Delaware lawmakers react to proposed tax hikes, cuts to education

WDEL | by Lauren Huet

Delaware lawmakers reacted to Governor John Carney’s budget proposal Thursday. The $4.1 billion budget proposal for Fiscal Year 2018 is a 50/50 split between cuts and revenue generating proposals.

Democratic Representative Paul Baumbach (D-Newark) was pleased with the proposal.

 “I’m happy that it wasn’t my job to come out with a balanced budget. I think Governor Carney did a good job with an extremely difficult challenge,” said Baumbach. “I like Governor Markell’s 2/3 on revenues and 1/3 on expense. Governor Carney took a 50/50. I think that’s quite reasonable. I think he’s done a good job of that and now it’s up to the General Assembly to take it forward.”

Republican Senator Ernie Lopez was also pleased overall with the proposals.

“I’m pleased thus far with what I’ve seen and the overall presentation, but I’m looking forward to digging more, and getting my hands into the materials, and going over it with a fine tooth comb,” said Lopez.

However, he does have concerns about raising personal income taxes across the board.

“I think it’s important right now for all of us, both Democrats and Republicans, to get together and see where we can continue to find savings,” said Lopez. “I think before we go off and start asking our constituents, and telling them they need to be paying more, we need to show them first where we’re finding the savings.”

Lopez does support the proposed raise in the corporate franchise tax.

“I think that was a very prudent step forward. I think Delaware is always going to be seen as the jewel in the crown in regards to the corporations and incorporations. When you see companies making the kinds of dollars that they do, and getting the services that they get in Delaware better than anywhere else, I think that’s a more than reasonable rate increase and one that I approve,” said Lopez.

In the face of Delaware’s $386 million budget gap, Baumbach said that everything, including the proposed raises in personal income taxes, the corporate franchise tax, and cigarette tax need to be on the table.

“Most of the revenue increases are on the corporate side, the corporate franchise tax. A lot of that is paid by out of state companies. So as a Delawarean, yes, I would love to see that’s where most of the dollars come from,” said Baumbach. “In addition, we need to share some of the burden also, and that includes the higher income people for the personal income tax.”

Baumbach is concerned the General Assembly will not have the votes to raise the personal income tax, and said they have been unable to do so year after year.

“I’m hopeful that our back is up against the wall, and that we’ll get the votes needed for this kind of balanced approach. I think Governor Carney has crafted a very fair budget. We can always disagree on one line, or that line, but overall I think it’s the right approach. The question is, is the General Assembly willing to do the right thing?”

Democratic Representative John Kowalko believes raising the personal income tax without creating new tax brackets is taking from the middle class.

“We can no longer afford to take a finite amount of money from the middle class through the lower class, no matter how little it is, because that is money that goes right into the economy,” said Kowalko. “That is not money that’s saved. That’s not money that’s put into the sock drawer. That is money that is spent at the neighborhood store, and that’s what will build a robust economy.”

The governor’s budget also proposes cutting $22 million from the Educational Sustainment Fund, but allowing school districts to increase property taxes to match that loss in funding, without a referendum.

“I think that’s a poison pill for the school district,” said Kowalko. “We’re putting these school districts in a position where they cannot win, because they will have to raise the match tax, which is a tax that can be raised without a referendum, but that will poison the atmosphere for any future referendums.”

Senator Lopez had a different take.

“Anytime we can allow the districts to have more flexibility, I think that’s important. I was pleased to see the investment in more teacher hirings,” said Lopez. “I was disappointed not to see more of some sort of impact in regards to what the biggest driver is in terms of cost, and that’s Medicare, Medicaid.”

The budget includes investing $25.1 million for new teachers as the number of students in Delaware schools rises.

In a budget proposal where the governor’s theme is “shared sacrifice” cuts include $25 million for Open Space, Farmland and the Energy Efficiency Fund until resources are available.

“As someone who represents the fastest growing district in the state, I do have some really significant concerns about them taking away money from the Open Space and the agriculture farmland preservation program,” said Lopez. “Those are dollars that I look forward to be fighting for as someone who represents the coastal district and when our land is getting gobbled up by developers.”

Now that the governor has presented his proposals, Baumbach said it’s time for lawmakers get to work.

“I’d like for the General Assembly to do work before June 30th on this,” said Baumbach. “We have big steps and this is not something we should be doing at the last minute. We need to be doing our work together, all four caucuses talking to each other, listening to each other, and we need to get these revenue votes done way before June 30th. Last minute decisions are usually ugly for our state. So, let’s avoid that this year.”

Read original article and watch video interview.

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