Markell Proposes Tax Hikes, End To Senior Tax Breaks, To Paramedic Support And Aid To Non-Profits

Dover – State Republican leaders are reacting to Jack Markell’s Proposed State Operating Budget.  In a statement released by Republican Communications Officer Joseph Fulgham leaders from the GOP expressed their concerns and criticisms for the proposed budget.

Governor Jack Markell released his recommended state operating and capital budgets Thursday afternoon. The spending plans are for Fiscal Year 2018, which begins July 1st.

The budgets are the last of the Markell administration, which ends on Tuesday with the inauguration of Governor-elect John Carney.

The proposed $4.128 billion state operating budget represents an increase of about 1.1-percent over the current budget. However, anemic state revenue growth, combined with higher state expenses, produced a projected budget shortfall of $350 million.

By law, Delaware must pass a balanced budget. The Markell administration plan bridges the gap with a heavy reliance on $216.6 million in higher taxes and tax revenue shifts. Among those increases are a hike in the Franchise Tax on large companies; changes to the Personal Income Tax; a 33-percent jump in the Realty Transfer Tax; and a Cigarette Tax increase of $1 a pack (to a total $2.60 per pack). The plan would also transfer to the state one-sixth of the Realty Transfer Tax revenue currently flowing to the counties’ coffers.

Additionally, the proposal calls for ending the state’s cost-share of county paramedic services; eliminating a property tax subsidy for senior citizens; cutting aid for non-profit agencies; and slashing the state’s cost-sharing on future school construction.

State House Republican leaders – State House Minority Leader Danny Short (R-Seaford) & State House Minority Whip Deborah Hudson (R-Fairthorne) – were quick to criticize the proposals, noting they likely would not have been made by the Markell administration had it not been in its final days.

Among Their Criticisms and Concerns:

· The plan relies disproportionally on tax increases. More than 60% of the gap is bridged with proposed tax increases or tax revenue shifts.

· The base budget reductions to state agencies in the operating budget total $31.8 million, which is only about 9-percent of the $350 million revenue shortfall.

· The state’s problems become the counties’ problems in this plan. The state would take $11 million in revenue from the Realty Transfer Tax that is currently flowing to the counties. At the same time, the counties are being asked to pick up $10.8 million in paramedic expenses previously paid by the state.

· Public schools will have a more difficult time getting built under the plan. One of the proposals calls for reducing the state’s share of new school construction to 50-percent. Capital school referenda already have a hard time winning approval, and this will significantly raise the bar.

Both Reps. Short & Hudson note that the budget is going to be a moving target. By law, the state cannot spend any more than 98-percent of projected revenues, and there will be four more state revenue forecasts between now and the start of the new fiscal year. The funding gap will go up or down as a result of those projections.

Reps. Short & Hudson added that a new state budget will not need to be enacted until June 30th, five-and-a-half months after Gov. Carney takes office. They said they hope the Carney administration will work with the General Assembly to build a consensus on how to meet Delaware’s fiscal challenges.

Last Budget1 – State House Minority Leader Danny Short.
Rep. Short says the budget plan proposed by the departing Markell administration is unlikely to have many supporters
Length: 11.8 secs. Outcue: “the new governor”

Last Budget2 – State House Minority Leader Danny Short.
Rep. Short says the outcome of the looming special election to fill Lieutenant Governor-elect Bethany Hall-Long’s seat in the Senate will play a role in future budget talks…
Length: 14.6 secs. Outcue: “Republican hands”

Last Budget3 – State House Minority Leader Danny Short.
Rep. Short says the budget proposal lacks creativity, relying heavily on tax increases and transferring state costs
Length: 15.2 secs. Outcue: “is going to impact”

Last Budget4– State House Minority Whip Deborah Hudson.
Rep. Hudson says this budget proposal was prepared by an administration that won’t be here after Tuesday, providing an opportunity for a fresh start
Length: 15.0 secs. Outcue: “$350 million budget deficit”

Last Budget5– State House Minority Whip Deborah Hudson.
Rep. Hudson says the size of the budget shortfall is tied to the state’s revenue forecasts, which may change for the better by the start of the new fiscal year on July 1st…
Length: 15.3 secs. Outcue: “very serious deficit”

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First State Update's Delaware editorial team covers New Castle County, Kent County and Sussex County breaking news, political news, and general news stories. We bring the reader the latest news from the Wilmington, Newark, Dover, Rehoboth Beach and all point in between. If you have news to share, email us at desk@firststateupdate.com.

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