Delaware Public Media

Lawmakers take first look at projected budget woes next week

Jan 26, 2017

Legislators tasked with paring down Delaware’s gloomy budget forecast start meeting next week to see what they might prune from next year’s spending plan.

Ask a state lawmaker what he or she makes of the projected $350 million budget problem and you’ll get different answers – most of them with a resigned sigh.

But Sen. Harris McDowell (D-Wilmington North), who co-chairs the budget writing Joint Finance Committee, characterizes it in a different way.

“Standard operating procedure,” said McDowell. “We do not have a budget crisis. What we do have is an accumulated problem that has been growing for a long time and will continue to grow.”

He notes it’s due to Delaware having among the lowest tax rates in the country.

It’s also due to an unresponsive tax structure that’s heavily reliant on silver bullet options that historically practically printed money and now have tapered off.

In order to address the projected hole for the upcoming fiscal year, former Gov. Jack Markell (D) suggested reigning in certain senior tax credits and rolling back generous state employee health benefits.

Markell floated such proposals in years past, but state lawmakers resoundingly rejected such talk.

Sen. Dave Lawson (R-Marydel), who also serves on JFC, says any changes to senior property tax credits are off the table.

“I think the senior property tax [subsidy] is off the table already. I don’t think that’s going to go. That’s going to stay in place – at least for those who are here. It may change for those who are coming in, but I don’t think the seniors are going to be damned by our bad spending,” Lawson said.

For him, cutting that spending will be a priority over the next several months, though it’s not clear where exactly the money will come from.

Shifting employee health benefits to a more cost-conscious HSA would also save money in the long run, but Lawson notes it’s a tough balance.

“Will healthcare be an issue? Oh yeah, it’s a big issue. Are our employees paid what they’re worth? Hell no. I don’t want to hand it to them on one hand and take it back in the other. I think that’s totally unfair.”

Rep. Mike Ramone (R-Middle Run Valley) previously served on the Bond Bill committee, but traded places with his caucus-mate Rep. Joe Miro (R-Pike Creek Valley).

He believes reassessing property values in all three counties – something that hasn’t been done in more than 30 years in some cases – could drum up some extra cash to help cover these new costs while also trimming elsewhere.

Ramone notes Governor John Carney (D) also seems willing to listen and adopt Republican Party budget positions in some cases despite his party affiliation.

“We have a governor who just came from a Congress where he sat in the minority for six years. He clearly is compassionate about the world we’re in as the House Republicans in the minority. I think he’ll listen to us,” he said.

Carney, who will be proposing his own budget in the coming months, just announced a listening tour where he’ll take questions and comments from constituents across the state. You can also submit your comments online.

“I think it’s got to be a balanced approach. I think it’s fair to say that an all cuts budget is going to look pretty draconian.”

That said, Carney says tax or fee increases also won’t be used excessively.

Otherwise, he says, Delaware’s small size affords people the luxury of moving a short distance to avoid them.

“We don’t want to incentivize people to move to an area where the tax and regulatory structure is more attractive,” Carney said.

There are other budgetary pressures, like Medicaid growth and more children entering First State classrooms.

Those new kids, or older children with special needs entering into higher grades are adding on $28.3 million in automatic spending increases due to how Delaware funds schools.

Carney says he’ll look at changing that formula, but that it’s not high on his priority list.

“There are some things I think we can do in education that don’t touch the classroom My focus is to keep as many resources in the classroom as possible and to have that conversation with the public, ‘What are you willing to pay for?’”

In the meantime, bills in the General Assembly that need funding are getting set aside at least until legislators finish preliminary budget hearings that begin next week.