Meyer’s planned reforms put big business on alert

Why Should Delaware Care?
Governor-elect Matt Meyer’s plan to shift the focus from grants for large corporations to small business development marks a huge shift in Delaware’s long-standing economic strategy. The potential change sparks important questions about how the state will balance attracting big businesses and supporting local enterprises while putting taxpayer dollars in the right places.

In a room filled with hundreds of Delaware’s top CEOs and corporate leaders Monday, Governor-elect Matt Meyer laid bare his plans to give fewer taxpayer-backed grants to for-profit companies and instead focus on creating economic growth through small businesses and workforce development.

“In my administration, you’re going to see the use of this cash assistance de-emphasized. Let’s focus our resources on things that matter the most to the companies and employees of today and tomorrow,” Meyer said as he spoke at the Delaware State Chamber of Commerce’s annual dinner in Wilmington.

The pronouncement built upon comments that Meyer made at Spotlight Delaware’s Legislative Summit the week before, where he also said that he intended to push for higher taxes on Delaware’s richest residents and rethink the way its primary economic development engine works.

For the 1,100 business leaders in attendance who are accustomed to governors’ comments typically being a pep talk of sorts, the frank comments from the incoming governor were a bit of a shock to the status quo. Each of the last four governors have given out significant state grants in attempts to win projects from major employers.

“The practice of providing grants to businesses which are seeking to locate in Delaware and bring jobs to the state is many decades long and has been run by the Council on Development Finance in a very transparent and public manner. It’s a modest budget line in the state budget,” said Bob Perkins, executive director of the Delaware Business Roundtable, an advocacy organization for the state’s top CEOs, after the dinner.

Meyer plans change for grants, taxes  

Taxpayer-funded grants have been used in Delaware and other states to incentivize companies to build new facilities and hire more workers for decades. In an increasingly competitive marketplace, where states try to gain an advantage over neighbors for major projects, the use of direct cash infusions have become more commonplace.

In Delaware, these grants usually come from the issuance of state bonds, which are then repaid by state taxpayers.

In Fiscal Year 2025, the total funds used to support business development, which included the Strategic Fund, the Laboratory Space Fund and the Site Readiness Fund, amounted to $24.5 million. Another $10 million was used to support infrastructure upgrades related to large projects while $10 million supported sports tourism projects.

In comparison, the Division of Small Business was budgeted to $1.7 million to support small business development in the state, primarily through the state’s EDGE grant program. In the last five years, less than $8 million was invested in small businesses via the EDGE grants.

Meyer’s predecessor, John Carney, worked closely with the business community and made such taxpayer grants a key part of his economic development strategy. He reformed earlier practices by making the funds reimbursables, and requiring recipients to build projects and hire employees before receiving funds. 

In an interview with Spotlight Delaware earlier this month, he defended his administration’s strategy, saying, “We compete every single day … and I don’t want to unilaterally make a decision that we’re going to pull back and therefore not compete.”

“I think the critics of that need to get a dose of the real world about how these corporate decisions are made,” he added.

Meyer can be counted among those skeptics, as he’s said the cash assistance has its limitations.

“For years, Delaware, the majority of states, have conducted economic development through the use of taxpayer funds to entice companies to set up shop here. This is a myopic view.” Meyer told chamber members. “Companies that only consider money are not concerned about the most important thing: quality of life.”

Meyer said he wants to work with the chamber, the most influential business advocacy organization in Delaware, to develop new policies and properly invest in the state by making a place where housing is affordable and public education is strong – and therefore naturally drawing in a workforce that would attract employers.

Earlier this month, the Chamber of Commerce released its policy priorities for the year, which advocated for things like tax and spending policies to promote business growth but also highlighted initiatives for workforce development. 

Those goals may be challenged by Meyer’s proposals to restructure the state’s income tax code and create a higher tax bracket for its richest residents.

“I don’t think it’s right that Delaware families making $70,000 a year pay the same tax rate as Delaware families making $70 million. And that’s not just an election slogan. That’s something we’re going to stand by,” he said during the Legislative Summit.

Impact on DPP remains uncertain

Perkins, who previously worked for corporate titans like AstraZeneca and DuPont and served as chief of staff to the late Gov. Pete du Pont, said Meyer’s comments came as a surprise and were never discussed during the multiple times the governor-elect met with the Roundtable on the campaign trail.

Although he supports Meyer’s desire to help small businesses, Perkins said that taking away grants from larger companies would affect the wage taxes that come in from the jobs created, which ultimately creates tax revenue that provides for residents. 

“The question would be, ‘What takes its place? How can you continue to attract businesses?’ You’re taking away one tool in the toolbox,” Perkins said.

But John Kowalko, a former state representative, retired union machinist and longtime critic of taxpayer-funded grants to large corporations, said he’s in full support of Meyer’s plan.

Kowalko made several attempts during his tenure in the statehouse from 2006 to 2022 to block grants to large corporations like Amazon, raise taxes for the wealthy and implement transparency regulations on the state’s economic growth initiatives.

“I had a couple bills over the years, maybe four or five over different sessions. I’d gladly share those templates with [the incoming governor],” he said. 

Kowalko also suggested that Meyer consider increasing transparency within the Delaware Prosperity Partnership (DPP) by making it subject to Freedom of Information Act (FOIA) requests, noting its significant influence over the allocation of Strategic Fund grants.

The DPP is a nonprofit organization proposed by the Roundtable that the Carney administration established in 2017, taking over Delaware’s economic development efforts to attract, grow and retain businesses from the former Delaware Economic Development Office, which was a state agency.

Co-chaired and co-funded by the state government and private businesses, the DPP employs a team to attract economic development projects to Delaware. In working with prospects, the DPP also helps prepare applicants for the state’s grant funds that are backed by state taxpayers.

In its nearly seven years of existence, the board that considers those applications, the Council on Development Finance, has never denied an applicant brought by DPP for Strategic Funds, the largest of the pots of money.

Despite its immense influence over state economic policy, the DPP, as a nonprofit, falls outside the scope of state FOIA requirements.

After hearing Meyer’s vision for prioritizing small businesses, Rod Ward, CEO of CSC and co-chair of the DPP, shifted the focus in his keynote address, emphasizing Delaware’s position as the top choice for business incorporation and its rich legacy in corporate law and business formation.

The address, which began and ended by invoking the mistakes of New Jersey that led to Delaware’s current status of incorporation capital of America, had the unmistakable tones of a warning to the incoming Meyer administration. 

The governor-elect has already chosen to replace the Secretary of State, who oversees the vital Division of Corporations. Meyer has nominated his former land use and economic development director Charuni Patibanda-Sanchez to take the post, replacing Jeff Bullock, who has served as State Secretary for 16 years – the longest such tenure in two centuries.

Ward noted that the corporate franchise contribution to the state’s annual budget increased from $1.6 billion to $2 billion in recent years. It represents about a third of Delaware’s state revenues and proponents have long argued that it allows the state to avoid imposing a sales tax. 

“While this is a positive trend, it means that we are now more than ever dependent on this critical revenue source,” Ward said during his speech. 

Ward stressed the need to uphold Delaware’s corporate leadership and praised the DPP for generating over $2 billion in investments and 10,000 jobs in the state.

DPP did not respond to requests from Spotlight Delaware to comment on how Meyer’s plan may affect their efforts. But Ward said he hopes to continue the progress of DPP under Meyer, who will become a co-chair of the organization by default.

Meyer is scheduled to be sworn in as Delaware’s governor on Tuesday morning in Dover. 

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