Legislative session leaves hard feelings, some issues unresolved

DOVER — Is there any doubt how the first leg of the 149th General Assembly will be remembered?

For perhaps the first time ever, legislators missed their deadline to pass a budget and exited Legislative Hall in the early morning of July 1 with only a temporary funding plan.

They did return the next day to come to an agreement on the $4.11 billion spending plan — with tax increases — although lawmakers went past midnight once again.

The compromise between the Democrats and Republicans solves many problems, but not all.

Gov. John Carney, a Democrat, took office in January and was immediately confronted with a budget shortfall of around $380 million, the result of key income sources like the lottery and abandoned property being stagnant or unpredictable.

Gov. John Carney presents a signed budget bill after 1 a.m. Monday as Speaker of the House Pete Schwartzkopf, center, celebrates with Rep. Steve Smyk. (Special to the Delaware State News/Patrick Jackson)

The governor proposed what he said was a long-term structural fix with cuts to state employee health care, education funding and a senior property tax subsidy, as well as increases in income taxes and the franchise tax and the elimination of itemized deductions.

Lawmakers, however, were wary of parts of his proposal.

In the end, they settled for smaller changes to employee health care and boosts in the cigarette, alcohol, franchise and realty transfer taxes. The senior property tax subsidy was lowered by 20 percent, the amount the governor recommended.

Gov. Carney was predictably happy lawmakers passed a budget, but he expressed concerns decision-makers will face a shortfall again in 2018 — an election year.

“I think maybe my frustration was is that I expected that people would more readily accept rational arguments around why you should do one thing or the other in the fiscal situation,” he said. “I think we have to work harder explaining things and finding ways to convince people to do the right thing.”

Legislators have for years resisted making major changes that could stem cost growth, something even they have admitted.

Whether this budget kicks can down the road once more will be determined over the next 12 months.

Gov. Carney, who gave himself a “solid B” when asked what grade he thought he deserved, says he has so far has focused mostly on creating jobs and bringing stability to the state budget, although he’s also been involved in pushing for more support for correctional officers and creating a new human resources department.

A recent area of intense focus is cost efficiency: The Democratic governor admitted the state could spend money more wisely in some cases, something Republicans have long pushed for.

Lawmakers recently approved several measures studying health care costs, school district consolidation and budgeting methods, part of a process they hope can lead to the state getting more bang for its buck.

While its budget is comparatively small, Delaware is one of the highest-spending states per capita.

Everyone wants to get their money’s worth, but there’s a big divide between Democrats and Republicans when it comes to government spending.

“One of the things I’ve learned, and I saw it in members of the General Assembly, is people don’t want to cut the budget and they don’t want to raise taxes,” Gov. Carney said. “Well, guess what, when you have a structural deficit you have to do a little bit of both.”

Party politics

That gap between the two parties was never more evident than in the end of June.

The final week of the legislative session was one of the ugliest in living memory. Lawmakers traded barbs and blew past the deadline for a budget.

Things did work out, ultimately, and leaders of both parties say they are no hard feelings, but there’s reason to wonder if legislators will be back in a similar spot next June.

Over the last weeks of the session, Republicans and Democrats engaged in a war of words, with even the Facebook pages for the Senate Democrats and Republicans indirectly arguing.

Democrats, the GOP charged, refused to “even make a token attempt at reaching a consensus,” tried to “bully” Republicans into a budget deal and were “buying votes” by not changing prevailing wage.

The majority party claimed that Republicans were trying to turn Delaware into a “third-world state,” had a budget plan based on “half-baked and highly suspect” ideas and wanted to “hold critical services hostage while they seek to shift the burden of our budget onto working families.”

Five months of negotiations failed to produce a compromise.

Pete Schwartzkopf

“Sometimes you have to hit bottom or hit a brick wall to make you re-think your position or see where we are and where we need to be, and that day was June 30,” House Speaker Pete Schwartzkopf, D-Rehoboth Beach, said.

All lawmakers needed was one more day.

Senate Minority Whip Greg Lavelle, R-Sharpley, said he and Rep. Schwartzkopf “had an airing of the grievances,” helping them work toward an agreement, after legislators missed the deadline on July 1.

For his part, Rep. Schwartzkopf said legislators, eager to avoid having to return another day, took a few things “off the table” July 2. Democrats ceased pushing for income tax increases, while Republicans dropped prevailing wage, which governs how much laborers on state-funded construction projects are paid.
“The atmosphere was so, it had deteriorated so badly on those two issues,” Rep. Schwartzkopf said.

Lawmakers eventually made a deal and used the projected revenue from hikes to the cigarette, alcohol, franchise and realty transfer taxes to undo some education cuts and provide funding for nonprofits.

The General Assembly had previously eliminated all grants-in-aid funding, with Democrats trying to force Republicans to vote for income tax increases on June 29 to avoid having nothing for nonprofits.

That effort failed, however, and may have worsened the situation.

With the new revenue approved a few days later, lawmakers funded grant-in-aid to the tune of $37.2 million — a 20 percent cut from the fiscal year that ended June 30.

With the current fiscal year now funded, Democrats have turned their eyes to the next year. They are particularly worried about another budget hole: Gov. Carney said lawmakers “missed an opportunity” with the defeated income tax proposal, and Senate President Pro Tempore David McBride, D-Wilmington Manor, said the chambers failed to find “structural stability.”

Republicans acknowledge challenges remain, but they are more focused on cutting government and spending money wisely than increasing taxes.

“We faced a huge budget hole and fought to ensure that the majority of it was dealt with through reductions,” House Minority Whip Deborah Hudson, R-Hockessin, said in a statement. “The majority of the burden of the higher taxes that were part of this package should not impact most Delawareans. We also started some initiatives to begin the process to fundamentally reform state spending.”

Republicans may push prevailing wage again next year, an issue which Democrats have refused to budge on. Should that be the case, another legislative session could go down to the wire.

Rep. Schwartzkopf, however, is confident lawmakers will have more luck avoiding an ignominious mark in 2018.

“We’ve all experienced what nobody ever has, this extraordinary session, and nobody, I don’t think, wants to come back here and do it again,” he said.

Gov. Carney’s administration and top Republican and Democratic lawmakers met regularly during the course of session — a marked change from previous years.

Democrats had a supermajority from the 2008 election to the 2014 election, meaning they could hike taxes without Republican votes. However, the party lost that supermajority in 2014 and lost another seat last year, giving Republicans more power in the Senate.

“Certainly, it was combative, but why? If you go back a few years, the Republican Party and Republican caucuses were simply ignored,” Sen. Lavelle said. “There was no participation, no leadership committee meetings, there was no participation or cooperation on the floor in terms of bills, and due to the fact we were able to pick up some seats the last few years, that’s why, suddenly, the dynamic changed and maybe that was a little learning for both of us.”

Other issues

While the budget is front and center, plenty of other issues stood out from the previous six months. Legislators tried to legalize marijuana, reinstate the death penalty and raise the minimum wage. They succeeded in altering the Coastal Zone Act, reorganizing the Delaware Economic Development Office and guaranteeing abortion access.

Legislation to make Delaware the ninth state in the nation with legal marijuana was introduced in March. It was released from a House committee in May but never made it to the floor, although main sponsor Rep. Helene Keeley, D-Wilmington, said recently the bill is “short probably a handful of votes, maybe even less” in the House.

On July 1, a resolution creating a task force to examine issues around legalization was passed.

Rep. Keeley said she hopes the committee can answer questions and concerns that lawmakers and others, including the governor, have and pave the way toward legalization of the drug.

The “Extreme Crimes Protection Act” restoring the death penalty passed the House in early May but has yet to be voted on in the Senate, which will be a tougher hurdle.

The Delaware Supreme Court struck down the state’s capital punishment statute in August, claiming part of it conflicted with the constitutional guarantee to a jury trial.

Gov. Carney straddled the issue. He has said he supports the Supreme Court’s conclusion but “wouldn’t rule out, however, supporting a death penalty that applied only to those convicted of killing a member of law enforcement.”

The measure is awaiting a Senate committee hearing.

A bill to raise the minimum wage from $8.25 to $10.25 in four 50-cent increments was supposed to be voted on in June but was pulled from the agenda at the last minute, indicating it is short on votes.

Every Republican who was present opposed a similar bill in 2016, with Sen. Brian Bushweller, D-Dover, being the only Democrat to not support it (he went not voting).

The General Assembly removed some of the limitations in the 1971 Coastal Zone Act, which prohibits industrial development along the Delaware River. A key part of Gov. Carney’s plan to attract companies to Delaware and create jobs, the measure passed over the concerns of environmentalists.

The bill creates exemptions for the 14 sites in the coastal zone and allows the Department of Natural Resources and Environmental Control to issue permits for other industries and bulk transfer facilities at the locations.

The Delaware Economic Development Office is being reorganized into a new public-private partnership designed to better spur companies to settle in Delaware. Several key positions in what DEDO have been moved to the Department of State. The board of directors for the partnership has yet to be selected.

The changes to DEDO and the Coastal Zone Act were recommended by Gov. Carney’s transition team, which drafted a long list of ideas focused on revitalizing the economy, improving public safety and bettering the education system.

The legislature also approved, mostly on party lines, a bill that would keep abortion legalize if the Supreme Court case Roe v. Wade is overturned.

Opponents said it would allow late-term terminations, but supporters said it does not change anything, only solidifies current practices. According to Reuters, Delaware is the first state to “protect” abortion access since Donald Trump was elected president.

Lawmakers and Gov. Carney will spend part of the next six months preparing for the second leg of the 149th General Assembly and hoping for positive revenue forecasts.

But, 2017 won’t be an easy year to forget, although some lawmakers may wish not to remember all the hurdles on the road to a balanced budget.

“There was combativeness, there was cooperation, there was consternation but then there was reclusion, and so we’ll work on it, and every budget leads into the next budget year, so there’s a lot of work for us to do what we did here and try to do the things that we want to do and I know the other side will do that as well,” Sen. Lavelle said.

Reach staff writer Matt Bittle at mbittle@newszap.com

You are encouraged to leave relevant comments but engaging in personal attacks, threats, online bullying or commercial spam will not be allowed. All comments should remain within the bounds of fair play and civility. (You can disagree with others courteously, without being disagreeable.) Feel free to express yourself but keep an open mind toward finding value in what others say. To report abuse or spam, click the X in the upper right corner of the comment box.