By Jon Hurdle
Special to Delaware Business Times
This time next year, Delaware businesses may face a whole new set of laws. Lawmakers are considering bills that include a proposal to raise the minimum wage; to pay for water-infrastructure improvements by raising the cost of business licenses, and to require more companies to give notice of mass layoffs.
Among the more controversial proposals is HB 270, which would add $45 to the annual cost of business licenses to help raise $20 million a year to pay for improvements to Delaware’s aging water infrastructure.
The business license increase would be added to an individual income tax surcharge of up to $80 per household per year to pay for upgrades to infrastructure, such as new pipes and drainage systems that are increasingly subjecting the state to pollution and flooding, according to the bill, with three Democratic lead sponsors and eight cosponsors.
The revenue would be a down payment on an estimated $500 million that the state needs over
five years to upgrade systems for drinking water and wastewater, including more than $150 million
in stormwater improvements and some $75 million for removing toxic pollutants from some waterways.
Most of the state’s bodies of water do not meet standards for their designated uses such as drinking, swimming or supporting aquatic life, the bill says, and the proposed surcharge would increase the level and reliability of funding to make the upgrades.
The bill would also create a Clean Water Trust with the authority to issue bonds to increase the revenue stream. That money, plus federal and private matching funds, could leverage as much as $50 million a year for clean-water improvements.
Sen. Bryan Townsend (D-Newark-Bear), one of the lead sponsors, acknowledged that the planned revenue is a long way short of what the state needs to fix its water problems, but said the bill is proposing what’s politically possible in an election year.
“Our water infrastructure is woefully inadequate in a variety of ways,” Townsend said. Examples are frequent groundwater pollution in Sussex County, poor water quality in the inland bays, and flooding that affects many bayside neighborhoods during storms.
The bill has been tabled by the House Natural Resources Committee, reflecting an aversion by lawmakers in both parties to raise taxes in any form during an election year, Townsend said.
James DeChene, head of government affairs for the Delaware State Chamber of Commerce, said the group supports the bill in principle, along with other forms of infrastructure improvements. It’s unlikely to make much progress in the General Assembly this year, but its introduction at least has drawn attention to the need for water infrastructure improvements, he said.
“It has bought water to the table, and the hope is that we will continue to have conversations outside of session, and we will continue to work toward getting this legislation passed,” DeChene said.
Earning the bare minimum
Concern over wage rates in a fast-growing economy has contributed to SB 170, which would increase the state’s minimum wage to at least $8.75 an hour starting in October, rising annually to $10.25 an hour in October 2021.
The bill, which by mid-May was in the Senate Labor Committee, is opposed by the chamber on the grounds that it would undermine job creation, especially in the service sector.
“We’ve never liked these minimum wage increases,” DeChene said. He said 2,700 jobs were lost in industries such as the food-service sector in 2017 and forcing employers to pay more would act as a further deterrent.
“This will do nothing to bring those jobs back,” he said. “It will force employers to hire fewer people at a higher rate.”
The minimum wage bill is also opposed by the Delaware Small Business Chamber, whose president, Bob Older, said most of his members want the market, not the government, to determine what they pay their employees.
“What people don’t realize is that all of these increases are going to affect the consumer because every business is going to have to raise their pricing,” Older said.
Sen. Townsend said he doesn’t want to deter job creation but will vote for the minimum wage bill because many wages have not kept pace with inflation.
“You either pay people through their wages or you support people through government programs such as health care and social services,” he said. “I want people to know that if they work hard they can support their families, and right now the minimum wage does not achieve that.”
Rep. Michael Ramone, a New Castle County Republican, said that while the federal government can legitimately set the national minimum wage, the state government has no business doing so. He said wages paid to employees such as those who work in his landscaping and pool-management businesses should be set by the market.
“I’m a pretty firm believer that minimum wage goes up when job growth goes up,” Ramone said. In view of the strong demand for employees across the economy, he said, “the minimum wage that I pay my employees now is higher than it’s ever been.”
Ramone predicted the bill won’t be approved by the legislature in the current session.
New standards for harassment
Growing national concern about sexual harassment in the work place is reflected by HB 360, which would require companies with more than 50 employees to distribute state guidelines on sexual harassment to employees, and to train supervisors in sexual harassment policies.
The bill, which was introduced to the House Labor Committee on March 29, is now subject to a possible amendment proposed by the DSCC.
“As drafted, we are not supportive of HB 360 but I’m hopeful that we can get to a point where we are, if not supportive, then at least neutral,” DeChene said.
Growing national concern over sexual harassment may help build support for HB 360, which would provide broader protections for employees by defining sexual harassment as an unlawful employment practice, and clarifying the definition of employee to include state workers. The bill would also require companies with more than 50 employees to train supervisors in ways of avoiding sexual harassment, and would require the Department of Labor to create an information sheet on the issue that companies would have to distribute to their employees.
Sen. Townsend said the bill may get support from the continuing public outrage over sexual harassment allegations against high-profile individuals such as Harvey Weinstein and Matt Lauer. But any new law should take into account the impact that it has on small businesses, he said. “Clearly, we have a problem but I want to make sure it’s done effectively,” he said.
DSCC does not support HB 360 in its current form, DeChene said in mid-May, but the Chamber is working with the bill’s sponsors on amendments to clarify what employers are already doing on sexual harassment.
Investors with benefits
Both Houses have already approved HB 170, the Angel Investor Job Creation and Innovation Act, which provides tax credits for qualified investors in small businesses. The bill received final legislative approval on May 1 and was welcomed by Gov. John Carney as a way of encouraging so-called angel investors — typically wealthy individuals — to help new enterprises get off the ground.
The act, which Carney was expected to sign sometime in May, will “connect our most talented entrepreneurs with resources they need to be successful, and create new jobs,” he said in a statement.
DSCC’s DeChene said the chamber was a leading backer of the bill because it will help to boost an entrepreneurial culture for a growing number of small businesses in Delaware.
“As Delaware’s economy continues to evolve, small business is becoming much more important to the state as the bigger companies retool themselves, this is an effort to increase investment in those small entities,” he said.
Rep. Ramone, a sponsor of the “angel investor” bill, said it will help create jobs. “What we really need to do to bring in more tax revenue is to create more jobs and this initiative does that without costing the taxpayers a dime,” he said.
Fair warning for workers
Delaware employers planning mass layoffs would face new rules under HB 409, which would increase the number of companies required under an existing law to notify the state of any plans for mass layoffs, by amending the existing Worker Adjustment and Retraining Notification Act. The employee threshold for the notification would be lowered to 50 from 100 and companies would be required to give 60 days’ notice, up from the current 30.
DSCC opposes the bill in its current form and is working for an amendment that would change the requirement for the employee threshold, DeChene said. By mid-May, the bill had been voted out of committee on the House side.
The bill would help to protect employees from any “predatory” companies that failed to give advance notice of mass layoffs, Rep. Ramone said. But he argued that most large employers already provide the notice that would be required by the bill, and so the additional requirement could deter companies coming to Delaware.
He predicted that the bill won’t become law this year, but said it could curb the practices of any companies that don’t manage layoffs fairly.
“We wouldn’t want somebody who is a predator on employees, using them and dumping them,” he said.