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State  Last Updated: Feb 5th, 2009 - 07:16:05

States Legislature Passes FY09 Budget
By Sussex County Online
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With a slowing economy, falling state revenues and last minute surprises, the Delaware state legislature passed a new balanced budget and capital spending plan for Fiscal Year 2009.

 

The operating budget for the State of Delaware (Senate Bill 300) totals nearly $3.348 billion for FY09, which began July 1, 2008.  The new budget is approximately $62 million more than the current FY 2008 budget, or an increase of about 1.9 percent.

 

Since January, when the governor released her recommended financial plan, state revenue estimates over fiscal years 2008 to 2010 have been reduced by a total of $507.8 million.  Lawmakers and members of the Minner administration responded to the shortfall with a mix of budget cuts and tax and fee increases.

 

Lost in the relief of the enactment of a new $3.348 billion state operating budget was the fact that many legislators were not happy with the new spending plan.

 

In all, more than a dozen of the General Assembly’s 62 legislators voted against the budget.  The bill passed the Senate by a vote of 15 to 6.  In the House, seven members opposed the measure, including   State Reps. Ben Ewing (R-Bridgeville), Greg Hastings (R-Millsboro), and Gerald Hocker (R-Ocean View).

 

“I was very disappointed we took the path we did,” Rep. Hastings said.  “I thought we missed an opportunity to reassess how we do things in state government.  I think budget-writers should have looked harder for cost savings through increased efficiencies.  Instead, they chose to keep the status quo by calling for higher taxes and fees.  The citizens I represent are already struggling to deal with climbing food and fuel prices.  They don’t need government piling on.”

 

Rep. Hastings noted that tax bills require a three-fifths majority in each chamber to the pass the General Assembly.  “Right now, 60 percent of our House and Senate members have to agree to pass a tax bill, but only a simple majority is needed to pass the budget.  I’d like to see the state constitution amended to make the budget a ‘three-fifths’ bill.  If you need a super-majority to take money from our citizens you should need a super-majority to spend that money too.”

 

Lawmakers struggled to pass the operating budget after two new anticipated sources of revenue didn’t materialize.  A proposed tax hike on alcoholic beverages, which budget-writers had counted on to generate $6 million annually, was defeated on the last night of the legislative session.  Earlier, a plan to leverage an additional $15 million from the federal government by imposing a new tax on Delaware hospitals also failed for lack of support.  To cover the operating budget deficit, officials removed cash from the state’s capital spending plan (Bond Bill).

 

Despite the cuts, the new Bond Bill – which funds major state projects road construction – was $4.2 million higher than the one it’s replacing.   Of the $601.7 million in the FY 2009 capital spending plan, $268.6 million is dedicated to transportation projects.  Nearly two-thirds ($207 million) of the remaining $333 million is earmarked for school construction.

 

State lawmakers also passed the $45.23 million Grants-in-Aid bill.  The bill, which provides state money to help hundreds of non-profit groups serving the public, represented a 5.2 percent drop from the previous fiscal year.  It’s the second year in a row such funding fell.  The new Grants-in-Aid spending includes $6.7 million for dozens of senior centers around the state; $1.76 million for museums and other cultural and tourism attractions; and $3.75 million to help agencies providing services to families and youths.  The state is also sending $6.63 million to Delaware’s volunteer fire companies to assist their operations. 

 

Facing dropping state revenues and wishing to avoid layoffs or scaling back social programs, state budget-writers proposed a mix of budget cuts and tax and fee increases.

 

While the cuts were largely accepted, the tax and fee increases got a chilly reception from state legislators.  Three proposals, intended to raise nearly $22 million in annual revenue, failed to clear the General Assembly.

 

A proposed tax hike on alcoholic beverages was defeated in the Senate after earlier clearing the House with the minimum required number of votes.  The proposal would have raised the cost of a six-pack of beer by four cents, the cost of a bottle of wine by 10 cents and the tax on a bottle of spirits by 34 cents (750 ml).  

 

Another alcohol-related proposal was also defeated.  House Bill 517 would have raised the license fees for businesses that sell alcoholic beverages.  Although the hikes would only have generated $600,000 annually, supporters of the bill noted that the fees paid by alcohol-sellers had not been raised in more than five decades.

 

A third failed tax proposal was never even brought to a vote due to a lack of support.  House Bill 512 would have levied a controversial 1.95 percent tax on the “net patient revenue” of hospitals in Delaware.  Supporters of the bill maintained the tax was simply a device to leverage more Medicaid money from the federal government and would not have impacted the hospitals’ bottom line.  However, hospital operators lobbied against the proposal saying it was fraught with uncertainty.  They feared that if the federal government payment didn’t materialize, they could be left holding the bag.  The proposed tax would have expired after three years and would not be implemented if the federal government fails to approve the increased payment to the state.

 

Delaware lawmakers have been struggling to deal with the nation’s slowing economy, which has resulted in falling state revenues.  Since January, when the governor released her recommended financial plan, state revenue estimates over fiscal years 2008 to 2010 have been reduced by a total of $507.8 million.  Under state law, Delaware is required to have a balanced budget, spending only 98-percent of expected revenues.

 

Although some tax and fee proposals failed, legislators viewed others more favorably.  Among the taxes hikes the General Assembly passed to help pay for this year’s budgets are:

 

  • Two bills (House Bills 519 & 520) that will increase taxes on limited liability corporations and raise some corporate fees.  Those moves are expected generate a total of $52.5 million annually.

 

  • A bill (House Bill 514) to give the state a slightly larger share of the slot machine revenues, allow slot machine venues to operate on Sunday mornings, and institute some new cost-sharing measures.  In all, the bill is expected to produce $14.5 million in annual revenue.

 

  • A bill (House Bill 513) repealing much of the gross receipts tax cuts enacted two years ago.  This measure is set to expire on March 31, 2012, re-instituting the rollbacks.   The tax cut repeal is projected to produce about $14.1 million in annual revenue.

Gov. Kills Private Property Protection Bill

A bill to protect citizens from having their property seized by government for economic development projects is dead for this year after an attempt to override Gov. Minner’s veto failed by two votes in the Senate.

 

Senate Bill 245 was a cooperative, bipartisan effort led by State Sen. Robert Venables (D-Laurel), State Rep. Dennis Williams (D-Wilmington North) and State Rep. Greg Hastings (R-Millsboro).  The bill would have required state, county and municipal governments to use their eminent domain authority solely for “public use”.  The bill further defined what constituted public use and specifically stated that benefits derived from economic development projects did not qualify.  

Eminent domain is a power used by all levels of government enabling them to seize the private property of citizens and businesses for “public use”.  Under the U.S. Constitution’s Fifth Amendment, people subject to these government takings must receive “just compensation”, although the amount of these payments is often disputed.   In some cases, the government turns the property over to a third party to build retail stores, upscale housing or other economic development projects.

 

Such a case was tested in the U.S. Supreme Court in June 2005 (Kelo v. City of New London) where the city condemned privately-owned property so that it could be used for a comprehensive redevelopment plan.  In a 5-4 decision, the High Court ruled that the general benefits a community enjoyed from economic growth qualified such redevelopment plans as a permissible "public use".   However, the court also said: “Nothing in our opinion precludes any State from placing further restrictions on its exercise of the takings power.”

 

In the wake of the Kelo decision, dozens of states enacted legislation to protect their citizens from being victimized by governmental economic development plans.  Delaware lagged behind, with one watchdog group giving the First State a grade of “D minus” for the eminent domain protections provided to its citizens. 

 

SB 245 was a bipartisan effort to address these protection concerns and enjoyed broad support in the General Assembly, passing the Senate by a vote of 19 to 1 and being approved unanimously in the House on June 12. The governor held the bill for the maximum time allowed under Delaware law, before vetoing the measure on Saturday, June 28.

 

On the last day of the legislative session (June 30), Sen. Venables took the rare step of calling for a veto of the bill.  While the move garnered 11 votes in the 21 member chamber, state law calls for a super-majority of three-fifths (or 13 votes in the Senate) for an override. 

 

Rep. Hastings, who has been working on the issue since last summer, said he was profoundly disappointed by the governor’s actions.  The governor’s stated reasons for vetoing the bill make no sense.  The legislation in no way restricts state agencies from carrying out their missions on behalf of the public good.  In fact, when the governor expressed some reservations that the bill might inadvertently interfere with road construction, we passed a companion measure specifically to deal with her concerns.  That bill was drafted by the governor’s own people. Nevertheless, she still vetoed our protections.”

 

Rep. Williams, whose district is in the City of Wilmington, said he was “very disappointed” in the governor.  “This legislation did not have to be vetoed,” he said. 

 

Wilmington city officials have claimed that efforts to re-develop the riverfront would “come to a screeching halt” if the bill becomes law, but Rep. Williams disagrees.  He says the bill would level the playing field and force government entities and the private developers to act in good faith and negotiate fairly with property owners.

 

Rep. Hastings says the bill would not affect the government’s ability to use their authority to acquire property for public projects (i.e. roads, schools, utilities, etc.) or from condemning abandoned or unsafe structures.  He also noted that it would have applied equally to state agencies. 

 

“I keep hearing that this bill was an assault on the ‘home rule’ aspect of local governments,” Rep. Hastings said.  “It’s not.  It would have applied equally to a small town government as it would to a large state agency.  We’re seeing a high-profile eminent domain case in Wilmington now, but this type of potential abuse could happen just as easily in Sussex or Kent counties.  We need these protections enacted and the sooner the better.”

 

Reps. Williams and Hastings said they plan to reintroduce their measure when the 145th General Assembly convenes in January.  Competing measures are also likely to be introduced.  Both legislators say their bill took months to craft and represents the best approach to protect Delaware’s citizens from the government’s potential misuse of its power to seize property.

 

Action on House Bills

House Bill 432 (Sponsors: Reps. Keeley, Marshall, Thornburg, Wagner, Booth & Valihura) – This is the first leg of a constitutional amendment designed to broaden the powers of the General Assembly to keep government operating in the event of a catastrophic disruption. That state constitution currently grants the General Assembly such powers to provide for continuity of governmental operations in an emergency caused by enemy attack. This legislation would extend the General Assembly’s authority to also cover disasters involving terrorism, disease, accident, and other natural or manmade disasters.

Status:  Passed the House.  The Senate failed to take up the measure prior to the end of the legislative session.

 

House Bill 436 – (Sponsors: Reps. Keeley, Schwartzkopf & Lavelle, et. al.) – This bill would require “every public officer”, as defined in Delaware law, to disclose whether any of their family members work for a state agency, a public school district or any organization that receives any state funding.  The bill specifically includes the University of Delaware, Delaware State University, Delaware Technical & Community College, the Delaware River and Bay Authority, the Port of Wilmington, the Riverfront Development Corporation, and the Delaware Solid Waste Authority among these organizations.  Under the bill, the term “family member” is defined as a:  mother, father, sister, brother, spouse, live-in companion, child (natural, adopted, or stepchild) and any sibling of the whole or half-blood, brother-in-law, sister-in-law, son-in-law, daughter-in-law, niece, nephew and grandchild.  The disclosures, which will be filed with the Public Integrity Commission, would contain:  the date of hire; the relation to the public officer; the name of the agency; school district, organization, or entity; the address of the agency or organization, or entity; and the position held.

Status:  Passed the House.  The Senate failed to take up the measure prior to the end of the legislative session.

 

House Bill 444 w/HA 1 (Sponsors: Reps. Cathcart & Johnson, et. al.) - This bill seeks to establish that the use of engine exhaust braking systems - often referred to as "Jake Brakes" - shall be limited to emergency situations. The systems typically release compressed air trapped in the engine cylinders, which reduces energy and slows the vehicle. However, the systems also produce a loud, staccato or machine gun-like sound. That noise has caused frequent complaints from residents living near toll plazas and other locations where trucks equipped with engine exhaust braking systems slow down. This bill seeks to clarify current state law and to establish that Jake Brakes cannot be utilized, except in cases of emergency. Supporters of the bill say the measure would make it easier to post and enforce Jake Brake restrictions.  The bill was amended to exempt emergency vehicles including fire trucks, ambulances, and emergency medical service vehicles.

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

Senate Bill 23 (Sponsors: Sen. Still & Rep. Stone) - This bill would bar automotive insurers from using a lapsed or canceled policy as a factor in determining new rates if the action was the result of the policy-holder being sent overseas on military deployment. This bill is in response to the case of a Delaware serviceman, who cancelled his car insurance policy while on a year-long deployment in Iraq. When the serviceman returned home, he faced higher car insurance premiums because of the break in coverage.

Status:  Signed into law.

 

House Bill 452 (Sponsors: Rep. Thornburg, et. al.) – HB 452 is a reform measure dealing with the state's extensive "tax ditch" system, which is used to drain agricultural land. Among other things, the bill defines various types of tax ditch rights-of-way and "grandfathers" existing permanent structures already located in such rights-of-way.

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

House Bill 443 (Sponsors: Rep. Lee & Sen. Ennis) -- This bill is an attempt to address the growing problem of Delaware prison inmates illegally getting access to cellular phones. The sponsors of the bill maintain that such access compromises prison security and the security of the general public. HB 443 would enhance penalties for those found guilty of "promoting prison contraband" from a class A misdemeanor to a class F felony. The crime covers anyone who "knowingly and unlawfully introduces any contraband into a detention facility"; or "possesses, with intent to deliver, any contraband to any person confined within a detention facility"; or any inmate who "makes, obtains or possesses" contraband.

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

House Bill 471 (Sponsors: Rep. Spence, et. al.) – HB 471 would establish a special, limited license plate. Next year marks the 100th anniversary of the first automotive license plate issued in Delaware. This legislation would allow the Division of Motor Vehicles to issue a commemorative centennial license plate for 15 months to honor this anniversary.

Status:  Signed into law.

 

House Bill 458 (Sponsors: Rep. Miro, et. al.) – This bill seeks to establish the 'Retail Crime Unit' within the Department of Justice that would be dedicated to the investigation and prosecution of retail crime. The new unit would be funded by an annual $15 fee on all general retail licenses and grocery store licenses.

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

House Bill 431 (Sponsors: Rep. Keeley, et. al.) – This legislation would provide protocols for the operation of Delaware's courts in the event a natural or manmade disaster destroys or heavily damages one or more court facilities or severely impacts the state's ability to staff the courts.

Status:  Passed the House.  The Senate failed to take up the measure prior to the end of the legislative session.

 

House Bill 398 (Sponsors: Rep. Spence, et. al.) – This bill was designed to crack down on underage drinking by suspending the driving privileges of anyone under the age of 21 who attempted to purchase or possess alcohol.  The bill would have removed judicial discretion by mandating the penalty, even if the underage person had been granted "probation before judgment" by the court.  It called for driving privileges to be suspended for 30 days for a first offense. Subsequent offenses could have drawn longer suspensions; evaluation for potential alcohol abuse; and requirements for community service.   Additionally, the legislation would have required anyone under the age of 21 taking a certified driver education course to sign a pledge acknowledging that they are aware of the state's legal drinking age and the penalties contained in the bill for those found in violation.  This bill was a recommendation by the Alcohol Awareness Task Force.  It was supported by Delaware's law enforcement community, the Division of Alcohol and Tobacco Enforcement, the Office of Highway Safety, Mothers Against Drunk Driving, and members of the alcoholic beverage industry.

Status:  Passed the House.  The Senate failed to take up the measure prior to the end of the legislative session.

 

House Substitute 1 for House Bill 450 (Sponsors: Rep. Wagner, et. al.) – This bill would exempt state workers, who are seriously injured while on deployment for the U.S. military or National Guard, from being required to use sick leave to recover from their injuries after returning to their state job. 

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

House Substitute 1 for House Bill 216 (Sponsors: Rep. Marshall, et. al.) - This bill would require merchants selling new apparel containing real animal fur to attach a "conspicuously displayed" tag, label or sticker that clearly indicates the garments contain fur. Merchants violating the proposed law would face a $200 fine per incident.

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

House Substitute 1 for House Bill 362 (Sponsors: Rep. Schooley, et. al.) – Called the "Children's Toy Safety Act", this bill would prohibit the sale or distribution of toys that are potentially harmful or otherwise threaten the health of Delaware's children. The Delaware Department of Health and Social Services ("DHSS") would be charged with maintaining a list of all unsafe toys including those containing toxic substances and toys that have been recalled by the manufacturer. First time violations would earn a $100 fine per incident, not to exceed a total of $5,000. Subsequent violations would draw heavier penalties.

Status:  Passed the General Assembly.  Heads to the governor for consideration.

 

House Bill 504 (Sponsors: Rep. Valihura, et. al.) – This bill would allow the residents of a manufactured housing community to purchase that community should it be offered for sale.  In many manufactured housing communities, the tenants own the homes but lease the ground on which those homes are located, creating potential problems when the landowner wishes to sell the property.  HB 504 addresses that possibility by giving homeowners the ability to collectively purchase the land.  HB 504 is a consensus bill that is the result of intense negotiations by people representing the manufactured homeowners and the owners of the communities in which those homes are located. 

Status:  Passed the General Assembly.  Heads to the governor for consideration.



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