The Delaware State Legislature has been drifting, rudderless, and has fallen asleep at the helm. And it’s all Pete du Pont’s fault.
Pete du Pont was elected Governor of Delaware in 1976 and served for eight years. While in office, he balanced the budget, passed a balanced budget amendment, began the process of slashing the state income tax top rate from 17.5% to 5.95% and held year-to-year spending increases to 1%. As a result, state revenues increased by more than 300%. He passed a banking bill designed to attract 2 New York banks and 1,000 jobs but attracted 30 banks and 43,000 jobs. By the end of du Pont’s term, Delaware had a vibrant and diversified economic portfolio that included auto manufacturing, chemicals, banking and a growing expertise in corporate registration and litigation. In short, Pete du Pont set Delaware on an unprecedented 25 year run of prosperity.
The problem is Pete du Pont’s 25 year run of prosperity started 30 years ago. Now the State Legislature, which in many cases, is still comprised of politicians originally elected during the golden years immediately following du Pont’s term, has coasted for too long.
The core industries of that prosperity have dwindled. The chemical industry, once the frontrunner in the First State, peaked in 1993. The Dupont Company once employed over 28,000 here, but now employs less than 8,000. Hercules is gone.
Automotive manufacturing peaked in 1995. Now Chrysler and GM are gone and no automobiles are manufactured in the First State.
The banking industry reached its high water mark in Delaware in 2000. Since then, mergers, acquisitions, a struggling economy and new federal regulations governing the credit card sector have capped the growth of this industry in Delaware.
Delaware’s standing as the corporate domicile of choice has been threatened by the recently passed Financial Reform Act. An equal threat to the state’s corporate desirability comes from overly aggressive escheat audits, presumably spurred by a state government desperate to make up perceived shortfalls in traditional revenue streams.
Despite an aging economic environment, one aspect of Delaware economic activity continues at a robust pace – state spending. Delaware ranks 2nd among the 50 states in state spending per citizen, eclipsed only by oil-rich Alaska. The largest employer in the State of Delaware is the State of Delaware! Despite the state’s high spending, many services lag behind other states and when services are added, new fees are imposed. When Delaware decided to institute universal recycling this past year, the state legislature found it necessary to implement a $.04/bottle sales tax on carbonated beverage bottles to finance the start-up costs for the recycling scheme.
A similar situation exists in our schools – Delaware is 1st in administrative cost per pupil, 8th in overall cost, but 27th in test scores and 36th in graduation rates. Our legislature has authorized payment for champagne but accepted delivery on watered down beer.
We need to revitalize Delaware’s economy, schools and business environment, but Dover doesn’t know how. That is because the people who are in our legislature never had to. Our legislature is largely the same one that inherited the Pete du Pont successes. The average time of legislative service in the Delaware State Senate is 17 years! Of 21 Senators, 15 have 10 or more years of legislative service and 9 of 21 have more than 20 years of legislative service! They served during a time of prosperity and do not know what to do in the current situation. Their long tenure renders them out of touch, inexperienced with basic business common sense, and therefore, unqualified to lead at this time.
Pete du Pont’s greatest accomplishment was establishing a common sense, pro-business attitude in state government in Delaware. Governor du Pont understood how business works and knew what a good deal looks like. However, the intervening years of prosperity have caused that business-like attitude to fade from our state government’s landscape.
Like the current administration, Gov. du Pont also faced an automotive crisis with the bankruptcy of the Chrysler Corporation. However, unlike the current administration, his investment was not a “venture capital type’ investment in a start up company, but a correct use of the bankruptcy system to restructure an existing, strong automotive brand. The current administration has jumped in with both feet into a deal where more than $250,000 is being spent for each job. Du Pont likely would have been very hesitant to invest so much of his business development funds in one unproven, experimental basket. The enormity of developing a completely new automotive technology and marketing it to Americans would also not be lost on him. Can you say Bricklin? Can you say DeLorean?
Pete du Pont’s instincts would have led him to invest in a much more diversified business base. It would not have been as glamorous as the apparent home run of landing 2,700 “green” union jobs all at one time. But I am sure Pete’s plan would have had a higher return on investment and a more secure future.
Bad politics should not be allowed to trump good business sense.
We need a state government where good business sense and economics trumps politics! You get that by sending passionate business people to Dover. You get that be sending people to Dover who have a vision of Delaware as a nimble, fast moving, business-minded successful center for economic development, a place where decisions on taxes, fees, regulations, education and infrastructure all are made with the vision of creating a winning business environment.
We need to become Maryland’s, New Jersey’s and Pennsylvania’s biggest economic problem.
Twenty five years of prosperity has left our current legislature uniquely unable to provide the leadership we need now. It is time to replace them with new blood prepared for the challenges ahead.
