JFC OKs $28.3M plan for bank settlement funds but Republicans press the issue


DOVER — The Joint Finance Committee voted Thursday to allocate $28.3 million in bank settlement money for a variety of initiatives mostly related to housing, but questions remain.

The committee, by a 7-4 vote, elected to transfer money held by the Department of Justice and gained from 2014 settlements with Bank of America and Citigroup due to alleged mortgage-related improprieties. The money is intended to go to funds that will help reduce foreclosures, fix up vacant homes and provide after-school programs for students.

Nonprofits can apply for the funding, with information to be made available on how they can receive grants.

Delaware law requires any measure giving money to a corporation gain approval of three-fourths of the entire legislature.

After the meeting, JFC Chairman Sen. Harris McDowell, D-Wilmington, acknowledged the proposal may have to be approved by the full General Assembly.

“We probably will go to a bill,” he said.

He said lawmakers did consider whether three-fourths support was needed but have not yet decided.

“We’re voting to put the funds available and how that mechanism happens we’ll look at,” he said.

Afterward, the Senate Republicans issued a release denouncing the vote.

“We were told that there would be a full floor vote on this action, and now, after the committee vote, we’re being told that vote will not take place,” Sen. Gregory Lavelle, R-Sharpley, said in a statement. “This sets a significant precedent for spending outside the budget process. Every citizen of Delaware deserves their constitutionally guaranteed right to vote on these matters through their elected representatives.”

Republicans plan to file a resolution requesting an opinion from the Supreme Court on the constitutionality.

During the meeting, Pike Creek Valley Rep. Joseph Miro read a letter from the House minority caucus protesting the plan.

The letter calls for keeping the money until after the final revenue forecast of the current fiscal year on June 20 and then putting it toward filling any budget shortfalls that exist.

“We believe the JFC is stepping on the gas when it should be tapping the brakes,” it reads.

Lawmakers were criticized last year by some outside groups — and some of their own — for balancing the budget with settlement money, a fact noted by Sen. McDowell, who called the letter from the House Republicans “contradictory” to their previous statements.

Members of the GOP also took issue with $8 million to be used on after-school programs and aid for low-income students, with Rep. Miro arguing that creating “new obligations” that must be picked up in future years is improper and unnecessarily grows the budget.

Sen. McDowell replied that those programs are not intended to simply be continued next year but are pilot versions that will first be evaluated.

The issue of upstate versus downstate also arose briefly, with Sen. David Lawson, R-Marydel, opining that New Castle County is benefiting from the allocation at the expense of Kent and Sussex.

“The state is not being considered throughout for the loss and damage that was done,” he said.

However, Sen. Brian Bushweller, D-Dover, noted nearly all of the funding will go to statewide organizations, and local groups then can apply for money.

Attorney General Matthew Denn, whose original December appropriation plan JFC has modified, said afterward he would have to consult with JFC members as to the exact plan before weighing in on whether a bill and three-fourths vote is needed.

Sen. McDowell said the committee will “make sure” its actions were proper.

“The relevant factor here is that there’s some process, rather than just a quiet sign-on,” he said.

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