• • ABC Meets with Governor Carney
• • Congress Reaches COVID Deal
• • New Labor Secretary meets with ABC
• • DEFAC December Update
• • Delaware General Assembly session starts in January
• • Delaware Senate Committees Set

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Congressional leaders along with the White House finally reached a deal on an additional $900 billion COVID relief package before the end of the year. The more than 5000 page bill also includes annual funding for government agencies and several end of year provisions that members of Congress were able to attach in what is the last major legislation of the 116^th Congress. The entire package is estimated at more than $2 trillion and is set to pass tonight.  

Among some of the most critical wins that ABC advocated for in the bill are the full deductibility of PPP loans, expansion of PPP loans to 501(c)6 organizations, and extension and expansion of the employee retention tax credit. Notably missing, however, is the liability protections for businesses operating through the pandemic, which ABC continues to advocate for. Below is an overview of the critical provisions of the deal.

Direct relief for individuals: $286 billion

• $300/week in Federal Pandemic Unemployment Compensation (FPUC) through March 14, 2021 and extension of the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment
• Direct checks of $600 for individuals making up to $75,000, checks of $1,200 for couples making up to $150,000, and $600 for each child dependent

Small business support: $325 billion

• Extends and expands the Paycheck Protection Program (PPP) for small businesses by providing an additional $284 billion for forgivable loans:
  • Provides "second draw" for small businesses and non-profits with 300 or fewer employees that can demonstrate a loss of 25% of gross receipts in any quarter during 2020 when compared to the same quarter in 2019 totaling 2.5 times the average monthly payroll up to $2 million
  • Allows for small businesses in the restaurant and hospitality industries to receive larger awards of 3.5 times average total monthly payroll, rather than 2.5 times
  • Expands PPP eligibility for more critical access hospitals, local newspapers and TV and radio broadcasters, housing cooperatives, and 501(c)(6) nonprofits, including tourism promotion organizations and local chambers of commerce
  • PPP loans will not be included in taxable income, and deductions are allowed for expenses paid with proceeds of a forgiven PPP loan with no restrictions
  • Rescinds $429 billion in unused funds provided by the CARES Act for the Federal Reserve's emergency lending facilities and terminates these facilities

Healthcare: $63 billion

• Vaccine funding, including $20 billion to BARDA for procurement of vaccines and therapeutics, $9 billion to the CDC and states for vaccine distribution and $3 billion for the strategic national stockpile, including $300 million specifically directed to high risk and underserved areas for distribution
• $22 billion, all sent directly to states, for testing, tracing and COVID mitigation programs.

Transportation: $45 billion

• $45 billion in transportation funding, including $15 billion for airline payroll support, $1 billion for airline contractor payrolls, $14 billion for transit, $10 billion for state highways, $2 billion for airports and airport concessionaires, $2 billion for the private motorcoach, school bus, and ferry industries, and $1 billion for Amtrak.

Tax: $30 billion

• Extends and expands the refundable Employee Retention Tax Credit (ERTC) through July 1, 2021 including:
  • increasing the credit rate, from 50% to 70%;
  • Raises the limit on per-employee creditable wages from $10,000 for the year to $10,000 for each quarter;
  • Expands eligibility for the credit by reducing the required year-over-year decline in gross receipts from 50% to 20%; and
  • Modifies the threshold for treatment as a 'large employer' by increasing the 100-employee delineation for determining the relevant qualified wage base to employers with 500 or fewer employees.
• Extension of paid sick and family leave, the Families First Coronavirus Response Act provided a refundable payroll tax credit for the mandated paid sick and family leave. This legislation extends the tax credit through March 2021 for employers that continue to offer paid sick and family leave to their employees.
• one-year extension of the $300 above-the-line-deduction for charitable giving and increasing the amount for 2021 that married couples filing jointly can deduct from $300 to $600.

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The Delaware Financial Advisory Council (DEFAC) met today (12/21/20) to discuss the fiscal forecasts for FY21 and FY22. This was the second meeting during the FY21 fiscal year and the last before the Governor will put together his FY22 Recommended Budget in January. Outlook still remains uncertain, but slightly better than previously expected.  
 
DEFAC increased the revenue forecast by $121.6 million for FY21 and $79.9 million for FY22 since the last meeting in October. Coupled with expenditure adjustments, this is an increase of $202.4 for FY22 since the October DEFAC meeting.  As a result of these changes, the FY22 appropriation limit is an increase of $608.2 million compared to the FY21 (current) budget.   

• FY21 anticipated revenues are projected to be $4,899.3 million and expenditures to be $4,652.9 million.

• The Appropriation Limit for FY22 is projected to be $5,155.2 million (a 13.4% increase over FY21).

When compared to FY21 projections made in Dec 2019 (pre-covid), projected revenues are down about $60.7 million. It's estimated that COVID-19 will impact the State's revenues by a decrease of about  $332.5 million from FY20-FY22 overall.
 
FY2022 looks strong for Delaware Employment, personal income and wage & salary. 
 
DEFAC voted on an advisory "Benchmark Index" (per EO21). The total budget stabilization fund amount is set at $463.5 million for FY21. 
 
For further detail, click here.

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