interview. “We have to gather together all these leaders and figure out where to drive our state.”
“Why, years into a recovery, why is Delaware still having problems with a budget?” Perkins asked. And noted that others are asking the same question.
“How do we help to move Delaware into a situation to grow its economy? TIP Strategies will help us not only with the economic development plan strategy, but with the political strategy, the advocacy strategy,” Perkins said.
The Delaware Business Roundtable is not an organization of companies, Perkins said, but of CEOs. “The Business Roundtable will be a partner, it will be collaborative.”
How is the roundtable different from the chambers of commerce, of which Delaware has many, as well as the National Federation of Independent Business (NFIB), known at the national level as America’s most effective small business lobbying organization? And the multitude of vertical industry groups ranging from the construction industry groups to the lodging and hospitality groups to the commercial real estate groups?
“Other business organizations are focused in part on that [economic development] and in part on other things,” Perkins said. “The Business Roundtable is focused just on this.”
Perkins has seen firsthand much of what he anticipates. A recent Ã©migrÃ© from AstraZeneca, where he witnessed firsthand the shrinkage in Delaware’s leading corporations, he once served on the gubernatorial staffs of both du Pont and his successor Gov. Michael Castle.
A former DuPont Co. public relations guy out of Lynchburg (Va.) College, Perkins, 62, worked in the political world of Dover before following Gov. du Pont to Delaware’s pre-eminent law firm Richards Layton & Finger, where he was its non-attorney law firm administrator.
Leaving AstraZeneca to set up his own policy consultancy, Perkins found a Business Roundtable ready to stretch its political legs and become more involved in inertia-busting the Delaware economy.
“Gov. du Pont led change by asking and answering two questions,” Perkins recalled. “His first was “˜What’s the right thing to do?’ With that answered, his next was, “˜How do we get this done?’
“In recent years, our business community has not been as assertive. Today, we have smaller companies than we had a generation ago, and more of their success and fortunes perhaps feels tied to business interests outside of Delaware,” Perkins said. “The CEOs a generation ago cast a huge shadow. This is a much different kind of Roundtable.
“The Roundtable likes to have the business community be more influential with regard to establishing a growth agenda for the state. It felt the state was at an inflection point, a business community that was at an inflection point,” and ready for change, Perkins said. “We decided to get into that growth agenda, and go see the State legislature.”
“It’s not our goal for this to be about the Business Roundtable, or the business community,” said Turner, who chairs the Roundtable.
“The way the state’s budget is now is not sustainable. We are overdue to start the dialogue earlier, not later. We’re putting our own resources into this,” Turner added, suggesting nothing should be off the table. “Whether it’s taxes, or fees, that the state has not had, or opportunities that the state needs to explore, it all needs to be evaluated.”
Roundtable study expected to result in robust growth agenda
The State of Delaware faces a structural budget challenge with multiple dimensions – a revenue portfolio that is not responsive to the economy, unsustainable expenditure growth and the need for more robust economic growth, according to an independent study released in September by the Delaware Business Roundtable.
The study projects that, absent policy changes, annual operating budget deficits will expand to over $600 million, or 11 percent of expenditures, by 2025.
The study, commissioned by the Roundtable, was conducted by Michael C. Genest and Brad D. Williams of Capitol Matrix Consulting, a leading economic consulting firm whose work focuses on a wide range of fiscal, economic and policy issues, particularly related to state government.
Specifically, the study identifies a number of areas where state expenditures are inconsistent with neighboring states or national averages.
Corrections – The study notes that expenditures for corrections are significantly higher than the national average and that over the last two decades expenditures in this area have taken a growing share of Delaware’s operating budget.
Public welfare/social programs – The study suggests there may be opportunities to improve on Delaware’s federal shares in the Medicaid program and recommends a thorough analysis be conducted.
Education – From 2008 through 2014, while other states were cutting K-12 per-pupil funding by 4 percent, Delaware was increasing funding by 12 percent. Slowing the growth of spending over time would bring costs in line with the average of neighboring states.
Personnel costs – The study recommends that Delaware consider reducing the size of its state and local government workforce over time, either through hiring freezes and attrition or by targeting specific programs for reduction or elimination.
The Delaware Business Roundtable is a nonpartisan, volunteer consortium of CEOs whose companies collectively employ over 75,000 people in Delaware. Since its inception in 1981, the Roundtable’s broad mission is to enhance the quality of life in Delaware by promoting commerce, job creation and select public policy issues. In recent years, the Roundtable has been a leading supporter of public education transformation and entrepreneurs in Delaware.