The initial revenue package included a tax on hospital receipts (House Bill 512) and an increase in alcohol excise taxes and licensing fees (House Bills 517 and 518). Those items failed to garner sufficient support in the face of stiff opposition from the alcoholic beverage industry and the hospitals. The hospital tax was expected to generate an additional $15 million in revenue while the excise tax and license fee increases combined were projected to raise $5.1 million. The hospital tax was not considered by either chamber. The alcohol-related measures passed the House but failed in the Senate.
Funding to replace the hospital tax revenue was taken from an unexpected $63 million corporate tax payment that the State of Delaware received in mid-June. Following the failure of the alcohol excise tax and license fee increase measures, an addition $5.1 million was cut from the bond bill (capital budget) in the early hours of July 1.
Ultimately, legislators approved a $3.3 billion operating budget, a $601.7 million capital budget and a $45 million grant-in-aid bill. $207.8 million of the capital budget is will go toward school construction. The grant-in-aid bill, a vehicle used to provide yearly financial assistance to fire companies and other non-profit agencies in the State, was reduced by about 8% over FY 2008.
Following are the major revenue enhancers approved by the General Assembly and signed by the governor:
- An increase in the flat annual tax for limited liability companies, limited partnerships and general partnerships from $200 to $250 ($24 million in additional revenue projected). (House Bill 520)
- An increase in the franchise tax for corporations ($28 million in additional revenue projected in year 1 and $24 million per year thereafter) (House Bill 519)
- A shift in funding whereby the racetracks will assume $1 million in funds provided by the State to the breeder’s fund – monies used to promote in-state racing. (House Bill 514)
- A reduction in a projected revenue sharing increase to teh City of Wilmington: the scheduled increase in UCC fees paid by the Department of State to the City of Wilmington will be reduced from 30% to 23%. This is expected to yield a 41.2 million positive impact to the general fund. (House Bill 516)
- A partial rollback of the gross receipts tax cut of 2006. Those companies benefiting from the increased exemption of $80,000/month which originally took 1,500 small businesses off the rolls will not be affected. Automakers will also be exempted from the rollback. ($14 million in revenue projected). (House Bill 513)
- An acceleration of Insurance Premium Tax payments from four equal payments in April, June, September and December to 50% in April, 20% in June, 20% in September and 10% in December, a move which will allow the State to book more of the revenue derived from the tax in FY 2009. (Senate Bill 333)
- A measure shortening the dormancy period before the State can claim abandoned (escheatable) property to 3 years (Senate Bill 334); and
- Legislation allowing the State to escheat monies from unclaimed pari-mutuel tickets at the race tracks after one year (SB 335).
