On Saturday, December 20, Republican Tom Kovach faced Democrat Mike Migliore to fill the seat of Diana McWilliams (D), who resigned her seat after the election to take a job in New Mexico. Kovach received 1,540, or 51.2 percent, of votes cast Saturday. Migliore received 1,467, or 48.8 percent.
Representative-elect Kovach is a partner with the law firm of Parkowski, Guerke and Swayze. Mr. Migliore is an attorney with the firm of Stradley Ronon and a House Democratic Caucus attorney when the legislature is in session.
The Republican win denies the Democrats a veto-proof 3/5 majority in the House. A 3/5 majority would also have allowed the majority to pass revenue legislation without any minority caucus votes.
Monday, December 22, 2008
Monday, December 15, 2008
The Latest
Markell Visits NCC Chamber Incubator on December 9:
On December 9, Governor-Elect Markell met with Mark Kleinschmidt, Pete Bailey, Carmen Facciolo, Bob Chadwick and Joe Fitzgerald to discuss economic development and tour the Emerging Enterprise Center. We are encouraged by our initial discussions with the governor-elect.
State Revenue Forecasts Continue to Fall:
During the course of the past month, revenue forecasts for FY 2010 have declined by an additional $100 million. At the November meeting of the Delaware Economic and Financial Advisory Council (DEFAC) it was stated that the structural shortfall expected during the next fiscal year is expected to exceed $500 million. DEFAC will meet this afternoon at 3 p.m. to release the latest forecasts. Difficult choices lie ahead.
Governor-Elect Markell Makes a Number of Key Appointments: From the standpoint of the business community, Governor-Elect Markell’s appointments are encouraging. Former Happy Harry’s CEO and past State Chamber chairman Alan Levin has been chosen to lead the Delaware Economic Development Office. Deputy State Treasurer Ann Visalli has been appointed the director of the Office of Management and Budget and former DuPont Company CFO Gary Pfeiffer has been chosen as secretary of finance. The new administration will need all of the financial and business acumen it has in order to confront the financial problems facing our state.
WDEL carried the story this morning that Dennis Rochford has reconsidered his acceptance of the chief of staff position with the Markell Administration. Mr. Rochford is a former NCC Chamber of Commerce board member and current president of the Maritime Exchange for the Delaware River and Bay.
Workforce Housing Legislation:
This continues to be a highly controversial issue. Originally enacted last February with a unanimous vote, Ordinance no. 07-150 amended the Unified Development Code to provide incentives for developers to develop housing for low and moderate income families, the ordinance soon ran into considerable opposition as plans were being filed in accordance with its provisions.
Opponents of the ordinance are generally concentrated in southern New Castle County and cite concerns about the quality of housing to be constructed, the impact of schools, roads and other infrastructure and the effect that they believe the legislation will have on the quality of life in their area.
Only one member of the seven members of Council on the ballot in the general election had opposition. The issue spilled over to the state legislative races. Representative Dick Cathcart and other legislators and candidates addressed large gatherings in their districts in opposition to the ordinance.
The initial version of the ordinance proposed in late 2007 would have required mandatory set-asides for “workforce housing”, an approach opposed by the New Castle County Chamber of Commerce and other business groups. We favored a market-based approach employing incentives to builders willing to meet the demand for moderately priced housing. The Chamber held a number of meetings with members of the Coons Administration, the original sponsor of the proposal (Councilman Hollins) and members of the business community where we encouraged policymakers to adopt a voluntary approach. The mandatory approach did not address one of the root causes (other than low interest rates and a real estate bubble) – regulatory costs.
One of the better summaries of this ordinance to be found was put out by Fox Rotshchild, LLP it can be found at http://www.foxrothschild.com/Newsstand/News.aspx?id=8424. It is likely that the Coons Administration will come back in January with a number of changes to the ordinance designed to address the opponents concerns. For a summary of concerns from the opposition, visit: http://www.stayoutofmypocket.com/.
Any legislative changes will not affect plans already in process. Civic opponent claim that they intend to halt existing development plans in court. The Chamber has expressed concerns to members of the administration and Council over the need for certainty in the development process.
Special Election in the 6th Representative District:
Michael Migliore an attorney with Stradley Ronon is running as the Democratic candidate to replace Diana McWilliams in the 6th Representative District seat she recently vacated to take a job in New Mexico. His opponent is Republican Tom Kovach. Mr. Kovach is an attorney with Parkowski Guerke and Swayze. The special election will be held this Saturday, December 20.
Monday, December 1, 2008
Election 2008 Results and News on the State and County Budgets
Election 2008 in Delaware
November 4, 2008 was the most notable election in recent Delaware history. Our nation elected its first African American President Barack Obama and, along with him, our own Joe Biden as Vice President. The Obama/Biden ticket took Delaware 62% to 37% for McCain/Palin, with the remaining 1% being divided among third party candidates. Vice President-elect Biden was also on the ballot for his United States Senate seat. In that race, he defeated Republican Christine O’Donnell 65% to 35%. Nationally, the Obama/Biden ticket won 52% of the popular vote (65,101,106) and 365 electoral votes versus McCain/Palin’s 46% of the popular vote (57,168,270) and 162 electoral votes. The remaining two percent of the vote went to third party candidates.
In Congress, the Democrats retained and increased their majorities in both the House and Senate. In the U.S. House of Representatives the Democrats picked up 20 seats, increasing their number to 254 seats versus the Republicans current 173. Four races remain to be settled. Two will be decided in a December runoff in Louisiana.
At the time of this writing there is a seven seat gain for Democrats in the Senate. 2 U.S. Senate races are yet to be decided: Georgia and Minnesota. The Democrats gain brings their number to 55 Democrats. Georgia will hold a runoff election between incumbent Republican Saxby Chambliss and Democratic challenger Jim Martin on December 2. Georgia law requires one when no candidate in a race garners more than 50% of the vote. Third party challengers took enough from each candidate to require the runoff. In Minnesota a recount is under way to settle the race between incumbent Republican Norm Coleman and Democratic challenger Al Franken. In preliminary results, each received 42% of the vote with third party challenger Dean Barkley picking up the remainder. Coleman has seen his lead shrink from more than 700 votes to 239 as more absentee ballots and polling place errors are corrected. If the Democrats pick up the remaining two seats, they would technically be 2 votes short of cloture (the ability to end debate/filibuster on a measure) and would need to rely on the two independents in the Senate, Joe Lieberman of Connecticut and Bernie Sanders of Vermont to vote with them to attain cloture. Observers are closely watching Lieberman as he is currently somewhat on the outs with Democratic leadership and the Democrats in general following his endorsement and active support of the McCain/Palin ticket. Senator Lieberman will continue to caucus with the Democrats and will retain his chairmanship of the Homeland Security Committee, but will lose his chairmanship of a subcommittee in a compromise reached with Democrats this week.
At the State level there were few surprises. Democratic candidate and current state treasurer Jack Markell handily defeated his Republican opponent retired Superior Court judge William Swain Lee with 67.5% of the 395,155 votes cast. In the lieutenant governor’s race, Democrat Matt Denn prevailed receiving 61% to Charlie Copeland’s 39%. The Democratic trend continued in the race for insurance commissioner with Karen Weldin-Stewart garnering 57% of the vote defeating her Republican opponent John Brady (41%) and Tom Savage (1.5%).
In the Delaware General Assembly the House majority changed from Republican to Democrat for the first time in 26 years. The House changed from 23-18 Republican majority to a 25-16 Democratic majority. Incumbents, Bob Valihura (R-Talleyville), Donna Stone (R-Dover), Nancy Wagner (R-Dover), Greg Hastings (R-Millsboro), Vince Lofink (R-Caravel Farms) and House Speaker Terry Spence (R-Stratford) all lost their seats to challengers. Dennis E. Williams defeated Bob Valihura with 51% of the vote. Darryl Scott, a school board member from the Capital School District, defeated Nancy Wagner with 53% of the vote. Brad Bennett will replace Donna Stone after receiving 57% of the vote. John Atkins will regain his House seat as a Democrat after defeating Greg Hastings with 53% of the vote. In a hotly contested race in Bear, Earl Jacques received 48.7% of the vote to Vince Lofink’s 48.3% (a third part candidate, James Spencer, received 3%). In another example of this year’s electoral trend, Mike Barbieri defeated the incumbent House Speaker, Terry Spence with 53% of the vote. Representative Pam Thornburg regained her seat following a code-mandated recount nearly 48 hours after the polls closed (the election was decided by less than a percent). The original count showed Charles “Trey” Paradee winning with 50.1% of the vote.
Democrats expanded their 36 year-long majority control of the Senate by three seats. Prior to the election, the body was comprised of 13 Democrats and 8 Republicans. Afterward, there are 16 Democrats and 5 Republicans. Physician and Democratic candidate Michael Katz was elected to the 4th District Senate seat vacated by Charlie Copeland with 50.7% of the vote versus his Republican opponent, John Clatworthy. Former State Representative Bethany Hall-Long won retiring 10th District Senator Steve Amick’s seat with 64.9% versus Republican Jim Weldin’s 35.1%.
At the New Castle County government level, there was only one contested Council seat out of the 7 on the ballot. County Executive Chris Coons also ran unopposed in the general election after defeating his predecessor, Tom Gordon, in the September 9 primary.
In the City of Wilmington, Mayor Baker was unopposed in the general election. Former district councilman Norman Griffiths (D) defeated Herman Holloway, Jr. who ran on the Republican slate for that office.
Budget Shortfall Widens Following November 17 DEFAC Meeting
Due to a substantial slowdown in economic activity, State tax revenue continues to fall. At the November 17 meeting of the Delaware Economic and Financial Advisory Council, an addition $130 million shortfall for the current budget year (FY 2009) was projected. In order to address the initial $270 million shortfall for FY 2009 which existed in the spring, the General Assembly enacted budget cuts and a $144 million tax and fee package. By the September DEFAC meeting, a projected $39 million decline had reduced the effect of that package to about $105 million. The latest forecast is even worse indicating a $130 million gap unless significant cuts are undertaken. Given the current economic climate, many observers expect things to get worse before they get better.
In response to the news, Governor Minner ordered a hiring freeze and an additional 7% mid-fiscal year cut in agency budgets. She also ordered an across the board 15% reduction in her recommended budget for FY 2010.
At the same meeting, revenue projections for FY 2010, which begins on July 1, 2009, were lowered by some $303.7 million. The 3.5% decline in revenues for next year will likely amount to a $500 million gap which legislators will need to close for next fiscal year by June 30.
At the end of session in June, the following items were part of the end of session tax and fee package:
County Executive Chris Coons recently announced a $30 million shortfall. Sharp declines in real estate transfer tax, property tax and fee-based revenue are cited. The county executive took the following steps:
•A hiring freeze for nonessential positions.
•Overtime allowed only for approved critical needs.
•Reductions in capital projects spending.
•Limits on travel and training.
•Prior approval for all contractual requests for spending.
•Reductions in major equipment and fleet purchases.
The county executive indicated that he will be seeking revenue enhancers that he termed “significant” in order to close the gap. Salaries, wages and benefits account for 75% of the county’s budget. The Chamber will also be casting a wary eye toward revenue enhancement proposals at a time when every available dollar is needed in the productive (private) sector of the economy.
Card Check
The prospects for “Card Check”, legislation which will allow for union organizing without a secret ballot, have significantly improved with the augmented Democratic majorities in the U.S. House and Senate. The New Castle County Chamber of Commerce opposes this legislation. The right to confidentiality and freedom from coercion is essential to a free and fair unionization process. The bill is likely to see action early in the next Congress. We will provide more information as this issue progresses.
November 4, 2008 was the most notable election in recent Delaware history. Our nation elected its first African American President Barack Obama and, along with him, our own Joe Biden as Vice President. The Obama/Biden ticket took Delaware 62% to 37% for McCain/Palin, with the remaining 1% being divided among third party candidates. Vice President-elect Biden was also on the ballot for his United States Senate seat. In that race, he defeated Republican Christine O’Donnell 65% to 35%. Nationally, the Obama/Biden ticket won 52% of the popular vote (65,101,106) and 365 electoral votes versus McCain/Palin’s 46% of the popular vote (57,168,270) and 162 electoral votes. The remaining two percent of the vote went to third party candidates.
In Congress, the Democrats retained and increased their majorities in both the House and Senate. In the U.S. House of Representatives the Democrats picked up 20 seats, increasing their number to 254 seats versus the Republicans current 173. Four races remain to be settled. Two will be decided in a December runoff in Louisiana.
At the time of this writing there is a seven seat gain for Democrats in the Senate. 2 U.S. Senate races are yet to be decided: Georgia and Minnesota. The Democrats gain brings their number to 55 Democrats. Georgia will hold a runoff election between incumbent Republican Saxby Chambliss and Democratic challenger Jim Martin on December 2. Georgia law requires one when no candidate in a race garners more than 50% of the vote. Third party challengers took enough from each candidate to require the runoff. In Minnesota a recount is under way to settle the race between incumbent Republican Norm Coleman and Democratic challenger Al Franken. In preliminary results, each received 42% of the vote with third party challenger Dean Barkley picking up the remainder. Coleman has seen his lead shrink from more than 700 votes to 239 as more absentee ballots and polling place errors are corrected. If the Democrats pick up the remaining two seats, they would technically be 2 votes short of cloture (the ability to end debate/filibuster on a measure) and would need to rely on the two independents in the Senate, Joe Lieberman of Connecticut and Bernie Sanders of Vermont to vote with them to attain cloture. Observers are closely watching Lieberman as he is currently somewhat on the outs with Democratic leadership and the Democrats in general following his endorsement and active support of the McCain/Palin ticket. Senator Lieberman will continue to caucus with the Democrats and will retain his chairmanship of the Homeland Security Committee, but will lose his chairmanship of a subcommittee in a compromise reached with Democrats this week.
At the State level there were few surprises. Democratic candidate and current state treasurer Jack Markell handily defeated his Republican opponent retired Superior Court judge William Swain Lee with 67.5% of the 395,155 votes cast. In the lieutenant governor’s race, Democrat Matt Denn prevailed receiving 61% to Charlie Copeland’s 39%. The Democratic trend continued in the race for insurance commissioner with Karen Weldin-Stewart garnering 57% of the vote defeating her Republican opponent John Brady (41%) and Tom Savage (1.5%).
In the Delaware General Assembly the House majority changed from Republican to Democrat for the first time in 26 years. The House changed from 23-18 Republican majority to a 25-16 Democratic majority. Incumbents, Bob Valihura (R-Talleyville), Donna Stone (R-Dover), Nancy Wagner (R-Dover), Greg Hastings (R-Millsboro), Vince Lofink (R-Caravel Farms) and House Speaker Terry Spence (R-Stratford) all lost their seats to challengers. Dennis E. Williams defeated Bob Valihura with 51% of the vote. Darryl Scott, a school board member from the Capital School District, defeated Nancy Wagner with 53% of the vote. Brad Bennett will replace Donna Stone after receiving 57% of the vote. John Atkins will regain his House seat as a Democrat after defeating Greg Hastings with 53% of the vote. In a hotly contested race in Bear, Earl Jacques received 48.7% of the vote to Vince Lofink’s 48.3% (a third part candidate, James Spencer, received 3%). In another example of this year’s electoral trend, Mike Barbieri defeated the incumbent House Speaker, Terry Spence with 53% of the vote. Representative Pam Thornburg regained her seat following a code-mandated recount nearly 48 hours after the polls closed (the election was decided by less than a percent). The original count showed Charles “Trey” Paradee winning with 50.1% of the vote.
Democrats expanded their 36 year-long majority control of the Senate by three seats. Prior to the election, the body was comprised of 13 Democrats and 8 Republicans. Afterward, there are 16 Democrats and 5 Republicans. Physician and Democratic candidate Michael Katz was elected to the 4th District Senate seat vacated by Charlie Copeland with 50.7% of the vote versus his Republican opponent, John Clatworthy. Former State Representative Bethany Hall-Long won retiring 10th District Senator Steve Amick’s seat with 64.9% versus Republican Jim Weldin’s 35.1%.
At the New Castle County government level, there was only one contested Council seat out of the 7 on the ballot. County Executive Chris Coons also ran unopposed in the general election after defeating his predecessor, Tom Gordon, in the September 9 primary.
In the City of Wilmington, Mayor Baker was unopposed in the general election. Former district councilman Norman Griffiths (D) defeated Herman Holloway, Jr. who ran on the Republican slate for that office.
Budget Shortfall Widens Following November 17 DEFAC Meeting
Due to a substantial slowdown in economic activity, State tax revenue continues to fall. At the November 17 meeting of the Delaware Economic and Financial Advisory Council, an addition $130 million shortfall for the current budget year (FY 2009) was projected. In order to address the initial $270 million shortfall for FY 2009 which existed in the spring, the General Assembly enacted budget cuts and a $144 million tax and fee package. By the September DEFAC meeting, a projected $39 million decline had reduced the effect of that package to about $105 million. The latest forecast is even worse indicating a $130 million gap unless significant cuts are undertaken. Given the current economic climate, many observers expect things to get worse before they get better.
In response to the news, Governor Minner ordered a hiring freeze and an additional 7% mid-fiscal year cut in agency budgets. She also ordered an across the board 15% reduction in her recommended budget for FY 2010.
At the same meeting, revenue projections for FY 2010, which begins on July 1, 2009, were lowered by some $303.7 million. The 3.5% decline in revenues for next year will likely amount to a $500 million gap which legislators will need to close for next fiscal year by June 30.
At the end of session in June, the following items were part of the end of session tax and fee package:
- 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 the 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).
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.
Many observers expect the General Assembly is expected to revisit the alcohol and hospital taxes and to take a hard look at a variety of possible tax and fee increases in order to stem the developing FY 2009 budget gap.
We at the New Castle County Chamber of Commerce are deeply concerned about the prospect of tax and/or fee increases during a time of economic turmoil. Greater emphasis than ever must be placed on finding efficiencies and cutting the State budget. In 1998, the State budget came to approximately $1.8 billion. The State’s FY 2009 budget came to $3.4 billion. That is a near doubling of the budget in the span of a decade! It took more than 200 years to get to $1.8 billion. The State of Delaware is the single largest employer in Delaware. This is unsustainable. Taking more money from the productive sector of the economy – i.e. the private sector – in order to sustain State spending is not the answer. Hard choices lie ahead.
County Executive Chris Coons recently announced a $30 million shortfall. Sharp declines in real estate transfer tax, property tax and fee-based revenue are cited. The county executive took the following steps:
•A hiring freeze for nonessential positions.
•Overtime allowed only for approved critical needs.
•Reductions in capital projects spending.
•Limits on travel and training.
•Prior approval for all contractual requests for spending.
•Reductions in major equipment and fleet purchases.
The county executive indicated that he will be seeking revenue enhancers that he termed “significant” in order to close the gap. Salaries, wages and benefits account for 75% of the county’s budget. The Chamber will also be casting a wary eye toward revenue enhancement proposals at a time when every available dollar is needed in the productive (private) sector of the economy.
Card Check
The prospects for “Card Check”, legislation which will allow for union organizing without a secret ballot, have significantly improved with the augmented Democratic majorities in the U.S. House and Senate. The New Castle County Chamber of Commerce opposes this legislation. The right to confidentiality and freedom from coercion is essential to a free and fair unionization process. The bill is likely to see action early in the next Congress. We will provide more information as this issue progresses.
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