DOVER – Governor Jack Markell (D) isn’t the only one with suggestions on how to use an estimated $320-million in additional revenues projected by the Delaware Economic and Financial Advisory Council (DEFAC). The House Republican caucus in the General Assembly Thursday offered its proposal on how best to spend the extra money.
The minority caucus put its focus on expanding tax relief, fixing a “structural imbalance” in the Transportation Trust Fund, directing part of the surplus to the state’s infrastructure needs, and addressing a problem that comes every eleven years: an extra pay check for state employees.
House Minority Leader Greg Lavelle (R-Sharpley) also took aim at Governor Markell’s proposals (see related stories here) to create additional funds, such as a jobs infrastructure fund, with one-time spending.
“He’s creating a new jobs infrastructure fund. He’s creating an asset preservation fund. He’s creating a housing preservation fund,” Lavelle said. “If there’s anything we know about government funds it’s that, once created, they don’t go away.”
Lavelle said capital needs could be handled through the bond bill process, and there are other funding mechanisms that already exist.
State Representative Deborah Hudson (R-Fairthorne) said the time is right to accelerate the “sunset” of tax increases enacted in 2009, which were set to expire four years later.
“We have a surplus. There’s no need to continue to build a surplus,” Hudson said. She proposes to reduce the top rate of the personal income tax from 6.95% to 5.95%, cut the gross receipts tax by 8%, and roll back the corporate franchise tax to June 2009 levels. If approved, all of these rollbacks would take effect January 1st, 2012. The relief program would cost $83.5-million in that second half of fiscal year 2012.
Part of the Republican plan would dedicate $100-million to the Bond Bill in the next fiscal year to address existing state infrastructure needs. $80-million would be directed toward that purpose in the following year.
Representative Gerald Hocker (R-Ocean View) said addressing various waste water facility needs, repairing various dams in the state, and fixing Wilmington’s deteriorating combined sewer outfall network would also have the added benefit of creating jobs.
“This is a time when, after two years of budget cuts on infrastructure and open space needs, when we can create jobs in a hurry,” Hocker said. “Why don’t we give a big portion of this money to our bond bill? The bond bill committee has heard all of these needs and can put this money to good use very quickly.”
Additionally, Hocker would like to see $20-million set aside to invest in farmland and open space preservation. He maintains with land values now about two-thirds what they were a few years ago, there is an opportunity to “get more bang for the buck.”
House Republicans offer plan for spending additional $320 million in state revenue
House Minority leader Greg Lavelle (R-Sharpley) points out what he considers flaws in Governor Markell’s proposals to spend additional state revenue.
Representative Ruth Briggs King (R-Georgetown) says revising the structure that led to a 27th pay period for state workers would still be fair to them
House Minority whip Gerald Hocker (R-Ocean View) wants to invest part of the projected $320-million surplus into open space and farmland preservation, as well as infrastructure projects.
State Representative Deborah Hudson (R-Fairthorne) says it is an opportune time to allow 2009 tax hikes to expire sooner than 2013
State Senator Harris McDowell (D-Wilmington North), Co-chair of the Joint Finance Committee, offers his initial reaction to Governor Markell’s proposals on how to invest a $320-million surplus .
Lavelle also took issue with Governor Markell’s plan to transfer $40-million in one-time cash to the Transportation Trust Fund, created to raise money for road and bridge improvements but now the source of DelDOT’s entire budget. The Transportation Trust Fund task force released a report earlier this spring indicating a potential gap of $1-billion within five years if corrective measures were not taken. (see related story here)
Republicans propose to move other transportation-related expenses into the general fund over a five-year period, starting with $65-million in FY ’12 AND $50-million in FY ’13. The Transportation Trust Fund is collected through gas taxes, tolls and other motor vehicle fees, and would remain dedicated to road and bridge projects.
The state also faces a $54-million expenditure this year due to a 27th two-week pay period for state employees, something that happens about once every eleven years. State Representative Ruth Briggs King (R-Georgetown) says this is creating stress for school districts, which pay 30% of the salaries of teachers.
“Instead of giving these salaried workers an additional paycheck, divide their annual salary by 27 instead of 26,” King said. “The bi-weekly check an employee receives would be modestly reduced, but they would still receive their full annual salary over the course of the year.” She added that “no one is being shorted or cheated.”
State Senator Harris McDowell (D-Wilmington) gave the Governor generally high marks for his proposal, but added “I really don’t think it’s necessary to make a tax cut at the upper level, particularly. I’m not sure the business tax cuts are even that justified.”
McDowell is co-chair of the Joint Finance Committee, which begins drafting the FY 2012 operating budget May 16th, shortly before DEFAC comes out with its monthly revenue projections.
A full explanation is also expected Monday from the state as to why the 27th state paycheck is needed, and does not constitute a “bonus” for state employees as House Republicans have termed it.
