Did Delaware legislators punt on large-scale budget reforms?

Gov. Jack Markell signed the budget around 5:15 a.m. July 1. (Delaware State News/Matt Bittle)

Gov. Jack Markell signed the budget around 5:15 a.m. July 1. (Delaware State News/Matt Bittle)

DOVER — Did lawmakers punt on some of the state’s most pressing concerns by not taking more steps to shrink the state budget over the past 18 months?

Gov. Jack Markell has given indications he believes they did.

In 2015, he proposed halving a senior property tax subsidy for senior citizens, which would have saved the state $12.6 million. Earlier this year, he suggested reforming employee health care by locking all future workers into a Health Savings Account rather than giving them several plans to choose from.

Both moves would have curbed the budget’s growth a bit, something just about everyone agrees is necessary with the state battling revenues that are not growing as hoped.

But despite a push from the executive branch, neither idea gained much traction in the General Assembly — and that, Gov. Markell told reporters on two separate occasions during the final month of the legislative session means the issues will continue to dangle over the heads of policymakers.

“I think to the extent that we don’t take action on things like the health care, on things like the senior property tax, I think one could argue that the can is being kicked down the road,” the Democrat said last month.

Senate President Pro Tempore Patricia Blevins, D-Elsmere, said last week while she did not think lawmakers had punted, the General Assembly will have to continue looking at ways to improve efficiencies and reduce costs.

Some people, such as lawmakers and union representatives, have argued reducing the options employees have in regard to health care would dissuade people from working in the public sector.

“I think that our benefits are one of the things that attract good workers to Delaware,” Sen. Blevins said.

Although the elder tax cut, which would have lowered the subsidy from $500 to $250 for Delawareans at least 65 years old who have lived in the state for three or more years, led to significant outcry from seniors, Sen. Blevins said it is possible legislators could look at changes for would-be recipients rather than current eligible Delawareans. Those alterations could include limiting the size of the tax break for new residents or locking future citizens out from the subsidy entirely.

Lawmakers did suggest last year the state means-test the subsidy’s recipients to limit it to those who truly need it but found the idea to be infeasible.

Senate Minority Leader F. Gary Simpson, R-Milford, disagrees with Gov. Markell on many issues but said he supported the governor’s push for both health care and the tax break.

“I think that we’re just not seeing the future clearly enough to realize that we’ve got some serious problems on the horizon with health care,” he said.

He believes the Health Savings Account would have helped employees become more aware of the expenses of care and thus become more cost-conscious.

Health Savings Accounts are “a mechanism where the state contributes money and the employee can contribute money on a tax-free basis and that can help pay for their health care and they can take it with them,” Ann Visalli said in January, when she was the director of the Office of Management Budget.

“It’s portable, they can leave to another employer, they can use it when they retire. It can be invested and it can earn interest.”

The legislature has “been kicking the can down the road for the last three or four years,” Sen. Simpson opined.

House Minority Leader Daniel Short, R-Seaford, avoided saying legislators had dodged issues but did acknowledge expenses will have to be dealt with at some point.

He believes a broad look at many areas of spending, including health care and nonprofit funding, is necessary to help curtail budget growth.

“Less social issues, more economy and more budget,” he said.

The chairs of the powerful Joint Finance Committee have pledged to take a more in-depth look at the budget next year in an effort to save money, something many Republican lawmakers have been after for years.

Bob Byrd, a longtime lobbyist who served two terms in the state House of Representatives in the ’70s, said lawmakers were forced to make compromises this year, as frequently happens in the political process, in order to balance the budget.

But, he cautioned, “in my opinion, we have a revenue stream that is not adequate to fund the services that the state of Delaware is providing and sooner or later somebody’s got to sit down and take that into consideration.”

That somebody will not be Gov. Markell, which adds another wrinkle. The governor has about six months left in office, meaning budget growth and health care costs will have to be confronted by his successor.

“I don’t have any doubt that it will have to be addressed because it’s just growing at a pace that is, it’s just too fast. It’s too big a number to start with and it’s too much growth and it will squeeze out other investments,” Gov. Markell said just after midnight July 1, in the final hours of the legislative session. “So hopefully some of the things that we proposed will lead to reforms down the line, but I would have liked to have seen something happen on that.”

In 2014, he pushed for an increase in the state’s gas tax. That failed, but lawmakers approved higher Division of Motor Vehicles fees the following year, bringing in money for infrastructure that Gov. Markell had sought previously.

While health care has been a point of emphasis for many, it is not the only field of focus.

Mr. Byrd noted the state is facing lawsuits, including one from 21 states, over its abandoned property laws. A decision that goes against the First State could result in the loss of hundreds of millions of dollars, although Delaware officials have expressed confidence they will win the suit.

Ultimately, if policymakers endeavor to make changes or undertake reforms next year, they may find an easier road, given 2017 is a non-election year and the beginning of a term under a new chief executive.

“My hope is that I will have made it somewhat easier for the next governor to get it done,” Gov. Markell said.

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