General Assembly Post-Game Wrap-Up/Pre-Game Show: Weds., Jan. 13, 2016
The daily Session Activity Report consists of newly-introduced legislation and committee assignments for the legislation.
So. We have two bills that somebody wants fast-tracked in January:
HB 240 (Longhurst) ‘establishes the Statewide Afterschool Initiative Learning Program. The Program will provide grants to public schools, that qualify as Title I schools, to develop afterschool engagement of students that will provide extended learning, homework assistance, enrichment, and nutrition.’ Sounds good. There is, however, no funding mechanism mentioned in the bill. Nor does the bill, for reasons I cannot understand, require a fiscal note. So, how are they gonna pay for the program? Will it be paid for from the Mortgage Settlement Funds? If not, what are you defunding in order to fund this? We may or may not find out sooner rather than later. Bill’s scheduled to be considered during today’s House Education Committee. BTW, here’s my uninformed guess as to what’s happening here: Sponsors can claim that this is merely ‘enabling’ legislation and that the funding mechanism will be determined by JFC. Which, of course, is totally disingenuous. You don’t need enabling legislation if the JFC funds such a program and establishes the criteria in the epilog language. But that would bypass touchy-feely brochure fluff. Someone, please prove me wrong.
HB 235 (Longhurst), the ‘Delaware Competes Act‘, allegedly ‘reforms Delaware’s business tax code to incentivize job creation and investment in Delaware, to make Delaware’s tax structure more competitive with other states, and to support small businesses by making tax compliance less burdensome. The principal change in the Act is to remove disincentives for companies to create Delaware jobs and invest in Delaware property that currently exists in how income is apportioned to Delaware for purposes of the corporate income tax’. In other words, tweaking the formula to remove inequities that create disincentives to job creation. Fine. Here’s what they didn’t tell you. This is not some revenue-neutral tweaking. Nope. There is a fiscal note attached to this bill, and here are the projected costs to the state’s coffers:
Fiscal Year 2017 $ 8,200,000
Fiscal Year 2018 $17,600,000
Fiscal Year 2019 $22,900,000
So, let’s be honest here. It’s yet another sop to business with not even a projection as to how many jobs will be created due to the removal of alleged disincentives. And this is annual revenue loss. Can someone in a position of authority project with any degree of accuracy as to what the rewards to the state and its workers will be? Not to mention that, if Delaware does this, so will other states, leaving us right where we started. But at least the Honorables will get pats on the head and campaign checks. Meaning: Mission Accomplished. Nice name, too. ‘Delaware Competes’. As if we haven’t already sold our collective souls to whatever the Chamber says is needed.
(Parenthetical Aside, which explains the parentheses…don’t worry, yes I easily have enough anger in reserve to at least get me through June.)
Today’s Senate Committee Meetings.
The Senate Education Committee considers HB 186 (K. Williams), which adds charter schools to the list of entities for audits through the Auditor of Accounts. The bill passed the House primarily on a party line vote, with Reps. Jaques and Speaker Pete the only D no’s along with all the Rethugs. Makes me think it’s a good bill.
The Senate Banking and Business Committee considers a ban on ivory and rhino horns.
Today’s House Committee Meetings. (You can click on the committee of interest to see the agenda.) Highlights, other than what was already covered:
The House Administration Committee considers a Joint Resolution apologizing for Delaware’s role in slavery. Not surprised that B. Short and B. Townsend are among the co-sponsors. No Bethany Hall-Long, though…
The Business Lapdog Committee considers legislation requiring that ‘health insurance offered in this state provide coverage for in vitro fertilization for persons who, along with their partner, are genetic carriers for spinal muscular atrophy or cystic fibrosis’. The purpose of the bill is to enable carriers to have healthy offspring.
Coming tomorrow: John Kowalko goes for the Veto Override of HB 50 in the House.
Tags: Delaware General Assembly, El Somnambulo, Featured, Steve Tanzer Delaware
Any Democrat who votes for the Delaware Competes Act must resign from the party and join the Republicans.
House Bill 240 is actually coming from a part of the Every Student Succeeds Act signed by President Obama last month. This is the part concerning “21st Century Community Learning Centers”:
Activities and programs covered under this grant to support access to a well-rounded education must be coordinated with other schools and with community-based services and programs, and can be partnerships with higher education institutions, business, nonprofits, community-based organizations, or other public or private entities. Activities can include: College and career guidance and counseling programs; Programs and activities that use music and the arts as tools to support student success through the promotion of constructive student engagement, problem solving, and conflict resolution; Programming and activities to improve instruction and student engagement in science; technology, engineering, and mathematics including computer science; and Efforts to raise student academic achievement through accelerated learning programs.
Each LEA will use a portion of its funds to develop, implement, and evaluate comprehensive programs and activities coordinated with other schools and with community-based services and programs that foster safe, healthy, supportive and drug-free environments that support student academic achievement, include parental involvement, and may be conducted in partnership with an institution of
higher education, community-based organization, or other public or private entity. These programs may include evidence-based drug and violence prevention programs; mental health services; programs or activities that integrate health and safety practices into school athletic programs; programs that support a healthy, active lifestyle, help prevent bullying and harassment, improve instructional practices for developing relationship-building skills (to prevent coercion, violence or abuse), provide mentoring and school counseling for children at risk of academic failure or dropping out of school or delinquency, establish or improve school dropout and re-entry programs; providing learning environment and teaching skills for school readiness and academic success. The grants can also provide high-quality
training for school personnel to allow to respond to various issues and dollars for child sexual abuse awareness and prevention activities. Other uses: designing and implementing a locally-tailored plan to reduce exclusionary discipline practices, schoolwide positive behavioral interventions and supports; and site resource coordinators.
A portion of funds shall also be used for activities to support the effective use of technology which may include: Professional learning tools, devices, content and resources for educators, school leaders, and administrators
Building technological capacity and infrastructure
Developing or using strategies for delivery of specialized or rigorous academic courses and curricula through the use of technology
Carrying out blended learning projects
Professional development in the use of technology
Is the money coming from the feds?
DD-I wouldn’t go that far. I just think we need answers as to what the tangible benefits will be concerning legit job creation directly associated with this Act. Failing that, then why are we doing this?
I read the News Journal summary of the Delaware Competes bill (of course with a giant grain of salt). On the face of it I have no problem with adjusting the formula used for corporate tax if that brings us in line with other states – as long as the net revenue from that tax remains the same or greater. But I assume of course that it is just a stealth tax cut for the rich.
As the fiscal note for the bill demonstrates, state revenue declines–$22 mill by year 3.
Just like every other tax break/credit/loan we give business, there is no empirical evidence as to what may come back to our coffers via increased employment.
If it is revenue neutral, then fine. But the fiscal note says it is not. Until such time as it is proven the Act is revenue neutral, any Democrat voting for this must resign from the party. In fact, revenue neutral is not a good thing either. It should be revenue positive.
They may be counting on a Delawarean winning the next Powerball drawing. Estimated $80 million in income taxes on the winning ticket would generate enough revenue to pay for four years of new corporate tax breaks (maybe five, if the prize keeps soaring).
Actually, and I have figured this out because I enjoy daydreaming about buying modern office space in Wilmington and Dover and turning DL into an actual news organization if I won the money, Delaware does not tax lottery winnings.
So no Powerball for you Delaware.
Not as income? The feds have a level 45% because it falls under “gifting” …I think.
No, standard income tax rates apply. Actually, when you get the lump sum payout, only a 25% federal withholding applies. So don’t go spending everything at once because you will owe the difference between 25% and 39.6% at tax return time.
https://www.usamega.com/powerball-jackpot.asp
I think Delaware passed a law a few years ago that changed the taxation of lottery winnings (so that they are taxed).
http://legis.delaware.gov/LIS/lis145.nsf/7d9d12462288129f852568a500018e7d/a836a012a2913ee8852575e4006510eb?OpenDocument
Booooooooo. So this is what a Republican thinks like. I feel more evil.
If I won, I would give the Feds an even 40% and be done with it.
One strategy for claiming Powerball winnings I have heard of is to set up a Trust and have the trust cash in the ticket. Tax free. Anyone know if that is workable? You’d have to pay taxes on what you withdraw from the Trust, but not on the entire amount.
RE: Delaware Capitulates Act: Secretary Cook already laid out how the $38 million gets recouped … weren’t you listening? Part two is where they (a) eliminate tax carve-outs for seniors; (b) eliminate itemized deductions; and (c) increase the licensing costs of in-state small-to-middle-size businesses. It’s already in the plan. They also intend to repeal the Estate Tax. This will all be presented under the mantra of “paying for the services we all want to receive” or some similar nonsense talking point, and it will be necessary to “fill the hole in the budget” that they created.
There is no job creation note because the act isn’t about job creation, it’s about convincing more corporations to incorporate in Delaware, not to physically move here. That was also made plain the “bipartisan” committee report.
The irony here is jason’s point about shareholder primacy and trickle down economics; Delaware is now doubling down on a strategy that has never, in the long term, actually worked, and with DuPont walking out the door, AstraZeneca rumored not to be too far behind, Bloom starting to have problems despite their cushy state subsidy, the future promises to look more and more like Detroit or Flint than anything else.
Steve–That stuff is not in this bill. It IS in the so-called BS sop to the rich plan bought and paid for by Markell and the Business Roundtable, and released in the fall. That’s what I cautioned against in yesterday’s column.
This IS ostensibly a job creation bill in that the stated purpose of the bill is to remove disincentives to job creation. I know, I don’t believe them either.
El Som: of course it is not in the bill. I didn’t say it was. I referred to “Part Two” when they put the other half of the Cook Commission agenda into legislation.
The state will find a way to tax or “user fee” citizens to compensate for the lost revenue of reducing business taxes. That is, we’ll underwrite this welfare program for rich corporations.
@Steve Newton:
The Delaware Competes Act has nothing to do with convincing firms to incorporate in Delaware. A firm that incorporates in Delaware, but does no actual business in Delaware, does not pay corporate income tax in Delaware.
[To clarify, a firm does no actual business in Delaware if the firm does not own or rent property in Delaware, have employees in Delaware, or generate income or gross receipts in Delaware.]
The Act benefits firms that have employees and property in Delaware but do not generate much income or gross receipts in Delaware.
Many other states use the single factor (sales) formula. Only 9 states, including DE, still use the 3 factor (sales,payroll,capital) formula.
You guys keep missing the point. The Delaware Capitulates Act, as I clearly said, is only the FIRST PART of a two-part strategy for implementing the strategy proposed by the Cook Commission.
Of course it’s not in this legislation. First you blow the hole in the budget and then you push through the other changes as necessary to raise the revenue.
The knee-jerk reaction here is pretty clear evidence that I’m right (cf Anon above).
Providing a fact is a knee jerk reaction?
Some of you sound like idiots.
(I am referring to Steve Newton)
Steve Newton could well be right. First you blow an annual $22 mill hole in the budget. Then you shrug your shoulders and claim you have no choice but to fill the hole.
Sounds plausible, which is why this bill shouldn’t be pushed through like this. They’re doing it right in front of our eyes, and it sucks.
@ El Som, HB 240 is probably going to source its funding from Title I federal grant applications.
@Steve Newton:
I still fail to see how the Act encourages firms to incorporate in Delaware. Unbalancing the budget would create a risk that fees on incorporation (that is, franchise taxes) will be increased.
Davy: That’s not the bill’s intent. The bill supposedly would eliminate disincentives for businesses that are already here to do more hiring.
As is typical with these types of bills, nobody, NOBODY, has put forward any plausible projection as to how many jobs this might create and how much new revenue, if any, would redound to the state.
We KNOW, through the fiscal note, that the bill will blow a $50 mill hole in state revenues over the next three years. That gap is gonna have to be closed somehow. And we KNOW it won’t be from the people and companies getting this undeserved windfall from the state.
@El Somnambulo:
This is what Steve Newton wrote on January 13, 2016 at 4:29 p.m.: “There is no job creation note because the act isn’t about job creation, it’s about convincing more corporations to incorporate in Delaware, not to physically move here. That was also made plain the ‘bipartisan’ committee report.”
Again, I am not sure how the changes would convince a corporation to incorporate in Delaware.
No, that’s not the bill’s intent. I don’t think that’s what Steve said, but if he did, that’s incorrect. Just read the synopsis.
BTW, there is no such thing as a job creation note. But that shouldn’t in any way prevent the people and institutions who are looking to push this thing through from at least sharing the purported pluses the bill would provide.
As things now stand, it’s just $50 mill leaving the State coffers and landing in the hands of business. With not even a pretext of any return in value to the state.
How about cutting budgets? This is only the beginning of the flight out of DE.
TK, That’s some goddam genius analysis, that is.
Jason, It’s the only way to stop the bleeding of lost income tax dollars from moving their residency out of DE.
We have plenty of takers but not so many givers..
Tom, you got data and stats to back up your lamentations there? Or just anecdotal stories from up there on that high horse?
Brian, Tom is having trouble acknowledging that the takers are the corporations and the givers are the individual taxpayers, whose interests are no longer represented by those elected to carry out that responsibility.
His suggestion about cutting the budget — what a joke! Wave $22 million under the corporations’ nose and they’ll say “we’ll take it,” and they could care less whether the budget is cut or not. After all, they’ve got theirs.