By Sam Waltz
So how’s Governor John Carney doing in managing Delaware through the coronavirus pandemic?
If I’ve been asked that once, I’ve been asked it – via phone and email, while social distancing – a dozen times in the last week. My view? He’s doing well so far. But the jury still is out.
I break it into three pieces: Pandemic Management, Reopening Management, and Post-Pandemic Delaware.
I think the Governor, who I’ve known for three decades, is doing a fine job at Pandemic Management.
Coming from a professional services background, where most professions have a “body of knowledge” (BOK), there was no BOK for Pandemic Management in the United States, for all practical purposes. I’ve known DEMA, the Delaware Emergency Management Agency, and the other groups, and frankly it’s unlikely that anyone had a plan for this in the desk drawer.
The Governor had to wing it, and he and his team took their cues from both President Trump on the right hand and Gov. Andrew Cuomo of New York on the left hand, choosing the most prudent course(s), and generally doing well for this.
In my work, I talk about “helping people navigate where there are no navigational markers, no beacons,” and, in this case, there truly were none. We’ve all made it up as we’ve gone.
Pandemic Management Science will be next year’s academic field of study.
So right now, Gov. Carney is at the threshold of Reopening Management, and I think he’ll make that work pretty well. It’s a political issue, and in any political issue, there are a lot of conflicting interests.
Of course, we in business want to get back to business ASAP, because every day of Delaware shutdown is a day of drain on capital reserves, of profits foregone, and of digging deeper into the capital hole, now a trench!
On the other hand, there are many perfectly content cashing unemployment checks, or business payroll checks, without producing. I’m not a cynic, so I really don’t want to speculate farther about that.
The big issue for Gov. Carney is that transition issue from Reopening Management to Post-Pandemic Delaware.
Delaware and all the states are different from the Feds. As States, we don’t have “the Power of the Press,” that is, in the case, the power to print money. We can borrow money, and plenty will be available. And like the Federal Revenue-Sharing of the 1960s and early 1970s, we’re happy to spend Federal checks that support Federal initiatives.
But, like any entity other than the Federal government, we ultimately have to pay the piper.
Delaware – like every state — is set up for a fairly draconian situation as it ends Fiscal 2020 on June 30 and it embarks on Fiscal 2021 on July 1.
When I came to Delaware 45 years ago this month, the State’s General Operating Fund was $425 million-$450 million. Today, its General Operating Fund is 10 times that, more than $4.5 billion.
While a drop in the bucket at a Federal level, or compared to the mega-states, Delaware’s spending still is real money that needs to come from Delaware taxpayers.
Like most businesspeople, I’m not a fan of Big Government Deficit Spending. Budgets grew wildly out of control under President Obama, growing at the rate of about $1 trillion a year, to about $16 trillion or so over Obama’s eight years.
Turning to his populist side and eschewing conventional Republican orthodoxy about budget restraint, President Trump kept his foot on the spending accelerator, continuing the Obama $1 trillion deficit pace in his first term.
Until this year, when his deficit likely will hit about $5 trillion, based on my reading, as part of the Pandemic recovery and stimulus.
But Delaware has no way to do deficit funding. For states like Delaware, it’s strictly “pay as you go.”
That’s going to cause some great discomfort for thousands of Delawareans, particularly in Sussex County where those New Yorkers, Pennsylvanians and New Jerseyites fled to avoid their own state’s onerous tax burdens. Without children here and with their retirements set, their passive (and active!) resistance to the realities of the Delaware budget-writing process will be volatile.
Others in Delaware whose ox is being gored similarly will be in pain.
What we really need to hear now from Gov. John Carney is the financial plan for a historic and unprecedented financial recovery of the First State.
Sam Waltz is publisher emeritus of the Delaware Business Times.
