It will take some time to absorb this and think through the implications, but in the main this is a mixture of tax increases and budget cuts and the strategy is still to make sure that everyone pays except the wealthiest Delawareans. (Caveat that I haven’t closely read all of this, so perhaps I am wrong here.)
- Itemized deductions on personal income tax would be completely eliminated, but the standard deduction would be increased 50 percent. Raises $18.1 million.
- Top personal income tax rate increases from 6.6 percent to 6.8 percent, at $60,000. Raises $9.9 million.
- Raise eligibility to age 65 for pension deduction and extra tax credits. Eligible age is 60 right now. No new revenues are anticipated for next year, but would save the State $18M in out years.
- Corporate Franchise Tax: raised to match inflation, with a new new top rate — $250,000 for companies with $750 million or more in revenues or assets. Raises $115 million.
- Cigarette tax increases from $1.60 a pack to $2.60 a pack. Raises $18.6 million.
- Realty transfer tax would increase from 1.5 percent to 2.5 percent. Raises $44 million.
- State cuts the share of the realty transfer tax that goes to counties by 50% to 0.25 percent. Raises $11M (and puts an $11M hole in county budgets).
Some Spending Cuts:
- State employees pay more for health care. Now all State Plans would have a deductible, and existing deductibles would increase. Saves $24 million.
- The subsidy that pays up to $500 of senior citizens’ property tax bills would be eliminated. Saves $25 million.
- All State department budgets would be cut. Saves $56 million all in.
- A senior citizen prescription drug program is eliminated. Saves $9.4 million.
- The state reduces its share of the cost of transporting students from 90 percent to 70 percent. Saves $14 million.
- The state reduces its share of school construction from (60 – 90%) to 50%. The state would only pay for 50 percent of new school construction; currently, it pays 60 to 80 percent. This applies to new construction projects only.
- Grant-In-Aid would be reduced, eliminating the partnership with the Paramedic Programs (saves $10+M) and reducing funding to Community Agencies by $1.6M.
So the wealthiest of Delawareans contribute only $9.9M, while we stop the grant program for Paramedics. Interesting.
John Carney sent out a press release shortly after the Governor’s:
“Governor Markell and his team deserve our thanks for putting forward another balanced budget, and we will review the specifics of his plan. It’s no surprise that Delaware faces a challenging financial situation, and we need a budget reset that looks at state spending and our revenue system. We are very focused on this problem. Over the coming weeks and months, we will work with lawmakers of both parties on a sustainable, long-term solution to our budget challenges.”
Budget Reset, Sustainable, Long-Term — these are key words to guide the new Administration and legislators over the next several months. There is no doubt that there is a structural problem here, a problem that most of the Doverites have been utterly complicit in creating. Nipping round the edges, robbing Peter to pay Paul and pretending that the only people who should bear the financial burdens are middle class, working class and poor people of the State have to come to an end. Transferring the payment for these structural issues to those who can least afford it isn’t about doing the right thing or about doing what Democrats should be doing.