Senate Bill 20, a Constitutional Amendment to Reserve Capital Funding for Capital Projects, Passes the Senate
On April 26, SB 20, sponsored by Senate Minority Whip Greg Lavelle (R-Sharpley) passed the Delaware State Senate, by a vote of 19 “yes” votes and 1 “not voting”. This legislation would serve as the second leg of an amendment to the Delaware Constitution, which would limit the ability of the State of Delaware to appropriate Transportation Trust Fund (TTF) moneys to a purpose other than:
- Capital expenditures on the public transportation system, including the road system and allocations for investments in transportation
- Payment of the interest and principal on all bonds issued before and after the effective date of this Act and secured by monies in the Transportation Trust Fund
- Other transportation-related purposes, including operating expenses funding the Delaware Department of Transportation.
According to the bill’s synopsis, it “essentially creates a lock box on the Transportation Trust Fund that can only be opened by the agreement of three-fourths of all members of each House through a bill separate from the annual budget act, bond and capital improvement act, or grants-in-aid act.” The amendment would also require that, once funds have been re-appropriated by the required three-fourths vote, an additional three-fourths vote would be required to restore them to the Transportation Trust Fund.
All, or substantially all of the Delaware Department of Transportation’s operating budget resides within the Transportation Trust Fund. The practices of shifting DelDOT operating expenses to the TTF began during the Castle Administration. The New Castle County Chamber of Commerce and other business groups have advocated for a shift from that policy for years. This legislation is a step in that direction as it requires that any future policy decisions on the part of an administration and the legislature will need to overcome a three-fourths vote threshold.
After passage, the bill was assigned to the House Administration Committee. It has not yet been scheduled for consideration.
Substitute Bill with Substantive Changes to House Bill 1 (Salary History Ban) Passes House
House Substitute 1 to House Bill 1 passed the House of Representatives on April 27 by a vote or 37 “YES”, 2 “NO” and 2 ABSENT. HS 1 to HB 1 reflected a number of changes that the sponsor made to the original legislation in response to input provided and concerns expressed by the New Castle County Chamber of Commerce, the Delaware State Chamber of Commerce, employment law attorneys and HR professionals. The bill has been assigned to Senate Labor Committee.
Following is a link to this bill on the General Assembly website: http://legis.delaware.gov/BillDetail?LegislationId=25664
A summary of key changes follows (based on conversations with House legal counsel and sponsor):
- The statute has been moved from the discrimination section of 19 Del.C. Chapter 7. Instead, the language will create a new subchapter after the social media statute [§709 (a)] in the title. Proponents of this change believe this is better for employers for the following reasons:
- It removes the implication that, merely by asking for a wage or salary history, that the prospective employer or search firm (agent) had a discriminatory intent
- It allows them to tailor the bill to the narrow purpose of ending the practice of asking for the wage/salary history. If they left it under discriminatory practices under “Unlawful Employment Practices (19 Del. C. §711), or placed it in the Wage Payment Act (19 Del. C. Chapter 11), they would be bound to the remedies in those sections (see point 2).
- They have provided enforcement and penalty power to the Department of Labor in a fashion which is substantially similar to that granted under the Wage Payment Act and the Unlawful Employment Practices Act, EXCEPT THAT:
- There is no private right to sue/private cause of action generated by violations of this new subsection. Unlike in the other two sections, only the Department of Labor will be able to levy the penalties described in lines 20 – 30 of the legislation (below). The language on line 29 indicating that “a civil penalty claim may be filed in any court of competent jurisdiction” does not refer to individuals, but rather to the State Department of Labor which would file such a claim in an instance where an employer did not pay a fine or fines levied for violations of the section.
- The penalties escalate for additional violations (lines 23-25).
- The substitute bill reduces liability/exposure for employers by narrowing what constitutes a single violation. Rather than having each applicant asked for a salary/wage history constituting a separate violation, they have amended the language to narrow it to applying to each position for which applicants were asked for this information. For example, if an employer, or its agent (a search firm) was seeking to fill one executive position, but interviewed 100 candidates, and asked all 100 candidates for their compensation history, that would constitute a single violation of the section, instead of having it constitute 100 separate violations. This change was made in response to concerns expressed by the County and State Chambers, as well as a number of employers and employment law attorneys.
- The substitute bill also includes language designed to protect employers who use third party search firms (lines 12-13). “(c) For the purposes of this section, if the employer can demonstrate that the employer’s agent was informed of the requirements of this section and instructed to comply, then the employer is not liable by an agent under this section.”
Minimum Wage Legislation Remains in Senate Labor Committee
Senate Bill 10, legislation which would increase Delaware’s minimum wage, remains in the Senate Labor Committee, lacking the votes for release. The bill was heard in committee on March 22, and the New Castle County Chamber of Commerce, joined by other business groups and small business owners, testified in opposition.
Senate Bill 10 would increase Delaware’s minimum wage by $2.00 per hour, from $8.25-to-$10.25 per hour in 50-cent increments between 2017 and 2020, and peg further increases to the Cost of Living Adjustment (COLA) under the Social Security Act. The bill’s sponsor, Senator Robert I. Marshall (D-Wilmington) has introduced an amendment which would strike the language which would index increases after 2020 to the COLA (Senate Amendment 1 to Senate Bill 10). Chambers and other business groups remain opposed to the legislation.
In prior years, when seeking to advance similar measures, Senator Marshall introduced the same amendment. Should the bill reach the Senate floor, senators would have the opportunity to vote the amendment up or down before proceeding with the bill.
“Homeless Individual’s Bill of Rights” Legislation in Committee, Hearing Pending
Senator Bryan Townsend (D-Newark) has introduced legislation which would create certain anti-discrimination protections, as well as an administrative review and civil penalty process, where homeless persons are concerned. A link to the bill on the General Assembly website follows: http://legis.delaware.gov/BillDetail?LegislationId=25549
The bill’s synopsis follows:
An individual's housing status should not be a basis for discrimination. This bill establishes a "Homeless Individual's Bill of Rights" that provides rights to protections for individuals experiencing homelessness, including protections from discrimination while in public and while seeking access to housing, employment, and temporary shelter. This bill vests important investigatory and enforcement authority with the State's Division of Human Relations and the State Human Relations Commission, similar to their roles with Delaware's Equal Accommodations Law and Delaware's Fair Housing Act.
While this bill is founded on a noble intention, in practical application, it could bring substantial unintended consequences for business owners, social service providers and municipalities. The sponsor has asked for written input from the New Castle County Chamber of Commerce, other business groups and stakeholders. Upon review of the legislation, please forward any input or questions to Joe Fitzgerald at firstname.lastname@example.org.
Marijuana Control Act in House Revenue and Finance Committee, No Hearing Scheduled Yet
House Bill 110, the Marijuana Control Act, sponsored by Representative Helene Keeley (D-Wilmington), as well as Senate Majority Leader Margaret Rose Henry (D-Wilmington), Senator Bryan Townsend (D-Newark), Representative Paul Baumbach (D-Newark) and Representative John Kowalko (D-Newark), remains in the House Revenue and Finance Committee. The legislation is expressly designed to set up a legal and regulatory framework for marijuana that substantially mirrors that of alcohol in Delaware Code. Licensing, excise tax and associated revenue to the State of Delaware is estimated by proponents to be approximately $22 million per year. Opponents dispute those projections and argue that the social costs, employment concerns and overall negative impact exceed any monetary benefit. Should the bill gain release from committee, it is subject to a two-thirds vote (27 out of 41 in the House/14 out of 21 in the Senate). Governor Carney has indicated that he does not favor legalization at this time.
A link to the bill on the General Assembly’s website follows: http://legis.delaware.gov/BillDetail?LegislationId=25571
Joint Finance Committee Meets to Consider Governor Carney’s Budget Proposal
The Joint Finance Committee met last week to consider the elements of Governor Carney’s FY 2018 “Budget Reset” proposal. Rather than using the Markell Administration’s final recommended budget HB 25, the Carney Administration opted to craft their own set of proposals to address the substantial budgetary shortfall which greeted them upon taking office. What began in January as a $350 million shortfall, widened to $385 million by March, when Governor Carney released his proposal. During the April meeting of the Delaware Economic and Financial Advisory Council (DEFAC), projections indicated that that gap has widened to some $400 million.
DEFAC is a committee comprised of state officials and representatives of the private sector which is responsible for generating and approving the official revenue forecasts on which the executive and legislative branches rely for budgeting purposes. The body meets six times per year: March, April, May, June, September and December. The next meeting is scheduled for Monday, May 15.
Governor Carney’s proposal is comprised of roughly one-half spending reductions and one-half tax and/or fee increases. It was based on the March 20 DEFAC forecasts, which means that the Carney Administration and the Joint Finance Committee will need to find an additional $15 million to close the budget gap – a gap which could widen further over the course of the next two DEFAC meetings.
Key revenue increase recommendations in the Governor’s proposal follow:
- Personal Income Tax: Eliminate itemized deductions in Delaware and increase the standard deduction more than 50% Increase each tax bracket by 0.2 to 0.4 percentage points, with top rate rising to 6.8 percent. Increase the eligibility age for additional personal credits and retirement income exclusions from 60 to 65 in 1-year increments. Effective: January 1, 2018 Revenue in Fiscal Year 2018: $64.6 million
- Corporate Franchise Tax: Create a second tier maximum tax at $250,000 for public companies with greater than $750M in revenue or assets and no less than $250M in revenue or assets. Increase the first tier maximum tax from $180,000 to $200,000 to reflect inflation since the last increase in 2009. Make inflationary adjustments to miscellaneous filing fees. Effective: January 1, 2018 Revenue in Fiscal Year 2018: $116.1 million
- Tobacco Taxes: Increase the tax on cigarettes from $1.60/pack to $2.60/pack. Treat moist snuff and e-cigarettes as Other Tobacco Products (OTP). Increase the tax on OTP from 15% of wholesale value to 30%. Effective: August 1, 2018 Revenue in Fiscal year 2018: $16 million
Should these recommendations be enacted by the General Assembly, they would amount to $196.7 million in new revenue.
The remainder of the proposal involves cuts of about $189 million to reach the $385 million needed to balance the budget at the time the proposal was released. Key cuts and cost savings in his proposal follow:
- 4.5 percent reduction in discretionary spending across all cabinet departments.
- $6.5 million cost savings via increasing state employees’ share of the cost of health benefits.
- $5 million in cost savings from eliminating 200 vacant positions.
- $3.5 million from the elimination of the double state share (a policy whereby married couples who are both employed by the State of Delaware are able to share a single premium for health coverage.
- $25 million reduction in funding for Open Space and Farmland Preservation, as well as for the Energy Efficiency Fund (until resources are available)
- $ 22 million reduction to the Educational Sustainability Fund; This proposed reduction was accompanied by a recommendation that school districts be afforded the ability to raise the match tax without a referendum in order to cover reductions.
- $15 million reduction in funding for school district and charter school operations.
- $5 million in cost savings from reducing the Senior Property Tax Credit by $100.
- $3.3 million reduction in funds to higher education.
- $2.6 million in savings by reducing Medicaid dental reimbursements by 14 percent.
- $1.2 million in cost reductions from Fleet Services and energy expenditures.
- $594,300 for reduction to pass-through programs.
- $460,800 to reduce funding for Delaware Art, and Library Standards
- $125,000 from eliminating the Polly Drummond Hill Yard Waste Site
- $171,000 from eliminating the Board of Parole
The Joint Finance Committee will be working during the month of May to accomplish a major part of the work and voting required to compile the final operating budget, which will come before the House and Senate for consideration in late June. Their task may be complicated by continued widening in the structural budget gap in May and June.