Legislators returning Tuesday after difficult 2017

Delaware State News/Marc Clery

DOVER — After one of the most trying final months of a legislative term in living memory, legislators return this week with hopes 2018 will be smoother.

The second leg of the 149th General Assembly begins Tuesday, kicking off a six-month period that officials are sure will be eventful.

Between now and the early morning of July 1, legislators will consider marijuana legalization, reinstatement of the death penalty, additional funding for schools, casino tax relief, prevailing wage reform, tax hikes and much more.

At the heart of it all is the budget, the issue that held up the session last year and led to the General Assembly missing its deadline for the first time since 1977.

Facing a budget shortfall last year, Gov. John Carney proposed raising taxes on large companies, alcohol, tobacco and personal income. Passing the first was relatively simple. The others, especially the increase in income taxes, proved considerably harder.

With Democrats lacking the necessary three-fifths supermajority needed to pass tax hike bills, they had to rely on Republican votes — and the GOP, in its strongest position since losing the House majority in 2008, didn’t budge.

Republicans sought reform to prevailing wage, which governs how much laborers on state-funded construction projects are paid, but Democrats were adamant they would not accept any deal that altered prevailing wage.

The stalemate dragged on for months. The GOP accused the Democratic majority of trying to bully Republicans and “buying votes” from unions by not changing prevailing wage. Democrats claimed Republicans were trying to turn Delaware into a “third-world state” and wanted to “hold critical services hostage while they seek to shift the burden of our budget onto working families.”

It’s not unusual for legislators to still be working as June 30, the last regularly scheduled day, creeps past midnight into July 1. But 2017 took it beyond that.

Legislators were unable to balance a budget by July 1, the first day of the new fiscal year. After agreeing to fund the government for three days they left the state capitol, to return July 2.

Following hours of discussion July 2, Democrats and Republicans reached a deal that didn’t involve income taxes or prevailing wage.

The budget bill was signed into law at 1:16 a.m. the following day.

“The legislative process … unfortunately or fortunately, and it works both ways, sometimes we don’t make a decision until we have to,” Senate President Pro Tempore David McBride, D-Wilmington Manor, said last week.

It was an ignominious end to Gov. Carney’s first legislative term.

This year, legislative leaders say, will be different.

“Both sides agree we don’t want to do this again, both sides agree to be more open with each other, more communicative,” said House Speaker Pete Schwartzkopf, D-Rehoboth Beach.

For starters, the revenue picture is rosier. Whereas last year the projected deficit reached nearly $400 million, the forecast issued in December indicates legislators might not have to worry about increasing taxes to balance the budget in 2018.

However, the long term might not be so good. According to the governor, the “same fundamental problem” continues: Government revenues aren’t steadily growing with the economy.

Gov. Carney, a Democrat, said he intends to discuss income tax hikes but admitted it will be more difficult to pass such a proposal in an election year, especially when there is no immediate budgetary concern.

The governor also expressed interest in spending reform, something Republicans have been seeking for years. That may take the form of a budget-smoothing fund, which would be filled when revenue tops a predetermined cap and used when it falters.

“The idea is not a bad idea,” Rep. Schwartzkopf said. “I mean, nobody wants to touch the Rainy Day Fund for bond ratings but if we created a second Rainy Day Fund … when we have a budget that’s $30 million down, we don’t have to cut anything. We have it right there.”

In regard to revenue, there is “some light at the end of the tunnel” after nearly a decade of challenging budgets, said House Minority Leader Danny Short, R-Seaford.

That doesn’t mean every lawmaker wants to rush out and start earmarking surplus funds.

Attorney General Matt Denn unveiled a plan last month to utilize $55 million in unexpected collections to aid children from low-income families, combat opioid addiction and help teenagers transitioning from the criminal justice system to society at large.

“He needs to stay out of the Legislature’s business,” Senate Minority Leader Gary Simpson, R-Milford, said of Mr. Denn, a Democrat.

Rep. Short proposed using the extra money to restore cuts to nonprofits, which received 20 percent less in state funding compared to the prior year.
Some Democrats figure to push bills that would raise taxes on the state’s so-called top earners.

“You just can’t keep taxing people and expect to get ahead as a state,” Sen. Simpson said.

Sen. McBride said he aims to restore funding to the Delaware Prescription Assistance Program, which was eliminated by legislators in 2017.
Others want to give state government employees a pay raise.

“We have good ideas. We just have to make sure we have money to pay for those things,” Rep. Schwartzkopf said. He noted he doesn’t want to pass any bills with large price tags until the May revenue projections are released.

Plenty of bills would carry a cost, such as a measure to provide state funding to school districts for students in kindergarten to third grade who need basic special education services.

“There’s always need … for additional revenue because the supply is less than the demand for various programs, so that’s always of consideration,” Sen. McBride said.

The federal tax cut bill signed into law last month might impact Delaware’s revenue as well, potentially leading to less taxable income for the state government to collect.

The economy

Gov. Carney ran on a platform of stabilizing the state’s financial picture and growing the economy, topics he fully intends to focus on in his second year at the helm, he said.

“We’re going to look to focus on the priorities that we set out last year, which include helping to make Delaware’s economy more competitive and doing that to strengthen our workforce and improve public education,” he said.

Last year, legislators changed the Coastal Zone Act in hope of spurring development along the Delaware River. Sen. McBride said he will be anxiously watching the outcome of those changes.

Sen. McBride said he hopes legislators can roll back some regulations, making it easier for businesses to find success.

His counterpart in the Senate said Republicans will push right-to-work and changes to prevailing wage. Right-to-work laws protect workers from being forced to join a union and pay dues as a condition of their employment.

Making at least select parts of the state right-to-work zones would attract big businesses, members of the GOP believe.

“If we’re going to quit playing politics with this issue, we want to attract big-scale manufacturers like that and the high-paying jobs they bring with them,” Sen. Simpson said. “We can’t continue to bribe our way into attracting these businesses. We have to make ourselves attractive to them.”

But Rep. Schwartzkopf expressed doubt enough Democrats would go along with prevailing wage modifications and described right-to-work as a complete nonstarter.

There may be consensus to give the state’s casinos a tax break. Executives at Delaware’s three casinos have said for years they are struggling, drawing attention from legislators — primarily including Republicans and downstate Democrats — who note the casinos pay more in taxes than money they keep.

Dover Downs, the only public casino among the state’s three establishments, paid $54.1 million in taxes to the state from slot proceeds in 2016 while finishing with a profit of just $786,000.

“I think we have a responsibility” to help the casinos, Sen. McBride said. He also noted Dover Downs is one of the biggest private-sector employers in central Delaware.

Other issues

Perhaps the most heavily watched bill is a proposal to legalize marijuana.

A bill filed in March would make Delaware the ninth state with legal cannabis, allowing adults to buy pot from specialized stores. But Delawareans would not be permitted to grow their own marijuana.

The state’s medical marijuana program would see little change.

That bill is awaiting the final recommendations from a task force studying the issues around legalization. Supporters hope it receives a vote on the House floor soon. It would then go to the Senate.

Gov. Carney, however, is opposed to recreational marijuana, although he did not say if he would veto the bill if it passes both chambers.

“We’ve made the changes in terms of medical marijuana and decriminalizing it,” he said. “I just don’t think it’s advisable when you talk about creating conditions where businesses can be successful.”

Perhaps more importantly than the governor’s opposition is U.S. Attorney General Jeff Sessions’ opposition. The federal government classifies marijuana as a dangerous drug.

On Thursday, Mr. Sessions announced an end to a policy started under President Barack Obama that essentially gave states freedom to legalize cannabis.
What that means not just for the bill but for Delaware’s medical marijuana program is unknown.

Another hotly debated issue is capital punishment.

The Delaware Supreme Court struck down the state’s death penalty in 2016, concluding a portion of it was unconstitutional.

But, after correctional officer Steven Floyd was killed when inmates rebelled and took control of a building in the James T. Vaughn Correctional Center last February, lawmakers introduced a bill that would create a new death penalty.

The measure passed the House in May and has not yet received a Senate committee hearing.

If the bill makes it out of committee, a vote on the floor is expected to be extremely close, to the point that Sen. Simpson termed it “anyone’s guess as to where that will end up.”

Gov. Carney is opposed to capital punishment but said he “would consider a version that had a law enforcement exclusion.”

Democratic legislators say they want to raise the minimum wage from $8.25 to $9.25 an hour in two 50-cent increments. The proposal is awaiting a vote in the Senate after being released from committee in June.

Among senators, every Republican 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).

In education, a task force has been considering school consolidation for six months. Options include merging some districts, creating countywide districts, consolidating some services among the 19 existing districts or instructing the counties to reassess property values.

Sen. Simpson said there might be support for merging the three vocational districts, but he doesn’t see anything beyond that this year.

Gov. Carney aims to provide more support for children from low-income areas, such as parts of the city of Wilmington. He also wants to grow programs focusing on science, technology, engineering, and mathematics, calling those areas “where the jobs of the future are going to be.”

Growing health care costs remain an issue with Medicaid and state government employees’ health care costs eating up about 38 percent of the state’s $4.1 billion budget.

Continued criminal justice reform also is likely, with legislators seeking to lessen penalties for some crimes, give individuals more help as they re-enter society and treat drug addiction as a disease rather than a crime.

A committee of legislators, members of the judiciary and other lawyers has been looking at revising the state’s criminal code for years. They note it’s ballooned from 95 pages in 1973 to more than 400 pages now and contains some redundant crimes. But not everyone is on board: Attorney General Denn has fiercely opposed the proposal, and Rep. Schwartzkopf says he sees both sides of view.

With 2018 an election year, Sen. Bushweller and Senate Majority Leader Margaret Rose Henry, D-Wilmington, have already announced their retirements, while several more lawmakers are contemplating it.

Others may leave involuntarily, courtesy of the voters.

Above all, members of the General Assembly want to make sure the madness of 2017 is a thing of the past.

“I’m hoping that we all learned a lesson from that,” Rep. Schwartzkopf said. “I don’t think any of us are proud how the session ended.”

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