House Democrats tried unsuccessfully late Thursday night to ram through a bill restoring most of the cuts made to nonprofits – with a hike to the personal income tax imbedded in the proposal.
“We will not stand for this sham and we are leaving this chamber and we will see you tomorrow morning,” said House Minority Leader Danny Short (R-Seaford).
Short and 15 other Republicans walked out of the House chamber about half an hour before midnight as Democrats tried to blame them for tens of millions of dollars of potential cuts to senior centers, fire companies and nonprofits.
Disclosure: Delaware First Media Corporation, the parent company of Delaware Public Media, received $90,000 from the grants-in-aid budget during the current fiscal year.
Just minutes before, Democrats held a 10-minute committee hearing – without public or legislative comment – on their proposal that would stick upper-income earners with higher taxes to restore part of the cuts.
State taxpayers would only be able to collect 50 percent of their itemized deductions. In all, the plan would bring in in $55.7 million this year and $172.8 million when fully implemented in fiscal year 2019.
While finalizing its proposed operating budget, the Joint Finance Committee left no extra money for these grants, saying they need more tax revenue.
Nonprofit leaders flooded Legislative Hall Thursday, rallying outside on the east steps and loudly rejecting such cuts to anyone within earshot.
“So we’re taking action tonight. We cannot let hundreds of thousands of Delawareans who rely on grant-and-aid services down,” said JFC co-chair Rep. Melanie George Smith (D-Bear).
The grants-in-aid bill would still take a 20 percent across the board cut under the plan, despite the new taxes more than paying for the roughly $46 million bill as it stands now.
With Republicans leaving their seats spinning during the roll call, 25 Democrats didn’t have the 31 votes needed to pass the bill.
House Speaker Pete Schwartzkopf (D-Rehoboth Beach) and other legislative leaders attempted to hammer out a deal during most of this session, but talks collapsed in recent weeks.
“We tried the “Delaware Way” for five months and we were this close to doing something positive in this building when [Republicans] chose to turn around and walk away,” Schwartzkopf said.
Earlier in the day, the GOP delivered their final offer: raising personal income tax rates across the board and leaving itemized deductions in place, but having it expire after a year.
In exchange, Republicans want changes to prevailing wage – though not a complete moratorium for public school districts and local governments.
The changes to prevailing wage would make it so certain pay scales couldn’t be locked in permanently – which is possible under current law.
The offer would also adopt measures raising alcohol and tobacco taxes, while making further cuts to state employee health benefits outlined in Gov. John Carney’s (D) proposed budget, which the Joint Finance Committee avoided.
Carney and other members of his party quickly rejected it.
The governor met with GOP leaders Thursday morning, telling them that a sunset on tax increases were “unacceptable,” and that such a move compromises any kind of structural fix to Delaware’s budget.
“When I was in Washington, if I had a nickel for every time a Republican said to me that they want consistency in the long-term around tax policy and regulatory policy, I’d be a millionaire and that’s exactly what my budget provides,” he said.
Carney cancelled a meeting with legislative leaders later in the day, saying in a statement, "We've met Republicans more than halfway. We have agreed to spending reforms and cost containment. They are hung up on a single issue - prevailing wage - that is not related to our operating budget. We're serious about moving forward when they are.
When asked why he thinks Democrats tried to cram such their late night proposal through, Short said, “I think they’ve been embarrassed by the fact that they haven’t been able to run this government effectively.”
He says he will introduce his own fully funded grants-in-aid bill Friday, finding the necessary money through further cuts to a yet-to-be introduced operating budget.
Lawmakers have yet to pass an operating budget and could have a long night ahead of them if they fail to reach a deal.