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With the
recent sale of $120 million of general obligation bonds to
finance some of the capital budget came the opportunity to get a
snapshot of the Delaware economy. The offering prospectus, which
federal securities laws require to contain only objective
information, provided a detailed glimpse behind the highest
level bond ratings awarded by the three major Wall Street
securities rating firms.
The
bottom line, according to Moody's Investment Services:
"Years of
well-managed financial growth have enabled the state to weather
the current economic slowdown in a manner befitting Delaware's
Aaa bond rating. While the state's debt burden is likely to
remain proportionately high among states, Delaware has performed
better than many states in the nation in the context of the
national economic slowdown. The state's Aaa rating speaks to
Delaware's financial flexibility, which will continued to give
the state latitude in managing this significant debt burden."
Within
that perspective, Delaforum has extracted the following details
about the components of the economy. Except where noted, the
data is for 2002 and the comparisons are with 2001. Quotations
are from the prospectus.
The Private
Sector
Gross State Product -- The U.S.
Department of Commerce estimated that the total value of goods
and services produced or rendered in Delaware in 1991, the
latest year for which data is available, was $40.5 billion.
Population (U.S. Census Bureau
estimates, April, 2003 vs. April, 2002 -- State: 807,000, up by
1.4%; New Castle County: 512,370, up by 1%; Kent County:
131,069, up by 1.7%; Sussex County: 163,946, up by 2%.
Wilmington, 72,530; Dover, 32,581; Newark, 29,798.
"Net in-migration continues to
account for a significant share of the population growth"
Population growth -- Estimated at 1.2% in 2004 and 1.3% in 2005.
The national estimate for both years is 0.9%.
Personal income -- $32,779 annually
per capita, up by 1.9%. Figures for the mid-Atlantic states were
$35,260 and 2.1% and for the nation, $30,941 and 1.7%.
Personal
income growth -- Expected to increase by 4.1% in 2004 and 5% in
2005. That is slower growth than the 4.3% and 5.4% expected
nationally.
Employment -- Non-agricultural
employment, which accounts for 98% of jobs in the state, stood
at 413,000 in 2002, down from 419,400 in 2001. The number of
jobs declined by 1.5% in 2002 after increasing by 0.1% in 2001.
Mid-Atlantic states had growth of 0.2% and 0.9% in the
respective years while employment nationally showed zero growth
in 2002 and a 1.1% decline in 2001.
Delaware saw growth in the number of
jobs in wholesale and retail trade, leisure and hospitality, and
health care and education in 2002. In health care there was a
shortage of applicants for available jobs, particularly in
nursing.
Employment growth -- Estimated at 0.6% in 2004 and 2.1% in 2005.
The national estimates are the same for both years.
Employment diversity -- Banking and
service business now account for 85.3% of all employment. Jobs
in manufacturing, which includes office jobs in companies
classified as manufacturers, accounted for 9% of Delaware
employment in 2002, down from 13% in 1992. The largest job
category now is professional and business services, 17%; second
ranking in government services, including public school
teachers, at 14%. "Diversification of its employment base is
expected to diminish the state's vulnerability to cyclical
downturns."
Private employers -- Employment of
the largest numbers of people in the state are: M.B.N.A. Bank,
11,300; Du Pont Co., 11,000; Christiana Care, 7,200; Astra
Zeneca, 3,900; Mountaire Farms, 3,300; and J.P. Morgan-Chase,
3,000. Thirty-one companies employ 1,000 or more, but missing
from that list are at least two former Delaware majors, Hercules
and Conectiv, formerly Delmarva Power & Light. The Daimer
Chrysler automobile assembly plant is listed as employing 2,300
and the General Motors plant 2,100.
Unemployment -- The average monthly
unemployment rate in 2002 was 4.2%. That compares with 5.2% in
mid-Atlantic states and 5.8% for the nation.
Housing production -- 7,459 units, up
by 13% over 2001. The largest number of units, 2,624, were
built in Sussex County.
Construction contracts -- Valued at
$1,431 million, up by 7% over 2001.
Agriculture -- According to the U.S.
Department of Agriculture, 45% of the land in Delaware is used
for farming. It counts 2,400 farms averaging 233 acres. The
number of farms was down by about 100 from 2001.
Farm receipts -- Total farm receipts
were $727.7 million, down 14.3% from 2001 as a result of lower
values for broiler chickens and smaller corn and soybean corps
and less milk production because of the drought. Total broiler
production was up 3% but the average per-pound selling price was
off by 17%.
Commerce -- The Port of Wilmington
handled 3.3 million tons of cargo in 2002, unchanged from 2001.
Military -- Dover Air Force Base is
the busiest military cargo port. It employs 4,250 military
personnel, 1,834 civilians and 1,748 contract employees.
Replacement of C-5-A aircraft by 12 C-17s, expected to be
completed by 2008, is expected to result in the loss of 123 jobs
on the base.
The Public Sector
Revenue
enhancement -- The tax revenue package, enacted by the General
Assembly at the behest of Governor Ruth Ann Minner will add an
estimated $156 million to anticipated fiscal 2004 revenue and
$165 million in 2005. Increasing the cigarette tax from 24¢
to 55¢ a pack is expected to net an additional $28.9 million.
Higher corporate franchise taxes and fees is expected to bring
in $99.7 million. The state's return from slot machine gambling
will grow by $15.9 million. Other enhancements are pegged at
$11.5 million.
State
revenue -- As a result of the increases, the Department of
Finance has increased the Delaware Economic & Financial Advisory
Council's June revenue projections to $2,514 million this fiscal
year and $2,627.9 million in 2005.
State
revenue growth -- The revised rates are 4.1% in 2004 and 5.2% in
2005.
Bonded
debt -- With the recent sale, tax-supported general obligation
debt now totals $810.5 million. In addition, there is
special-fund debt, mostly transportation related, of $243.8
million.
Incorporations -- There were 307,907 corporations, including
196,000 limited-liability corporations chartered in Delaware at
the end of 2002, including more than half of all companies whose
stock is publicly traded and 58% of those in the Fortune
magazine list of 500 largest U.S. corporations. This activity is
second only to the personal income tax as a source of state
revenue as well as a boon to law and other professional services
businesses.
"In order
to sustain its competitive edge over other states and countries,
Delaware continues to adopt strategies that respond to changing
business conditions." Recent changes in state business law
include provision for "more cost-effective, confidential and
consensual" mediation of disputes and giving Court of Chancery
jurisdiction over technology disputes.
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