Fiscal Year 2019 Budget

2018 State of the State Address of Governor John Carney
January 18, 2018

Governor Carney may deviate from prepared remarks

Lt. Governor Hall-Long, Mister President Pro Tem, Mister Speaker, Members of the 149th General Assembly, Members of the Cabinet, Distinguished members of the Judiciary, invited guests, and my fellow Delawareans: Thank you for inviting me into the chamber today.

A point of personal privilege before I begin. I'd like to recognize and welcome my mother who's here with my brother Mike and sister Liz and brother-in-law Brendan. And a special thank you to my wife Tracey for all she's doing for our state.

I'd also like to recognize our retiring legislators, Senator Brian Bushweller and Senator Margaret Rose Henry. We're certainly going to miss you. And I want to thank you for your service to our state.

A year ago, I stood on the steps outside this building and promised that working hard and working together, we would begin to meet the challenges our state faces. And that by making tough decisions, we would put our state on a sustainable path in the new economy.

Despite the inauspicious freezing rain on that day a year ago, I felt hopeful. I knew that if we worked hard and worked together, we could make our state stronger, and better prepared for the future.

And we have.

When we left here last, we had worked through disagreements in balancing a $400 million budget shortfall. I said then – and believe today – that more work needs to be done to ensure our long-term financial sustainability.

But we should not lose focus on the progress we've made by working together.

• We partnered with the private sector to drive job creation.
• We directed new resources to support small business.
• We passed responsible changes to the Coastal Zone Act, clearing the way for development and cleanup of abandoned industrial sites.
• We created Opportunity Grants to provide new resources and support for low-income students, English language learners, and students afflicted with trauma.
• We strengthened protections for Delawareans affected by computer breaches, enacting the first major changes to our cyber security laws in more than a decade.
• We made historic investments in the Department of Correction, and gave our officers a pay raise.
• We strengthened oversight of opioid prescriptions, expanded access to substance abuse treatment and better coordinated our efforts to help those battling addiction. And very soon, under the leadership of our Lieutenant Governor, we will recommend more reforms to help control this terrible epidemic.

It is because of all this work, all this work we did together, that I can tell you this. The state of our state is strong, and getting stronger.

In 2018, these are our priorities:

• A stronger economy
• Better schools for all Delaware children
• Safer communities
• A healthier Delaware
• A strong and stable state workforce

I'm here today asking you to join me in making these goals a reality.

Jobs

We all know that the key to lifting up our state is making sure every Delawarean has a good job.

That's why we worked with all of you to create a public private partnership to attract businesses to our state. And to keep them growing here.

It's why, led by Representative Osienski and others, we passed changes to the Coastal Zone Act that will bring new manufacturing jobs and clean up old industrial sites along the Delaware River.

It's why we created a new Division focused on the needs of entrepreneurs and small businesses. Because we know that these are two of the biggest engines of job creation in our state.

It's why we're working with members of the General Assembly to increase access to venture capital for Delaware start-ups and to help entrepreneurs grow their businesses, by pursuing the Angel Investment Tax Credit. I hope to see this bill on my desk in the coming weeks.

It's why we partnered with the University of Delaware and the DowDuPont Company to create the Delaware Innovation Space at the Experimental Station. It's already home to more than 160 high-paying jobs and 9 different companies working to cure diseases, create new materials, and improve our overall quality of life. Companies like Prelude Therapeutics and Adesis are at work in state-of-the-art labs, paving the way to create the next Incyte, or W.L. Gore.

And it's also why we'll be creating a new deer management program, to protect Delaware's farms from crop damage. Agriculture is part of our Delaware heritage – it's our number one industry, and it's a way of life. The best way to protect and preserve family farms is to help make them more profitable.

At the same time, our innovation economy is taking off.

In Newark, Chemours will partner with the University of Delaware to build a $150 million state-of-the-art research facility and innovation center at the Star campus.

Just down the road, FMC Corporation has taken over the Stine-Haskell Research Center and will continue to drive research and innovation at that site.

And with DowDupont's specialty products and agriculture units headquartered here in Delaware, our long history of scientific discovery promises to remain an important part of our future as well.

None of this would have been possible without government working closely with our private sector. I want to thank everyone in this chamber who are helping make this happen.

When employers are deciding where to locate, we know that the number one thing they're looking for is a highly skilled workforce. And the states with the strongest workforce are the ones that will win in the years ahead.

That's why we're working to strengthen the Pathways program in our schools, to connect more students with externships and on-the-job training that will lead to a full-time job.

That's why we're investing in our institutions of higher education, particularly Delaware Tech, so students graduate ready to enter the workforce.

That's why we need to support programs like Zip Code Wilmington, that transform students into skilled I.T. workers.

That's why we've reorganized the Department of Education into one focused on supporting teachers in the classroom – because teachers spend more time than anyone with the workforce of tomorrow.

Investing in our workforce will pay dividends for generations to come. Join me in making this a high priority.

Businesses are also looking for a good quality of life and fun things to do for their employees. Delaware has a lot to offer, and it's our job to support and promote the things that make Delaware a great place to live.

This fall, I kayaked through the bald cypress trees on Trap Pond and toured the Fort Miles Artillery Park at Cape Henlopen. I took an Eco Tour on the Lewes Rehoboth Canal, and went to Bombay Hook to watch the bald eagles. I biked the Mike Castle Trail, walked along the Brandywine, and did CrossFit on the Riverfront.

I saw a country music concert at the state fair, listened to Love Seed Mama Jump at the Queen, and heard Blood, Sweat and Tears at the Grand.

I had beers at the Bellefonte Brewery in Marshallton, the Mispillion River Brewery in Milford, and a glass of wine at Harvest Ridge in Marydel.

I visited the John Dickinson plantation, the George Read house in New Castle, and the Kalmar Nyckel. And I even had time to stop by a Blue Rocks game in Wilmington.

I ate crab cakes in Leipsic, had sushi in Dover, and ice cream at the UD creamery on Market Street in Wilmington.

I toured the downtown development districts in Milford, Laurel, Seaford, and Wilmington, and saw the exciting things that each town is doing to bring new energy and business to their downtowns.

And as lifelong Delawarean, I can tell you, there has never been a better time to live and work and raise a family here in our state.

Businesses tell us that they want a tax and regulatory environment that lets them grow and innovate.

This year I partnered with many of you, members of the General Assembly in hosting ten small business roundtables in your districts. The complaint about government that we heard over and over again was that regulations are too cumbersome and confusing, and they're bad for business.

In particular, we heard concerns about DelDOT's permitting process. We listened.

A few weeks ago, Secretary Cohan announced a package of process improvements to make it easier for employers to do business with the state. We cut project review timelines dramatically, so businesses can get busy putting Delawareans to work.

There's more we can do, and we will.

City of Wilmington

I firmly believe that the strength of our state lies in the strength of our largest city.

But as everyone here knows, we continue to face significant challenges in Wilmington that pose a threat to its long-term success. I've called Wilmington home for three decades. Tracey and I raised a family there. And I care deeply about its success. But we all have a stake in helping our city succeed. Its success is closely linked to the success of our state.

That's why, over the past year, Delawareans have seen this administration work with Mayor Purzycki and members of Wilmington City Council to devote unprecedented time and attention to making Wilmington strong again.

Our approach has three parts:

1. Support city families.
2. Improve city schools.
3. Connect city residents with jobs and job training.

To bring a sharper focus on families that are struggling, we re-established the Family Services Cabinet Council.

We've put a greater emphasis on coordination among state agencies tasked with serving our most vulnerable citizens.

To do this, we're implementing the recommendations of the Centers for Disease Control report, which was intended to reduce violence in the city. We're starting by helping agencies better share data, and target resources where they're needed most.

The Department of Health and Social Services launched a unit specifically dedicated to providing support for Wilmington's struggling neighborhoods.

We're stationing caseworkers at community centers, public libraries, and probation offices throughout the city.

Our probation and parole officers are working arm in arm with Wilmington PD on Operation Safe Streets. Senior Probation Officer William Walker was grazed by a bullet while helping to keep the streets of Wilmington safe. He's here with us today, along with his wife, Angie, and daughters Michelle and Taylor. Help me thank him for his work.

Of course, our greatest obligation in Wilmington is to our children.

Already we have taken steps that, I believe, will help our efforts in all city schools, and schools across Delaware. We opened the Office of Innovation and Improvement at the Department of Education, to focus state energy on these and other high-needs schools.

We created Opportunity Grants to serve disadvantaged students not just in Wilmington, but across the state.

We put basic needs closets in schools in all three counties, so students can have access to hygiene products, school supplies, and winter clothing, in a dignified way.

Christina School District's portion of the City schools – Bayard, Stubbs, Bancroft, Palmer, and Pulaski – need our help the most. So for the past six months, we have been trying to form a partnership with the district to lift up our city children.

The state has offered Christina support for smaller class sizes, more professional development for teachers, critical capital upgrades, an early learning center and parent supports. We are working with the Christina community to come up with ideas for using the existing school buildings in a way that is better for kids.

This may be the most difficult thing we do during this Administration, but it is clearly the most important. Next week, I'll be coming to you with a budget request to help us with these efforts, and I'll be asking for your support.

In addition to our efforts to help our city schools, we've been working to provide stable environments for these children by helping their parents find jobs.

The work we are doing to expand the port of Wilmington is a critical piece of our plan, both for the city, and to create blue collar jobs for Delawareans statewide. Every month, hundreds of people, many from the city, show up at the longshoremen's hall in Southbridge looking for work. But the port is at a real crossroads. It needs to grow and change in order to survive.

In the weeks ahead, we will present a plan for a new public-private partnership that holds the promise of significant new investments at the port. The plan will include a new port facility at Edgemoor, and expanded job opportunities in the years to come. These good-paying jobs stabilize families, and the neighborhoods where they live. Creating more port jobs is key to the economic success of our state.

We can't undo decades of distress in Wilmington in a single year. But working with the Mayor and city leaders, we're determined to turn the ship around. This year has been a good start. Let's work together to make Wilmington strong again.

Education

Of course, the best thing we can do to invest in our state's future is to invest in quality education for every Delaware child.

And we know that students are best prepared for success when they reach kindergarten ready to learn. We need to encourage Delaware's early learning centers to invest in their programs and to continue to grow. That's why, I will propose additional funding for the STARS program in next year's budget.

We also will propose expanding the number of math coaches in middle schools across the state. I saw firsthand the impact of these math coaches at McCullough Middle School in the Colonial School District. Math proficiency is critical in today's workforce. I am committed to ensuring more of our educators get this type of support.

Working with you last year, we created the Opportunity Grants program to provide new resources to students who need it most. We reached thousands of students across 13 schools last year. Next week, we will be proposing additional funding for Opportunity Grants that will more than triple the number of schools receiving this support. Schools could use this funding for things like after school programs, reading interventions, or other resources to help students and teachers be successful.

We want to target the resources toward schools like North Georgetown Elementary. There, I saw an amazing teacher, Maria Hazzard. She works hard every day to help a group of Spanish-speaking children move one step closer to becoming our state's doctors, lawyers and teachers of tomorrow. Maria is here with us today. Let's thank her and her colleagues for what they do every day.

Our budget will target resources where they're needed most: in the classroom. Teachers go to work every day to help Delaware's children succeed. Our budget will include a plan to hire close to 200 new teachers statewide to match enrollment growth in our public schools.

Teachers do our state's most important job – working on the front lines to prepare Delaware children for the future. That's why, working with Representative Bentz and Senator Townsend and DSEA, we will create a student loan forgiveness program for educators. This program will help us retain educators in our highest need schools and in the highest demand subject areas.

As we seek to help our lowest performing schools, we're studying models of excellence throughout the state from Frederick Douglass Elementary School in Seaford to Laurel Middle School to Harlan Elementary in North Wilmington. We're learning from their success, and will seek to replicate it.

Delaware's First Lady

My wife Tracey has been hard at work as our state's First Lady, focusing on the needs of our state's children.

She secured a generous grant from Casey Family Programs to support partnerships that will give Delaware's children a better chance to succeed. Paul DiLorenzo from Casey is here with us today. Thank you, Paul, for your support.

Tracey's goal is to use the Casey grant as a catalyst to recognize and inspire partnerships to promote early care for at-risk children, end childhood hunger, promote literacy, and recognize and respond to childhood trauma. The idea is that no one agency – government or otherwise – can do it alone. Thank you, Tracey, for working to make a real difference in the lives of the children of our state.

Tracey is also working with the Division of Libraries on a new statewide library card campaign – which we're officially launching today – and on initiatives to use libraries as a way to deliver social services to our communities. We've seen a great example of the potential for this in the opening of the incredible, multi-functional, library on Route 9 in New Castle. Thank you, Representative Johnson, and everyone else who made this possible.

Budget & Healthcare

We're standing here today facing a much more positive financial picture than this time last year. We closed a $400 million budget shortfall. But we did not go far enough, unfortunately, and as a result, our long-term budget problems continue to linger.

It's a simple math problem. Our long-term growth rate for state spending is two times the growth rate of our revenues. We have to find a long-term way to limit our spending growth. I've imposed this type of discipline on the budget I'll introduce next week.

The budget smoothing task force is considering several good ideas to bring more fiscal discipline to our spending patterns. For the long-term, we need structural spending reform, just as we need structural revenue changes. I want to continue working with the General Assembly – Democrats and Republicans – to do both.

And, this is important, we cannot build new ongoing spending on top of one-time revenues. It's just not responsible, and we can't allow it, no matter how compelling the cause.

Healthcare costs continue to be the biggest driver of state budget growth, accounting for thirty percent of our budget today. At our current pace, Delaware's total spending on healthcare services will more than double over the next decade. That puts a squeeze on both Delaware families and business owners. These rising costs also make it harder to invest in education, public safety, and our workforce.

Here's the bottom line. We're spending too much money on healthcare, and not getting the best results. We all need to come to the table – state government and hospitals most of all – and be part of the solution. The hospitals and other providers have been laying the groundwork for this effort for years. Now it's time to make the hard decisions, and change the way we deliver healthcare. Secretary Walker is working with many of you to come up with a plan to do just that. If there's any place we can do it, it's here in Delaware.

Through the work of the Government Efficiency and Accountability Review Board, or GEAR, we are also focused on making government run more cost effectively. Many ideas have come from our dedicated state employees themselves. Ideas like changing how we deliver technology to our schools. Modernizing how we record and process sentencing orders in our courts. And improving how state agencies utilize banking services and purchasing cards. In the coming months, we will begin implementing many of these recommendations.

A Strong and Stable Workforce

The state is Delaware's largest employer. And state employees – from DNREC park rangers to Kids Department social workers to state troopers – are the public's main point of contact with state government. Here with us today we have members of the National Guard, First Lieutenant Michael Kerr and Master Sergeant Lori Friess, who deployed here at home and overseas, missing time with their loved ones, for the sake of their state and country. Thank you both for your service.

We need to invest in state employees, and treat them like the professional, dedicated workers they are.

While we're on this topic, I'd like to acknowledge everyone in this building's favorite state employee – Bernard Brady – who announced his retirement earlier this week.

As an initial step toward investing in our workforce, last week, I announced my support for paid parental leave for all state employees. This is the right thing to do for our workers, and for their children.

As part of our focus on improving workplace conditions for state employees, I directed Secretary Johnson to analyze our state's current sexual harassment policy and training, and to recommend ways to improve it. In the coming weeks, we will announce a series of changes to ensure that no state employee is made to feel uncomfortable or threatened at work.

At the same time, we'll be working to improve diversity and inclusion in every state agency, particularly in hiring and promotion practices. Our first step was to hire the state's first Chief Diversity Officer.

State employees deserve to work in spaces that are clean and well-maintained. Unfortunately, many state office buildings have fallen into disrepair, are poorly lit, and are in need of a little TLC. I will be proposing money in my budget to invest in our facilities, to increase productivity and give us a happier workforce.

And finally, and I'll talk about this in more detail next week, I believe we need to pay our state workers more fairly.

Department of Correction

Nowhere have we made more investments in our state employees than in the Department of Correction. Fifteen days into my administration, the hostage incident at James T. Vaughn took the life of Lieutenant Steven Floyd and stole a sense of security from the thousands of correctional officers who work throughout our system.

We have been working every day since February 2nd to make our prisons safer, and to address the conditions that contributed to that terrible tragedy.

Based on the Independent Review Team's recommendations, we reached an agreement to increase salaries for Delaware's correctional officers.

We have implemented significant investments in equipment, recruitment, technology and training at the Department of Correction.

And we're installing cameras at James T. Vaughn and other correctional facilities as we speak.

I made a commitment that the Independent Review report will not collect dust on a shelf. It has not. And it will not.

Changes will continue in 2018, led by Commissioner Phelps and with the guidance of a special assistant we appointed to make sure this work gets done quickly and well.

Conclusion

As I've traveled the state over the past year, I've met countless Delawareans who are working hard, and working together, to make life better for their neighbors.

The National Guardsmen, DEMA and DelDOT employees who deployed at a moment's notice to Puerto Rico and Texas and Florida, and who work around the clock in snow storms to keep us safe.

Maria Hazzard, the teacher at North Georgetown, who holds our state's future in her hands.

The grandmother I met knocking on doors on Oak Street in Wilmington, who makes sure her grandkids do their homework each night, and get to Pulaski Elementary School safely each morning.

Probation Officer Walker, who puts his life on the line to keep our neighbors safe.

These men and women are my north star. They make hard decisions every day in order to make life easier for somebody else. They expect us to do the same. They've put their trust in us, and we cannot let them down.

This past year, we were faced with our fair share of challenges. But they did not shake our resolve to get things done. And they will not going forward.

We won't always agree on the solutions, but we can all agree on the goals.

To make our economy stronger. Our healthcare system more effective. Our communities safer. Our state workforce strong and stable. Our children more ready to compete for the future.

Working hard and working together, we can and we will get this done.

Thank you, God bless you, God bless the state of Delaware, and God bless our great United States of America.