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Archive for May 25th, 2012

Readers of this blog know that I like data. Figures never lie — although liars do figure… More data to support my view that Rep. Williams is making a purely political decision so that he can become Mayor of Wilmington by burdening Delawareans — low income ones as well as high income ones — with higher taxes and lower services for years to come.

Again, if this is an indication of the type of Chief Executive he’ll be for Wilmington, perhaps Bill Montgomery is the best choice…

The Delaware JFC: Clueless?

The Joint Finance Committee (JFC) of the Delaware legislature has proposed a 1% hike in the salaries of all state employees…including public education, colleges and universities, and retiree pensions. The estimated $21 million addition to the FY 2013 expenditures (July 1, 2012 to June 30, 2013) flies in the face of the state’s fiscal realities.

For the current FY 2012 ending in June, state expenditures will have risen 10.4% over FY 2011. State revenue, however, is projected to come in -5.5% lower than last FY. The gap between expenditures and revenues has been made up primarily by carry over funds from the previous year and borrowing.

This is not a healthy picture.

Over the past seven years total state salaries have risen 3.6% per annum and fringe benefits by 6.4%. Pension payments have soared by 10.3% a year while the funded pension liability has dropped from 103% to 94%. The total unfunded health care liability for state retirees is now close to $6.0 billion.

Meanwhile, over this same time period Medicaid spending by the state has risen 12% a year and at $630 million now eats up over 17% of the state budget. Finally, state payments for contractual services have gone up almost 15% a year.

The Delaware Economic and Financial Advisory Council (DEFAC) projects FY 13 revenue to be almost $3.7 billion, a 10.6% increase. This drops to an 8.9% increase when a one-time $60 million tax settlement is excluded. The 8.9% includes a very optimistic 57% jump in the net corporate income tax and an extraordinary hike of 81% in revenue from abandoned property.

If the corporate income tax and abandoned property revenue rise only 8.9%, and the one-time $60 million is excluded, FY 13 revenue will only rise by 1.5%. And DEFAC predicts that FY 14 revenue will come in -2.0% below the optimistic FY 13 projection.

Both the Delaware Office of Management and Budget and the Department of Finance has tried to get the JFC to face reality. The response of JFC co-chair, Rep. Dennis P. Williams, is “you propose and we dispose.”

Such a caviler [sic] attitude in face of the dire circumstances the state of Delaware confronts is a recipe for fiscal disaster.

Dr. John E. Stapleford, Director

Center for Economic Policy and Analysis

via Caesar Rodney Institute.

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The News Journal ran a story today about the Joint Finance Committee’s vote for a State Employee pay raise. Several members of the committee did not support the move. Budget Committee Chair and presumptive Wilmington Mayor, Dennis Williams, was the key mover to spending this money and chastised the opponents:

Williams defended the pay raise and challenged Miro and Briggs-King to do more for low-wage [state] workers if that’s what they think is necessary.

via Committee OKs 1% pay raise for state workers, retirees | The News Journal | delawareonline.com.

Rep. Williams seems to forget who is paying for the pay raise. How about the 30,000 unemployed Delawareans? When the unemployed go to the store, they are paying the gross receipts tax (even when using food stamps). When they make a phone call, they are paying a telecommunications tax. When they pay their power bill, they pay a public utilities tax. The same can be said about the tens of thousands of under-employed Delawareans. – Adding this revenue bite to Delawareans during this economy is extremely poor policy — especially for those that live in the city that Rep. Williams would like to lead as mayor.

Given his actions today, are we to expect that Rep. Williams is going to run Wilmington in a fiscally responsible manner? To quote Bugs Bunny… “What a maroon.”

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