Gov. Jack Markell used his first State of the State address April 28 to reinforce his priorities for balancing Delaware’s projected $780 million budget shortfall, including a pay cut for all state employees and the reintroduction of sports betting.

    Gov. Jack Markell used his first State of the State address April 28 to reinforce his priorities for balancing Delaware’s projected $780 million budget shortfall, including a pay cut for all state employees and the reintroduction of sports betting.
    At the start of his speech before a joint session of the General Assembly, Markell compared the current economic challenges facing the state to those of the Great Depression and sounded a familiar refrain on the severity of his proposed budget cuts.
    “I will be the first to acknowledge that my budget proposal is not easy or popular. There is much in it to dislike and much in it that I dislike,” he said.
    In addition to defending his proposed budget cuts, Markell unveiled plans to centralize certain elements of the state’s education system, incubate small businesses, attract new companies to Delaware and increase efforts to conserve energy.
     The governor reiterated his plans to cut state employees’ pay but attempted to soften the blow with praise.
    “Our financial crisis is dire and I want to avoid layoffs like many in the private sector have been forced to endure. To state employees I say this: I very much value your service.”

Sports betting talks
    But for as gentle as the governor was with state workers, he was equally blunt with the gambling industry.
    Markell accused the casinos of refusing to negotiate with his administration regarding his plan to launch sports betting and increase the state’s share of gambling revenues.
    Even though a provision to allow up to 13 new gaming venues was taken out of the sports betting bill currently before the House of Representatives, casino executives have said the governor’s plan to modify the revenue split would push their businesses to the edge of failure, but Markell has held firm.
    “The [casino] owners are the taxpayers’ partners in this venture and they need to act like partners,” he said. “So to the members of the General Assembly, I urge you to reject their arguments.”
    After the speech, president and CEO of Dover Downs Gaming and Entertainment Denis McGlynn said he and his counterparts at Delaware Park and Harrington Raceway and Casino offered several counterproposals but were rebuffed.
    “I think he had it backwards from the real reality. We met with them five times and came up with three proposals and they moved very little,” he said. “What I don’t understand is why they didn’t allow the legislature in to try to mediate this.”
    The sports betting bill could come before the House for a full debate this week.

School consolidation
    Markell also made his first serious proposal for centralizing the state’s 19 public school districts, an issue he expressed support for during his campaign.
    He urged the legislature to consider centralization and prepare a report on the concept for next year, but said he wants to begin combining certain school district administrative services in the interests of saving money.
    “I don’t think many parents care whether their school district has its own back rooms, staffed with its own team of procurement officers, human resources advisers, lawyers and accountants,” he said. “For now, we can maintain the current school districts for the purpose of making the decisions parents care most about at the local level. But we must move dollars out of those back rooms and into classrooms by consolidating those back office functions.”
    Republican Rep. Gregory F. Lavelle said he’s encouraged by the governor’s gradual approach to consolidation.
    “It’s a real political challenge, but I think he started in the right area. Nineteen is too many. I’m not saying four is the right number, but I think all the things he talked about, back office consolidation, could save a lot of money,” he said.

Jobs and businesses
    The governor repeatedly stressed the state’s need to attract more businesses and quality jobs to Delaware and unveiled plans for retraining the jobless and supporting employers under the heading CORE — Creation of Real Economic Prosperity.
    Markell highlighted his Small Business LIFT program, which makes available low interest loans from $5 million of the state’s Strategic Fund.
    The loan program could help as many as 500 small businesses with start-up and expansion capital, he said.
    He also called for the elimination of certain red-tape hurdles that he said discourage businesses from locating in Delaware.
    “There is no excuse for a state our size to make employers jump through so many hoops before they can get to work and create jobs,” he said. “We should establish a single statewide business license.”
    However, some lawmakers say the governor’s business policies are at odds with plans he announced to reduce the state’s per capita energy consumption by 15 percent in the next 10 years.
    Markell said he plans to use federal stimulus money to launch the Delaware Modernization Service, which will help residents and businesses equip their homes and properties with energy efficient technology.
    “It’s a good idea I guess, in theory, in terms of conservation, turning off lights. But I’m wondering if it contradicts his comments on trying to reduce the regulatory burden here in Delaware,” Lavelle said. “If we’re going to reduce energy usage by 15 percent, what’s that mean? How do you do that? Particularly in an area where you’re trying to get businesses up and running, they have to turn their lights on and hopefully turn on manufacturing lines.”
    Overall, Republicans from both chambers said they weren’t surprised or troubled by too much in the governor’s address.
    “I was glad to hear him reiterate that we can’t tax our way out of this, I know there’s been a lot of talk in this hall, in the shadows at this point, about additional income tax increases, sales taxes and things like that,” Lavelle said. “I agree with the governor that this isn’t a one-year problem and we have to reduce the size and scope of government going forward.”
    Dover Republican Sen. Colin R.J. Bonini said he was happy with the address, but that he still fears tax increases, especially given the fact that the budget shortfall is likely to deepen in the coming months.
    “I was very pleased with the overall tone of the speech,” he said. “He wants to raise taxes, but I don’t want to be negative I’m very pleased with what the governor has said on a variety of subjects. He’s talking about bringing accountability to state government, he’s talking about bringing accountability to education … But Delaware’s problem is not a revenue problem, Delaware’s problem is a spending problem.”
    Dough Denison is a staff reporter for the Dover Post, with which the Transcript is affiliated.