It’s been a rough ride for Delaware citizens since 2000
It’s always interesting to watch the Delaware Legislature’s last-minute wrangling over the annual spending budget, especially this year since they went overtime to pass another massive $4.1 billion budget for Fiscal Year 2018.
On the state’s news.delaware.gov website, I found a partial list of the budget results but a full summary of the Legislature’s actions doesn’t exist per Speaker of the House Pete Schwartzkopf and the Office of Management and Budget. It’s necessary for citizens to decipher HB 275’s legalese and confusing item totals. It’s not customer-friendly.
But, the known tax increases include the corporate franchise tax - $116 million which will find its way into increased consumer prices; real estate transfer tax - misleadingly sold as a small 1 percent increase that is really a 33 percent rise in revenue from 3 to 4 percent, which will hurt first-time buyers the most; pleasure taxes - beer up 66 percent; spirits 20 percent, wine 68 percent from 74 cents to 89, and cigarettes up 50 cents per pack - which all further burden the average joe.
Total tax and spending increases listed come to $208.3 million while the promised shared sacrifice in spending cuts totals only $19.6 million. All this accounts for only $188 million of the nearly $400 million gap. I couldn’t find the rest.
Thankfully, though, we dodged a bullet with no personal income tax increase (yet) which Gov. Carney called a “lost opportunity.” Really?
Summarizing the session, Schwartzkopf said the state’s legislators fell short making the changes for long-term growth. He added, “We must continue to work toward fixing the structural problems with our budget, both on the expenditure and the revenue sides.” (Note: “structural problems” is political-speak for spending more than you take in.)
The ramifications of those structural problems were described in the Delaware Business Roundtable’s August 2015 report. In it they say that although the economy and employment have improved, Delaware “now faces a structural budget shortfall that will expand over time, growing to 11 percent ($600 million) of its budget in 10 years unless steps are taken to bring the revenue and expenditure trajectories into line.”
And then they noted that, “It also faces an economic problem wherein it has seen jobs and per capita income shrink relative to the rest of the nation over the past decade.”
A look deeper reveals that the top expenditure for FY 2018 is again public education at 34.5 percent of the budget, about $1.4 billion annually. The report related that, “K-12 spending in 2012-13 was $14,890 per pupil, 52 percent higher than the national average.”
Commenting on school performance, then-Gov. Markell, in his State of the State speech three years ago, remarked that, “only 20 percent of our kids graduate from high school ready for college or a career.” This despite an additional $119 million in Race to the Top grant funding!
Complicating all this even more is the unknown amount in the budget spent on illegal immigrant social services, especially education.
Representative Tim Dukes (Laurel) wrote recently in The News Journal that, “There is no census of the illegal immigrants living in Delaware, although the Pew Center in 2015 estimated the number was at between 20,000 and 25,000...it is not (legally) possible to count the number of undocumented immigrants in the public school system.” I guess it’s a sanctuary secret.
He continues that these children are “often handicapped by lack of English skills making them more difficult and expensive to educate...Simply put, Delaware does not have a complete understanding of the expenses associated with illegal immigrants as it relates to public health care, hospitalization, the criminal justice system, the correctional system, public education or social services.”
The Roundtable suggests that, “...the state can go a long way toward restoring budget balance by restraining spending growth over time, especially in the areas of K-12 Education, Corrections, Public Welfare and personnel costs...”
But, how do you do that without a handle on illegal immigration costs?
Confused by budget complexity? Just look at the big picture. It tells all.
According to the U.S. Census, the percentage of change in Median Household income in Delaware from 2000-15 was -16.7 percent, ranking 49th among states (D.C. was first at +23.5 percent; US = -2.2 percent). Meanwhile, according to budget.delaware.gov, state government has grown by 106 percent since 2000.
With two economic booms and two busts already in this young 21st century, it’s been a rough ride for Delaware citizens since 2000, but you would never know it by the wallet-draining expansion and overspending by state government.
Geary Foertsch lives in Rehoboth and writes from a libertarian perspective to promote economic liberty, non-cronyism free markets, small government and a non-intervention foreign policy. He can be contacted at email@example.com.