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Legislators are eyeing slot machine revenue from the state’s three horse tracks as a potential source of income to close a budget shortfall of $217 million just a week ago.
But on Monday, June 16, legislators received a $63 million windfall just hours before the Delaware Financial Advisory Council (DEFAC) was to make budget recommendations to the Joint Finance Committee. The announcement sent members of the committee into another round of talks, said Rep. Joe Booth, R-Georgetown, who is also a committee member.
“In years past, we have waited to get June DEFAC numbers to set the 98th percentile of what we pass in our budget. Low and behold, a check came from a company divesting itself,” Booth said. “It comes at a suspicious time, but we’ve had these late payments before. I still don’t even know the company name yet. This has made our job in JFC 10 times harder. We were taking the knife to the soft butter part of the budget,” said Booth, who said it’s back to the drawing board for the committee.
“It caused a cascade of people coming to Leg Hall saying, ‘Put me back, put our interests back,’” he said. Lawmakers are also looking into increasing the alcohol tax, corporate taxes and increasing a medical-provider tax, said Booth.
“We’re still undecided – that’s the Big Head part of the conversation,” said Booth, referring to the state’s movers and shakers – behind-the-scenes decision makers. “I haven’t been privy to some of the suggestions. I would have difficulty working with the hospital-provider tax,” said Booth.
He also said members are reorganizing cuts to the University of Delaware programs and the Department of Natural Resources and Environmental Control. After the state asked counties to pick up some costs, including dog control and land preservation efforts, no one is really eyeing the transfer-tax redistribution anymore, he said.
Now the budget gap is closer to $150 million, and skimming from fat gambling profits might be the prescription for balance, say some lawmakers.
Last week, two lead sponsors, Sen. George Bunting, D-Bethany Beach, and Rep. Deborah Hudson, R-Wilmington, unveiled their plan in Dover.
“A lot of Delawareans don’t realize this, but the tracks get the lion’s share of the slot-machine money,” Hudson said. “With what we’re facing, we need to take another look at that.”
In 2007, the state received about $226 million from slot machines, while about $302 million went to purses and to vendors supplying and maintaining the slot machines.
Currently, the state gets about 36 percent of slot-machine revenue, but the proposal would increase the state’s share to 50 percent.
Sen. Gary Simpson, R-Milford, said revenue-sharing percentages need to be updated. “I have no problem taking a greater percentage of the revenue. I think in the beginning, when the legislation was first enacted, the value of it was underestimated for the money that would be raised from slot machines,” Simpson said. “It was a little too generous in the beginning. I think it’s appropriate to take a greater percentage at this time,” he said.
Rep. Pete Schwartzkopf, D-Rehoboth Beach, also favors the increase. “It’s very easy for me to say, ‘Yes, I’d increase this.’ But, you have to convince at least 20 others to do it with you, and then you have to do the same in the Senate. Enough people have to agree with your point of view – that’s the difficult part of government,” Schwartzkopf said.
Hudson is anxious to put the measure in place.
“The state is facing fiscal problems the likes of which we haven’t seen in more than a decade. The tracks are potentially looking at two huge new sources of income, the state is in dire need of cash, and we’re looking at raising taxes on our citizens. It’s time to split this pot of money evenly down the middle and for Delawareans to get their fair share,” Hudson said.
Governor yet to sign eminent domain bill
A measure that requires the state, county and towns to limit eminent domain authority to public-use projects – not for economic development – is ready be signed by the governor. But a public relations campaign is urging residents to contact Gov. Ruth Ann Minner after she appeared to hesitate over signing the bill.
Senate Bill 245 passed the House Thursday, June 12, by a 38-1 vote. Two days earlier, S.B. 245 passed in the Senate 19-1. The Coastal Conservative Network has encouraged people to contact the governor and urge her to sign the measure.
The bill was introduced over fears that Wilmington officials might use eminent domain to acquire riverfront property for a private developer. Delaware League of Local Governments also opposes the bill. A 2005 Connecticut Supreme Court decision determined that governments could use eminent domain to obtain property for private development, prompting a more limited measure in Delaware. The Supreme Court decision is a stretch, said Rep. Pete Schwartzkopf, D-Rehoboth Beach, who supports the bill. Sen. Gary Simpson, R-Milford, said, “I think the Supreme Court vastly overstepped its bounds with its ruling. I think they went well beyond the current scope of eminent domain, which should apply to schools, roads and other infrastructure.”
Lawmakers may soon OK minimum wage measure
Senate Bill 204, which would raise minimum wage in Delaware, cleared the House Labor Committee Wednesday, June 11. It’s now on its way for a vote in the House. In March, the Senate passed the measure 15-6. The bill would gradually increase the minimum hourly wage from $7.15 to $8.25 by 2010 – well above the federal minimum wage. A couple of Cape Region legislators are against the measure. So is the state chamber of commerce, which says increasing the minimum wage would hurt small businesses. “Minimum wage doesn’t really affect my district much. For the most part, our employees in the beach area are making more than minimum wage. There’s no adequate work force in the area, which forces employers to pay their workers much higher than minimum wage to keep employees,” said Rep. Pete Schwartzkopf, D-Rehoboth Beach.
Sen. Gary Simpson, R-Milford, said the bill would hurt local businesses. “I am against raising the minimum wage. It’s the wrong time with the economy and the businesses economic downturn. It’s discouraging because it would increase businesses’ costs,” said Simpson. He also said the bill is a Democratic political maneuvering tool – a front to portray sympathy for the poor.
“It’s more a political move by some members of the Democratic Party to make it appear they’re more sympathetic to low-income wage earners. Most businesses in the Cape Region are paying well above minimum wage already. Let the market forces determine what that should be. Let the market forces work,” Simpson said.
Cape Region chamber opposes tipped-worker wage increase
Senate Bill 280 introduced by Karen Peterson, D-Wilmington, would increase the minimum wage for tipped employees. Waiters and bartenders currently make $2.23 an hour, but if tips and wages do not equal the state’s $7.15 per hour minimum wage, employers would have to increase their employees’ pay rate to that amount. The measure squeaked by in the Senate 11-8 on Wednesday, June 18. On its way to the House, however, the Rehoboth Beach-Dewey Beach Chamber of Commerce and area restaurant owners are opposing the measure. They say tipped employees make well above the state’s minimum wage.
Bill Klemkowski, who owns Jake’s Seafood House – one on Route 1 and another in downtown Rehoboth Beach – is lobbying against the bill. “We do not support increasing small-employer costs in these troubled times. I am against S.B. 280. Over the past six months, these are the worst economic conditions in the past 20 years,” Klemkowski said.
Klemkowski is also treasurer for the Delaware Restaurant Association and first chair and next in line to be president of the Rehoboth chamber. He said it would cost him an additional $60,000 in payroll expenses a year for each restaurant if the House approves the bill. “I don’t know how that’s going to be absorbed. Somebody would get laid off,” he said. Delaware has 1,900 restaurants, which employ 40,000 people making restaurants the state’s largest small-business employer, Klemkowski said. “Believe me, they wouldn’t be doing these jobs is if they weren’t making good money. How many hundreds of thousands of kids put themselves through college waiting tables and working in bars?” he asked.
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