Legislative leaders talk state spending, business matters
© 2023 Delaware Business Times
DOVER — With eight session days left in the legislative calendar, Senate President Pro Tempore David Sokola and House Speaker Pete Schwartzkopf gave a top down view of the state’s financial and social issues to business leaders.
Both Democratic Party leaders spoke at the annual Delaware State Chamber of Commerce End-of-Session Policy Conference on Wednesday morning. Top priorities include the pending Fiscal Year 2024 budget, which is now at $5.6 billion after the Joint Finance Committee pored over it in late May.
Even before mark-up, Gov. John Carney already proposed a record-setting $5.4 billion spending plan.
“While I know we’re all tired of hearing about [COVID-19], there is no escaping the fact that the pandemic and the market forces being created are still impacting our state’s economy as much as I’m sure it’s impacting businesses,” Sokola said. “These forces are changing rapidly.”
Last June, concerns loomed about high inflation, gas prices and unemployment numbers, and now these market indicators have stabilized. But Delaware could be seeing a potential deficit on the horizon, as the federal funding to stave off shortfalls has all been spent, Schwartzkopf cautioned.
“The DEFAC [Delaware Economic and Financial Advisory Council] numbers are not good, they’re facing a possible deficit next year, somewhere between $300 million and $600 million,” the House Speaker said. “Leadership has had to try and triage our bills, much to the chagrin of our members.”
However, Schwartzkopf noted that the budget does include key provisions like pay raises for all state workers, ranging between 3% and 9%, as well as spending $48.5 million to address a Medicaid shortfall. The budget also includes $13 million to increase the state’s Delaware’s Purchase of Care program, which will allow the state’s reimbursement rate to meet 2021 the market rate benchmark.
This year, the legislature also approved increasing unemployment benefits as well as the standard deduction on state taxes and the Earned Income Tax Credit.
In terms of other matters, Sokola stressed measures that boost quality of life in the state that have been undertaken this year, such as bills that would give tenants the right to representation during eviction. He also pointed to a bill that would require more consistent property reassessment to ensure equitable school funding throughout the state.
“We’ve seen time and time again how the quality of our public education system is one of the biggest indicators that large employers look for when considering where to invest,” Sokola said.
Delaware business owners and representatives asked questions, with some focused on how the state plans to improve opportunities for minority businesses after a study showed that less than 3% of state construction contracts were awarded to firms owned by Latino or Hispanic-owned businesses between 2015 and 2020. Black-owned businesses were awarded around 2% of contracts in that time frame, or $685,000 in total construction dollars.
Sokola noted that a Community Workforce Agreement pilot came from that study, which would be used to assess the next steps moving forward.
“When we make a change, we want to make sure we’re making the right change,” he said. “So then you implement something like [the CWA] and track if it’s making a difference.”
Another topic was the paid family leave program, of which regulations are still being formed by the Department of Labor. Questions still remain about how it would be rolled out in time for a 2025 implementation.
When asked if the Senate would consider revisiting the law to address issues that have come from the rulemaking and regulation process, Sokola thought it was a little premature since the bill won’t be implemented for another two years.
“We do want to make it as simple as possible, and implement it in a way that’s fair to workers, businesses and taxpayers,” he said.
With a handful of days left to consider numerous filed bills, both were asked if that practice were to continue as the new normal. Several new lawmakers started this session, and Schwartzkopf said this could be one reason for the flurry of late bills.
“It can be worrisome, because when you have half your caucus that has only been here for less than four years, they don’t know the downside,” the House Speaker said.
He also pointed out that many bills need funding to implement, and at this point, it could mean reallocating funds to other line items. Any bill that requires more than $100,000 heads through the Appropriations Committee for consideration.
“Some don’t know what it’s like to have money taken away from you, or services,” he said. “Money doesn’t appear, and we’re looking at a deficit next year unless things change. But obviously the economy could pick up, and a lot of different things could happen between now and next year.”
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