In the wee hours of the morning July 1 Gov. Jack Markell signed Delaware’s 2010 budget into law, after the General Assembly spent upwards of 12 hours sorting out the $3 billion spending plan.
In order to reconcile an $800 million projected shortfall for the fiscal year that begins today, lawmakers wrote into the budget a slew of unpopular measures including a 2.5 percentpay cut for state employees, a personal income tax increase, a tax hike for corporations, an estate tax and millions of dollars in new fees.
Before signing the bills that make up the budget, the governor took time to praise those who helped it on its way to his desk, and criticize those who he said made the process more difficult.
“I’m pleased we were able to solve this historic budget challenge in a way that is fiscally responsible,” he said, adding later, “I’m disappointed that we didn’t get the bipartisan support we would have wanted.”
Markell said it was the House Democrats who understood the efforts needed to shrink the budget and raise revenue with tax increases, and that the Republican caucus worked against his proposals all along.
The governor lambasted Republicans for failing to support his plan to raise alcohol taxes by 50 percent, despite the fact that the House minority leadership assured the passage of several other tax increases by lending a critical party vote to the other side.
This session, Democrats were just one member shy of the three-fifths majority vote needed to pass revenue bills.
“It was the Democrats who made those tough calls…We couldn’t get two Republicans to vote for 2 cents on a can of beer,” he said, brushing off the fact that one Democrat, John A. Kowalko Jr., Newark South, also held back support for the bill.
To make up for the lost revenue that the increases would have generated, the Bond Bill Committee cut $4.8 million in school renovation funds from the bond package — a deal that was finalized well after midnight when it became apparent that the alcohol tax bill did not have the votes.
That episode was one in a series of events that brought the final budget to the governor’s desk shortly after 4 a.m.
Tax bills finalized
Early in the evening of June 30, the House voted on its last outstanding piece of tax legislation, a bill that increases corporate franchise taxes and is projected to raise approximately $124.7 million in the next year.
Most of the tax bills, including increases to the personal income and gross receipts taxes, were passed by the House on June 29, but Majority Leader Rep. Peter C. Schwartzkopf, D-Rehoboth, chose not to run the corporate tax bill that day because sufficient support had not yet materialized.
After the bill was introduced Kowalko introduced an amendment that would have increased the corporate franchise tax even more for some of the state’s wealthiest companies, and resulted in an additional $7 million in revenue.
Schwartzkopf, however, said he viewed the amendment as unfriendly since it would have jeopardized a compromise struck with Republicans to ensure the bill’s passage.
House Minority Leader Rep. Richard C. Cathcart, R-Middletown, called the amendment out on a procedural question and had it struck down by the speaker, who held that Kowalko’s proposal altered the original bill too greatly.
Later, as the House Democratic leadership attempted to rally its troops and resurrect the twice-defeated alcohol tax, Kowalko remained steadfast in his position.
The representative said he was not pleased that party leaders ignored his efforts to raise more money through alternative taxation schemes like his corporate franchise tax amendment.
“I think I’ve been very open and honest on some of these compromises,” he said. “It’s fallen on deaf ears.
Later in the evening, the Senate passed the all of the House taxation measures with little discussion.
The tax bills made up approximately $206 million of the projected shortfall.
