Legislative Update, November 21, 2022

Emily Justison

Tuesday, November 22, 2022

Legislative Update, week of November 21, 2022

Midterm Elections Recap

Congressional

As of this writing, the United States Senate will continue with Democrats in the majority. Democrats will go into the 118^th Congress with at least 50 seats, which, when Vice President Harris’ vote is counted, constitutes a majority of 51. Two Senate races remain to be determined, Alaska and Georgia.

Alaska uses ranked-choice voting, so full results will not be available until November 23. In the Alaska Senate race, Senator Lisa Murkowski (R) will face off against Kelly Tshibaka (R) in the final round of voting. Hence, regardless of the outcome, the seat will be Republican.

There appears to be a challenge brewing to Senator Mitch McConnell (R-Kentucky) for the role of Senate minority leader. Senator Rick Scott (R-Florida) has stated his intention to run for the slot.

In Georgia, there will be a runoff election as Senator Raphael Warnock (D) received 49.4% of the vote, Herschel Walker (R) received 48.5% and Libertarian candidate Chase Oliver garnered 2.1%. Under Georgia law, if no candidate receives more than 50% of the vote, a runoff election is held.

It appears that the House of Representatives will shift to a narrow Republican majority once the remaining races are called. However, their majority is going to be considerably slimmer than was projected. As of this writing (November 16), there are 217 Republican seats and 208 Democrat seats in the House. 218 seats out of 435 are required for a majority. 10 races remain outstanding. It appears likely that current House minority leader Kevin McCarthy (R-California) will be the next speaker of the House.

As recently as the week before the election, polls were projecting Republicans with 225 seats which fell into the categories of “safe” (178), “Likely GOP” (20), or “Leans GOP” (30) and Democrats with 174 seats which fell into the categories of “safe” (146), “Likely Dem” (16) or “Leans Dem” (12). Those same polls categorized the remaining 32 seats as “toss-ups”, 28 of which were Democrat and 4 of which were Republican.

In the race for Delaware’s lone seat in the U.S. House, Congresswoman Lisa Blunt Rochester (D), won reelection with 55.47% of the vote versus Republican challenger Lee Murphy.

State of Delaware

All three statewide row office races went to the Democrats, albeit by somewhat narrower margins than in recent years.

As for the General Assembly, the House will remain in Democratic Party hands with a 26-15 majority and the Senate, will also retain its Democrat majority, with an increase from 14-7 to 15-6 due to the loss of the seat previously held by Ernie Lopez (R-Lewes).

New Castle County Government

One-half of New Castle County Council district seats (6 out of 12) were on the ballot. Only one member faced a general election opponent, Councilwoman Dee Durham (D-2^nd District). During the September primary election, there was only one council race, for the open seat vacated by Councilman Ken Woods (D-1^st District) which was won by Brandon Toole (D).

Policy Implications

The progressive wing of the Delaware Democratic Party made substantial gains during the September primary election and were able to hold onto and expand those gains in the General Election. T

The NCC Chamber will continue to work to advance a pro-growth agenda and will seek dialogue and collaboration where proposed legislation and/or regulation raises concerns. Where dialogue and collaboration are not sufficient to address concerns, we will continue to advocate for our members and vigorously oppose problematic legislation and regulation.

During the 151^st General Assembly (2020-2022), there was the most substantial volume of legislation of concern to the business community in recent memory. That trend is expected to continue in the 152^nd General Assembly, which begins in January.

Based on recent trends and information at hand, the Chamber anticipates legislation of concern in the following areas (list not exhaustive):

Environmental Regulation & Land Use

Employment Law

Data Privacy

Health Care

Property & Casualty Insurance

Banking & Financial Services

Delaware General Corporation Law

FEDERAL ISSUES

FY 2023 Budget

On September 30, the end of the federal fiscal year (FY 2022), Congress passed, and President Biden signed, a continuing resolution funding the federal government at FY 2022 levels through December 16. The CR also included $12.3 billion in funding for Ukraine.

Congress began scheduling mark-ups for individual FY 2023 appropriations bills in June.

The Biden Administration released its full FY 2023 budget request with a base discretionary funding request of $1.582 trillion, which is a 7.4% increase over FY 2021.

Congress is supposed to pass a budget resolution to set out basic principles by April 15 each year. However, one was not adopted for FY 2023.

Instead, the House of Representatives used a process known as “deeming” which allowed the House Appropriations Committee to begin their work assuming adherence to an overall spending level set forth in a resolution passed in June.
The Senate has not yet considered a deeming resolution. However, the Senate Appropriations Committee released its spending bills at the end of July.
Republicans have argued that proposed non-defense discretionary spending is too high and defense spending is too low.

The deadline to pass a budget package or another continuing resolution to avoid a shut-down is December 16.

Inflation Reduction Act of 2022

President Biden signed the bill on August 16. The legislation included provisions aimed at reducing the cost of prescription drugs and health care (including the continuation until 2024 of ACA premium subsidies which were scheduled to expire this year), combatting climate change, and increasing taxes on corporations. Studies have indicated that, though the title suggests that the bill is an inflation-reduction measure, it will likely have little or no impact on inflation.

The Congressional Budget Office has concluded that the bill will have a “negligible effect on inflation in 2022.” In 2023, it is projected to result in either a 0.1 reduction or a 0.1 increase in inflation, or some change within that miniscule range. However, CBO has projected that it could reduce the deficit by $100 billion over the next decade.

Major provisions include:

Creation of a 15% corporate minimum tax rate: Corporations with at least $1 billion in income will have a new tax rate of 15%. Taxes on individuals and households won’t be increased. Stock buybacks by corporations will face a 1% excise tax.
Prescription drug price reform: One of the most significant provisions of the Inflation Reduction Act will allow Medicare to negotiate the price of certain prescription drugs, bringing down the price beneficiaries will pay for their medications. Medicare recipients will have a $2,000 cap on annual out-of-pocket prescription drug costs, starting in 2025.
IRS tax enforcement: The IRS has been warning for a number of years about being underfunded and being unable to deliver on its duties. The bill invests $80 billion in the nation’s tax agency over the next 10 years.
Affordable Care Act (ACA) subsidy extension: Currently, medical insurance premiums under the ACA are subsidized by the federal government to lower premiums. These subsidies, which were scheduled to expire at the end of this year, will be extended through 2025. Approximately 3 million Americans could lose their health insurance if these subsidies weren’t extended, according to the Department of Health and Human Services.
Energy security and climate change investments: The bill includes numerous investments in climate protection, including tax credits for households to offset energy costs, investments in clean energy production and tax credits aimed at reducing carbon emissions.

The bill passed with all 50 Democratic votes in the Senate on Aug. 7. Democrats were able to secure two key votes, from Senators Joe Manchin (D-W.Va) and Kyrsten Sinema (D-AZ), after the pair opposed earlier versions of the bill. Sinema, the last party holdout, expressed support for the bill after the carried-interest loophole provision was dropped.

The bill was passed in the Senate without Republican support under the reconciliation process. The House passed the bill 220-207 on Aug. 12.