It’s already the end of May. In a typical year, I’d be camped out at Legislative Hall, tracking changes made to the budget made during Joint Finance Committee markup and planning advocacy activities with most of you to ensure our nonprofits’ policy and budget needs would be met. However, the world is changing so quickly amid COVID-19 precautions, and Delaware is no exception. Our nonprofits are navigating a new frontier in advocating virtually, but it is important to remember that our policymakers are navigating new terrain as well. You may be asking yourself, where does that leave us? DANA is here to help answer those questions.
Let us start with where we are right now. In terms of the COVID-19 Recovery landscape Governor John Carney announced, on May 26th, that based upon the progress of the State of Delaware Phase I reopening that moving forward outdoor gatherings of up to 250 people would be permitted in Delaware starting June 1. In addition, Governor Carney lifted the ban on short-term rental units and the associated 14-day quarantine for out-of-state travelers, as well as, the existing shelter-in-place order for Delawareans but has urged everyone to avoid “unnecessary outings and gatherings to limit community spread of COVID-19” .
To comply with the existing Executive Orders and to set the example for limiting the spread of COVID-19, the Delaware General Assembly has taken steps to move forward in an unprecedented virtual setting. HCR 85 allows the meetings of the General Assembly and legislative committees to take place virtually in times of emergency. The House adopted this measure on May 26th and the Senate will consider on May 27th. Once adopted by both chambers, the Legislature will be able to move forward with consideration of a budget for FY 2021.
Budget development will be done based upon the revenue projections discussed at the virtual DEFAC meeting held on May 21st. While the revenue projections are not what we hoped for in 2020, given the COVID-19 challenges and implications relating to increased rates of unemployment, we are cautiously optimistic regarding the FY2021 budget. If you’d like to take a look at the full DEFAC packet you can find it here.
The Joint Finance Committee has already scheduled their virtual budget markup meetings to take place starting June 2nd beginning at 10:00am. Meetings of the JFC are scheduled from June 2nd through June 9th on every weekday. As in year’s past it is wise to keep up with changes to the markup schedule on the JFC website given times and dates are likely to change based upon the work the committee accomplishes. As JFC members work through the state budget, with all its constraints, it is important to maintain contact. Do not hesitate to call and email your legislators and remind them of the contracted work your organizations may be engaged in to support the state in their efforts, or how critical Grant-in-Aid support is to your organizations’ post-COVID019 recovery. While information for accessing the virtual sessions is not on the website yet, it will be there in the coming days. You can find the schedule, agendas and more information here.
Finally, on the state front we are faced with challenges regarding Unemployment Insurance. Many nonprofits choose reimbursable unemployment to manage unemployment claims. In a normal economy, with few instances of unemployment in their organizations, this makes more sense than paying into the Unemployment Trust Fund year-round. In our current economy with businesses struggling, paying unemployment claims would push nonprofits and small businesses that choose reimbursable unemployment to close permanently. While waiting for Congress to finalize the CARES Act, Secretary of Labor, Cerron Cade, announced a moratorium on billing for unemployment costs to nonprofits for 90 days. To solve this issue, Congress put a provision in the U.S. CARES Act that businesses and nonprofits choosing reimbursable unemployment would be responsible for reimbursing the Unemployment Trust Fund 50%, with the federal government coving the remaining 50% of the cost. While implementing this provision, the U.S. Department of Labor guidance indicated that States’ Department of Labor were required to charge the full amount and reimburse the federally covered 50% later. Given the confusion this policy would create, our state Department of Labor is continuing to work through a feasible solution, and we are grateful to Secretary Cade for his partnership.
While we are here in Delaware navigating challenges, our federal delegation is considering several different issues that will impact our local organizations and the Delaware State budget. We understand the U.S. CARES Act provided initial loan support to our nonprofit organization through the Paycheck Protection Program and offered federal stimulus support to states and large counties for COVID-19 related expenses. Thanks to our partnership with the National Council of Nonprofits, we have a good sense federal legislation working its way through the pipeline relating to COVID-19 recovery:
- Paycheck Protection Program Extension Act: This legislation seeks to increase the covered period for spending PPP funds from eight weeks to 16 weeks; treat purchases of personal protective equipment as permissible expenses under the program; extend the PPP deadline from June 30 to December 31, 2020
- Paycheck Protection Program Flexibility Act: This bill would extend the PPP coverage period from eight week to longer; eliminate the 25% limit on non-payroll costs; extend loan maturity beyond two years; permit PPP borrowers to participate in payroll tax deferment; and extend the rehiring deadline beyond June 30 for reinstating staff after layoff
- SMART Act: Given that states are not permitted to use federal stimulus funds to fill budget shortfalls, there is a concern about how states will make up the difference. The SMART Act is a $500 billion bill to help offset the collapse of state and local revenues resulting from the COVID-19 pandemic
- While not in legislation at this time, six U.S. Senators, including Delaware’s own Chris Coons, are advocating for improving and extending the above-the-line charitable deduction, which was embedded within the U.S. CARES Act, for inclusion in the next iteration of the CARES Act in the coming weeks/months. The Universal Charitable Deduction would incent personal giving and may help nonprofit organizations to make up some of the losses experienced by cancellation of major fundraising events in the spring.
Given these federal initiatives are underway, its best to remember that that politics are at play and this is baked into every action. Use cautious optimism as we consider how fast these proposals will impact our day-to-day operations.
As we consider our collective path forward, bear in mind that we are all in this together. Navigating new terrain is certainly not for the faint of heart, but neither is advocacy or nonprofit life. If you have questions, or concerns, feel free to reach out to me at [email protected]