Joint Finance Committee starts hearing process

Feb 2, 2010 — Dover Post

Doug Denison

Dover, Del. -

The once secretive Joint Finance Committee of the Delaware General Assembly cracked into Gov. Jack Markell’s proposed budget Feb. 1, in full view of the public.

This will be the first full legislative session in which the panel of six representatives and six senators is subject to the state’s open meetings law — a change that took effect at the tail end of the 2009 session.

On Feb. 1, the committee began with briefings on the state’s overall revenue situation from the Controller General’s Office and an outline of the governor’s proposal by the Office of Management and Budget.

Deputy Controller General Steve Kubico reviewed the state’s dismal revenue projections for the coming year presented in December by the Delaware Economic and Financial Advisory Council.

According to DEFAC, revenues through the end of fiscal year 2011 will slump more by than $136 million, mostly because of sagging corporate income, bank franchise and realty transfer tax receipts.

Even though those taxes were raised as part of last year’s budget, the continuing economic recession has cancelled out the revenue increases projected at the time.

Leaders from both houses of the General Assembly and the JFC recently have brushed off the idea of tax increases, and committee member Sen. Harris B. McDowell, D-Wilmington North, said at the meeting it’s clear tax hikes didn’t save last year’s budget and they can’t save this one.

“We got very little bang for our buck from the revenue package in June,” he said.

Tax revenue projections for the long term reinforced McDowell’s claim.

Corporate franchise taxes reached their peak in 2008 with $178.5 million in total receipts, Kubico reported. For fiscal year 2010, those taxes only are projected to bring in $47.5 million. By 2014, they are expected to reach only $103.4 million.

“The question is when and if it will ever come back,” Kubico said. “These aren’t marginal changes, these are sea changes.”

McDowell said it might be time for Delaware to take a hard look at the corporate and banking taxes that generally are regarded as the state’s financial bedrock.

“One of the things to think about in the long run is, have we got too many eggs in those baskets?” he said.

The committee also heard from Budget Director Ann Visalli, who briefed the panel on the governor’s proposed budget.

During Visalli’s presentation, the committee broached the subject of offering early retirement to state workers — an idea Markell has so far snubbed, but has been introduced in the form of legislation authored by Sen. Colin Bonini, R-Dover South.

If early retirement were offered, Visalli said approximately 3,000 state employees would be eligible.

However, JFC co-chair Sen. Nancy Cook, D-Kenton, a veteran on the committee, said offering early retirements to teachers, corrections officers or other critical positions would not make much of a dent since many of the slots still need to be filled.

“In the real world, you aren’t going to eliminate teachers and that’s 50% of retirees,” she said. “You’re not going to eliminate nurses and health workers either.”

Over the next six weeks, the committee will spend each Monday through Thursday poring over the fiscal year 2011 budgets of every state agency, from the Department of Education to the National Guard.

During these hearings, committee members will be able to weigh the governor’s proposed budget cuts and enhancements, hear from state agency staff about their priorities and lay the groundwork for their own budget agendas.

In May, the panel will start drafting the legislature’s version of the budget bill, which must be passed by June 30.

Email Doug Denison at doug.denison@doverpost.com