Grants-in-aid to nonprofits axed: State budget balanced with $88M in proposed cuts

DOVER — The Joint Finance Committee balanced the state government’s budget by making an $88 million cut Wednesday, two days ahead of the final day of the fiscal year.

Included in the budget are a $37 million decrease in education funding and the elimination of the entire grants-in-aid bill, which funds various nonprofits throughout the state.

Despite JFC’s work, the budget process might be far from over: Lawmakers of both parties have expressed displeasure over the cuts, raising the possibility the General Assembly might bring the budget to the floor only to vote it down.

JFC may still return and undo the cuts if legislators can reach a compromise on revenue. But that depends on one party caving — something lawmakers of both parties have publicly pledged not to do.

For now, the spending plan totals $4.08 billion, almost the exact same amount as in the current fiscal year. A gap of about $364 million will be erased with — unless things change — an increase in the franchise tax, which is projected to raise $114 million in revenue, and $250 million in cuts.

Joint Finance Committee Chair Rep. Melanie George Smith talks to Rep. William Carson before the JFC meeting at Legislative Hall in Dover on Wednesday. (Delaware State News/Marc Clery)

Gov. John Carney had proposed a 50-50 mix.

JFC’s votes provide a path forward, but the finished budget left members of both parties frustrated and fuming.

According to lawmakers, the legislature has never exited on July 1 without a budget, a streak that appears to be at risk.

“We are making history in the wrong kind of way,” House Speaker Peter Schwartzkopf, D-Rehoboth Beach, said.

Both sides are hung up on the prevailing wage. Republicans have refused to give the Democratic majority votes on increased taxes on personal income, cigarettes and alcohol without changing the wage which governs what laborers on state-funded constructions projects get.

Democrats, meanwhile, have not budged on prevailing wage, which they say helps middle-class workers and is unrelated to the budget.

Wednesday’s cuts came one day after budget talks between the two parties, according to Democrats, took a step back.

Reaction

Democrats and Republicans hammered each other Wednesday afternoon and evening, casting blame for the cuts in services and indicating a growing gap between the two sides.

“We’re moving backward in time with the services that we’re providing for our people and how we take care of our people,” Rep. Schwartzkopf said.

Republicans countered by blasting Democrats’ refusal to change prevailing wage.

“Today, the Democrats demonstrated where their values lie. They have declared that they value union campaign checks and unsustainable spending over the most needy in Delaware,” Senate Minority Leader Gary Simpson, R-Milford, and Senate Minority Whip Greg Lavelle, R-Sharpley, said in a statement.

“The idea that they would use our nonprofits as a tool in budget negotiations is mean-spirited and pathetic.

“The state government spends over $8 billion every year. Are we to believe that there wasn’t $37 million to be found anywhere else? Are we to believe that every government program works? Of course not. But not one of the JFC cuts from today reduces the size of any state government program. Not one.

“We continue to be committed to real, permanent changes to our state government that makes Delaware better, not just more expensive. We look forward to further conversations that will lead to a sustainable, successful state government.”

House Minority Leader Daniel Short, R-Seaford, took a similar view, saying Democrats refused to commit to real reform and blaming the majority for refusing to consider alterations to prevailing wage.

Senate President Pro Tempore David McBride, D-Wilmington Manor, blasted Republicans in a statement, hinting at a possible line of attack for Democrats in the 2018 election.

“This is the bed our Republican colleagues have made for our state,” Sen. McBride said. “After weeks of moving the goalposts in our budget negotiations and skipping meetings entirely in favor of press releases and press conferences, they now seem giddy that they’ve forced the Joint Finance Committee to make painful cuts to programs on which Delawareans rely.

“Three weeks ago, the Republicans issued a manifesto of demands to the press, and we have already agreed to the vast majority of them. But now our Republican colleagues have shifted from negotiating to dictating that we inflict further pain on our most vulnerable residents — our seniors, our school children, our veterans and those who count on the essential services provided by non-profits.

“Unlike my Republican colleagues, who want to put off difficult political decisions with a continuing resolution, I intend to do everything possible to ensure we have a balanced budget, as is constitutionally required, by the end of session on June 30. I then intend to help hold Republicans accountable for the pain inflicted on the Delawareans who elected us to do a job their party has abandoned.”

Cuts detailed

Grants-in-aid, which total $45.9 million in the current fiscal year, goes to senior centers, fire companies and veterans’ organizations, among other groups. All of the organizations, some of which depend greatly on state funding, are now set to receive nothing.

Rep. William Carson, D-Smyrna, was the only one of the 12-member committee to vote against the grant-in-aid cut, protesting the elimination of $300,000 for veteran-related causes.

“It’s like we’re throwing heroes away,” he said. “It’s an extremely sad day when that happens for our great state.”

Fire companies were allocated $5.9 million in the current budget, while just under $16.5 million was earmarked for community agencies, and senior centers were given $23.2 million. The funding includes $1.6 million for arts and tourism organizations, $3.8 million for health programs, $1.4 million for Kent County senior centers and $662,00 for fire companies in Kent.

Nonprofits and their supporters have argued grants-in-aid help save the state money by allowing organizations to provide some services for Delawareans.

“We received $15,000 in grant-in-aid each of the past few years. EVERY DOLLAR is really essential, as we cannot pay for all of the operating costs of the shelter without these funds,” Jeanine Kleimo, chair of the Dover Interfaith Mission for Housing, said in an email. “The demand for our services only increases. Our budget is already tight, another grant ends this month and we will seriously struggle to keep operating without grant-in-aid funds.”

Part of the education cut could be made up by allowing school districts to raise property taxes without referendums.

In Kent, the cost per month for a homeowner would vary from $2.40 to $8.36 depending on the district, while it would be between $2.08 and $10.14 in Sussex.

Under the budget proposal, the state would shift the cost of Delaware State Police patrols to Sussex County, something lawmakers proposed two years ago before walking it back.

The decision means the county will have to come up with $2.1 million if it opts to continue the patrol.

JFC previously reduced a property tax break for senior citizens by 20 percent, cutting it from the greater of $500 or 50 percent on property taxes to $400 or 40 percent.

While the budget includes some cuts proposed by Gov. Carney, others — such as changes to state employee health care — do not go as far as what the goveror recommended.

A spokesman for Gov. Carney on Wednesday decried the failure to find an agreement on tax hikes, saying “The people of Delaware now expect Republicans to do their job and help responsibly balance our budget.”

Gov. Carney had previously said he may veto the budget if it does not provide long-term structural change.

According to Rep. Schwartzkopf, the budget will be voted on Friday.

Reach staff writer Matt Bittle at mbittle@newszap.com

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