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In The News

Delaware deserves a sustainable budget that curbs irresponsible spending

The state budgeting process begins in February, and groups like A Better Delawarefounded by Chris Kenny are concerned that it will once again force tax increases onto Delaware residents without improving their quality of life.

The budget increased by more than 130 million last year, yet Delaware still ranks 45th in the nation for fiscal health, based on the inability to pay its debts, according to a report from the nonprofit Truth in Accounting. State revenues only cover 96% of expenses, and that percentage continues to decline.

A budget that doesn’t cover normal expenditures year-to-year is not sustainable – that’s just common sense – and it’s time to take a hard look at a budgeting process that continues to fail Delawareans.

How the budget is made

The current budgeting process is not transparent, and doesn’t leave much room for voter input. It begins in January, when the Governor submits a recommended budget to the Joint Finance Committee.

The Governor holds a significant amount of power in the process, which results in a near-complete state budget before hearings even begin in February. The Joint Finance Committee then operates within strict limitations of that budget, with pre-allocated funds for schools, government agencies and more, and must find ways to fund any additional projects.

The easy solution for lawmakers is to take more hard-earned money from Delawareans – who are already owed billions in unpaid, unfunded pension debts – by increasing taxes.

Why it’s a problem

With a budgeting process that gives the Governor so much sway, residents need to be able to count on their leader to make decisions in their best interest. Delaware Governor John Carney approved large tax increases in his first year, including higher corporate franchise taxes, realty transfer taxes, alcohol taxes and cigarette taxes—totaling around $200 million annually.

It’s no surprise that Carney received a D-rating from the Cato Institute, a libertarian think tank based in Washington, D.C., on a recent report card of governors’ fiscal spending. When tax increases resulted in a surplus, Governor Carney allocated the money to new spending projects, instead of paying down the state’s unpaid debt, or returning the money to over-taxed residents.

Delaware’s money problems aren’t going anywhere, anytime soon. The state’s long-term debt liabilities are higher than the national average, and the unfunded pensions that have been promised to residents total $13.75 billion; more than triple the current total state operating budget. With rising unemployment rates, stagnant economic growth, and, according to policy nonprofit Tax Foundation, a poor business climate, now is not the time for our Governor to continue to spend, but instead to focus on genuinely improving the economic outlook in the state.

What needs to change

A Better Delaware, a pro-growth issue advocacy group, believes it’s time for Delaware lawmakers to actually address the ever-growing budget, instead of choosing to raise taxes.

By instituting a policy of data-based spending, lawmakers can use existing funds more efficiently, investing in programs that improve life for the state’s residents, provide more economic opportunity, and begin to pay down the state’s crushing debt.

It’s time for a real solution. Delawareans deserve responsible budgeting of their money, a budget that can weather an economic storm, and better choices from their Governor to ensure a brighter future for the state.

To learn more, sign up for the A Better Delaware email newsletter at abetterdelaware.org.

Wesley College to receive $3 million in state funding

From Delaware State News

DOVER — A state panel this week approved a request for $3 million from Wesley College, with conditions.

The funding is expected to help the college continue operations until it can come to an accord on a merger with another higher education institution, which could be announced in the coming weeks.

In November, the private school submitted a request for $3.2 million from the state’s Higher Education Economic Development Investment Fund. The group, which consists of the director of the Office of Management and Budget, the secretary of state, the co-chairs of the General Assembly’s Joint Legislative Committee on Capital Improvement and the controller general, previously awarded $2 million to the college in 2019.

Wesley also was given permission in the spring to move $1.375 million earmarked for it the prior year to renovate the former Dover library.

College officials were informed in the summer they would not receive any more funding without first submitting a long-term strategic plan to the state, which they have not done as yet.

Read more:

https://delawarestatenews.net/schools/wesley-college-to-receive-3-million-in-state-funding/

Prosperity Partnership’s project pipeline got a lot busier in 2019

From Delaware Business Times

One of the Delaware Prosperity Partnership’s core functions is to assist companies looking to relocate to Delaware or expand within Delaware, providing a range of support services from identifying potential sites, to providing detailed labor and business cost data, to connecting with key state agencies and local partners, to explaining and coordinating incentive options, and more.

DPP calls these engagements with prospective companies “projects,” and collects and analyzes data to better understand and communicate the types of projects that DPP works on, job creation potential, and more. These projects are all at different stages, from initial conversations to pending final decisions by the company. Projects that ultimately choose to locate or expand in Delaware are referred to as “located projects,” and are moved off this active pipeline, as are projects where DPP has lost contact with the company or the company chose a location outside of Delaware, all of which are referred to as “closed projects.”

DPP’s project pipeline grew considerably in 2019. In January 2019, DPP was working 49 active projects. These projects represented the potential for at least 3,302 new jobs, 922 retained jobs, and $186 million in capital investment. By December 2019, DPP was working 63 active projects, with the potential for at least 5,069 new jobs, 515 retained jobs, and $747 million in capital investment.

https://delawarebusinesstimes.com/news/delaware-prosperity-partnership-busy-2019/

Intern Delaware hopes to stem brain drain in state

From Delaware Business Now

Formed in September 2019 by local business leaders, the organization is focused on connecting interns working in Delaware with the local culture, economy, business leaders, and opportunities.

In the current environment, more than 70 percent of graduates from local colleges and universities are moving outside of Delaware to start their careers, creating a talent drain in the state, the group noted.

Intern Delaware will support companies throughout the state in attracting and retaining intellectual capital by providing their interns with a series of experiential marketing events that highlight Delaware and run parallel with their corporate internship programs.

“In our initial cohort, we are bringing over 350 like-minded individuals together from 21 corporate partners to experience Delaware,” commented Scott Malfitano, co-founder and board chair of Intern Delaware. “These interns will be provided access to signature events, discounts to local merchants, and opportunities to take part in a dynamic summer program designed to open their eyes to all that Delaware has to offer.”

Intern Delaware has initially collaborated with 21 local companies, along with local colleges and universities. Partner companies include Adesis, Agilent, Big Fish Restaurant Group, Buccini-Pollin Group, Capital One, Chemours, Christiana Care, CompassRed, CSC, DowDuPont, EDiS, Epic Research, Goodwill of Delaware and Delaware County, Highmark, Kelly Benefits, M&T Bank, Marlette Funding, The Mill, White Dog Labs, Wohlsen Construction Company, and WSFS Bank.

https://delawarebusinessnow.com/2020/01/intern-delaware-hopes-to-stem-brain-drain-in-state/

Delaware economy projected to shrink within 6 months

From the Philadelphia Fed

Commentary from A Better Delaware

In addition to higher unemployment and poor economic rankings, Delaware’s economy is projected to shrink within the next 6 months.

Delaware is one of only 9 states whose economy is projected to contract in that period.

“The leading index for Delaware was -0.7 in November. The state’s coincident index decreased, and building permits decreased in November. Additionally, the index of delivery times from the Institute for Supply Management’s manufacturingsurvey increased in November, while initial unemployment claims decreased. Overall, Delaware’s leading index forNovember suggests contraction in the state’s economy in the second quarter of 2020.”

Read the full report:

https://www.philadelphiafed.org/-/media/research-and-data/regional-economy/indexes/leading/2019/leadingindexes1119.pdf?la=en&fbclid=IwAR3dusBkbBP8P3m_DCMda_zhm-pjw_i6PC3T8VyVb6Xqq8deXmDb4YwPC1w

Carney proposes largest operating and capital budgets in state history

From Delaware State News

DOVER — Gov. John Carney’s budget proposal includes what would be both the largest operating and largest capital sums in state history. It contains a 2 percent pay raise for state employees and directs much of the state’s expected excess revenue to one-time projects like construction, building maintenance and water treatment.

The governor’s recommended operating budget totals $4.63 billion in recurring expenses and $9.9 million in a separate one-time spending bill, while the capital bond bill comes to $893 million. The general spending plan for the fiscal year started July 1 is $4.45 billion, along with $62 million in a one-time supplement.

The current bond bill, the largest in state history, is $863 million.

Of the $178 million operating increase, about $36.5 million would go to school enrollment growth, while $29.3 million would cover a raise for most of the state’s tens of thousands of employees. Collectively bargained workers like police and correctional officers would not be covered.

Teachers received 2 percent raises in each of the past two years, with most other state employees pocketing an extra $1,000 each year. The proposed 2 percent increase across the board means employees who earn less than $50,000 will see a smaller bump, while those at the upper end of the pay scale will benefit from an amount several times larger than the one handed out last year.

Read more:

https://delawarestatenews.net/government/carney-proposes-largest-operating-and-capital-budgets-in-state-history/

New report shows DE unemployment up .1% for 6th month in a row

Report from the Bureau of Labor Statistics

A Better Delaware Commentary

The Bureau of Labor Statistics released the December 2019 unemployment numbers on Friday, showing Delaware unemployment still on the rise, with a 3.9% unemployment rate.

The rate has climbed by .1% each month since July, and is up from 3.6% this time last year.

The First State ranks dead last in economic output, faces a shrinking economy over the next six months according to the Fed, and ranks among the worst states in the nation for fiscal health.

Small businesses employ over 90% of workers in the state. Strangling these employers with new taxes and regulations will keep employment numbers on a downward trend and hurt our state.

Read the release:

https://www.bls.gov/news.release/pdf/laus.pdf?fbclid=IwAR0luVvEqHQCV-_qkAEp97IiFFqZRFEj9cAEdmrkI4obZckvt0NuE9P4XyA

Delaware lawmakers are setting a new deadline for the legislative year

From The News Journal

Delaware’s top two lawmakers are setting a deadline for when lawmakers can consider bills this year.

The goal is to lower the number of bills that are hastily passed through both chambers in the final days of session and “ensure as smooth an end of legislative session as possible,” according to a Wednesday news release from House Speaker Pete Schwartzkopf, D-Rehoboth Beach, and Senate President Pro Tempore David McBride, D-Hawk’s Nest.

Read more:

https://www.delawareonline.com/story/news/politics/2020/01/22/delaware-lawmakers-set-new-2020-deadline-avoid-end-year-fiasco/4543318002/?fbclid=IwAR3SRHsYOMIFpToYZAdKYJLep-cmVjDvRaCaVTLXt58t2aR3O8P0-NC8tGQ

Getting rid of these outdated laws could be good for Delaware’s health

In Sussex County, one of Delaware’s most rural, and fastest-growing, areas, there are only three hospitals in more than 1,000 square miles. In August, plans to bring an emergency medical center for the Georgetown area were squashed when the Delaware Health Resources Board denied Beebe Healthcare’s application to expand.

It was one of the most recent casualties of Delaware’s outdated, harmful certificate-of-need (CON) laws, which require health care providers to prove to the state that there’s a need for new facilities, devices and technologies before they can expand or upgrade.

The result is a health care a market where competition is unfairly limited and select health providers are able to get a stranglehold on competition. It’s the people of Delaware who ultimately suffer, faced with inflated prices and limited options for care. Groups like A Better Delaware are advocating for change and educating consumers about laws like these that can negatively affect them.

How we got here

In 1974, the federal government passed the National Health Planning and Resource Development Act, mandating that states have CON laws for health care in order to receive Medicare and Medicaid funding.

As some felt the laws did not reduce costs or improve access as intended, in 1986 the federal CON laws mandate was repealed. The Federal Trade Commission (FTC) and Department of Justice (DOJ) Anti-Trust Division have pushed for the repeal of CON laws in the remaining 35 states – including Delaware – that maintain them.

How we’re impacted

In Delaware, proponents of change like A Better Delaware say that CON laws create a barrier to entry into the market, inhibit expansion, and, as we’ve seen recently in Sussex County, fail to provide adequate health care services in some areas.

Delawareans have suffered the consequences of CON laws. At $9,509 per capita, Delaware has the sixth highest state government spending for health care, but also has some of the highest rates in the nation of obesity, cancer, diabetes, low birth weight, infant mortality and death before the age of 75.

Advocates of CON laws argue that they help the health care system by preventing duplication and keep prices down by restricting competition, but this contradicts the basic tenets of supply and demand. Instead, patients are forced to pay a higher price for care in older facilities with outdated equipment.

Some believe certificate-of-need laws stifle competition in health care, leading to worse outcomes for Delaware residents.
How we can change things

A report by the Mercatus Center at George Mason University estimates that by removing CON laws, Delaware could see a $270 saving on total health care per capita and $99 savings in physician spending per capita. The same study estimated increased access to services with a 42% increase in total hospitals and 17% increase in the number of ambulatory surgical centers.

In short, residents of the First State would have better access to care, and would pay less for it.

The benefits of repeal don’t stop there. The evidence from the Mercatus report suggests that hospital readmission, post-surgery complications and mortality rates would decrease in the absence of CON laws. Innovation and quality of health care would rise, in a market full of opportunity.

Delaware has had harmful CON laws on the books since 1978. Forty-one years later, it’s time to reevaluate, and make decisions that serve the health and well-being of every Delawarean.

If expanded health care options are important to you, stay abreast of the latest by subscribing to A Better Delaware’s newsletter, or by visiting them online at abetterdelaware.org. Email the organization’s Executive Director Zoe Callaway for more information about laws impacting the First State.

Full senior tax break may return

From Delaware State News

DOVER — In 2017, facing a budget crunch, legislators cut a school property tax subsidy for seniors by 20 percent, reducing it from $500 to $400. Since then, the state’s financial situation has improved considerably, prompting a number of lawmakers to stump for restoring the credit to its prior amount.

Established in the 1990s as part of an effort to discourage seniors, who are more likely than other residents not to have ties to local school districts, from voting against referendums, the tax break has come under fire and seen changes before 2017.

In 2015, then Gov. Jack Markell proposed halving the subsidy, noting the number of individuals age 65 or older in Delaware was steadily climbing and was not projected to stop. His recommendation faced fierce pushback however, with many arguing slashing the subsidy would be unfair to seniors on fixed incomes.

In 2017, legislators voted to change the residency requirement from three to 10 years. One year later, they approved a bill that would set a means-testing requirement, preventing seniors making more than $50,000 a year from receiving it.

However, Gov. John Carney vetoed the means-testing measure, saying it would create logistical problems and should be done as part of a broader effort.

https://delawarestatenews.net/government/full-senior-tax-break-may-return/