Good afternoon,
Delaware’s 2021 legislative session ended this week without any early morning theatrics.
That’s what happens when your fiscal house is largely in order and taxes are low on the list of hot issues.
Despite the initial loss of revenue from the coronavirus pandemic, a combination of higher than expected tax and fee revenues, along with federal funds, left the state about $1 billion in the black.
The cushion allowed the General Assembly to pass its own ambitious infrastructure bill, a $1.3 billion capital budget that is good news for the state’s construction industry. The operating budget totaled $4.7 billion.
Gov. John Carney again convinced legislators to set aside funds for tougher times. That cushion helped the state weather the early stages of the pandemic.
Things got a lot easier when Congress passed the CARES and Rescue acts that brought a cascade of federal money.
Some red states responded to the improved fiscal picture with corporate and personal tax cuts. Few if any cuts were substantial given restrictions that barred federal funds from being used for such purposes.
Like their counterparts in many blue states, Delaware legislators are hesitant to cut taxes, given the restrictions cited above and a widespread belief that we live in a low tax zone.
GOP legislators in Dover rolled out corporate and personal tax cut bills. But, to their dismay, the measures gained little traction, with the state’s business community and other influencers staying on the sidelines.
Republican leverage in demanding changes in the budget was largely eliminated by losing two key senate seats in New Castle County in 2020.
Progressive Democrats were equally frustrated when efforts to add a higher tax bracket for those making $125,000 a year drew yawns.
The argument that Delaware is a low-tax environment was bolstered earlier this year in a little-noticed report from the WalletHub financial site.
The report ranked Delaware third among the 50 states in a comparison of state and local tax burdens on families making the national median income. However, when that income was compared to the cost of living, Delaware ranked first.
Should the economic recovery continue, pressure to take another look at cutting taxes may grow, especially if job growth remains on the weak side.
Meanwhile, all three counties begin the long-overdue process of reassessing property. Under reassessment, a third of properties typically see lower taxes, a third see higher taxes, and nothing changes for the rest. Contrary to popular belief, reassessment can’t be used as a revenue-raising tool.
Have a safe and happy July 4th. Enjoy the local fireworks. Be a good neighbor and limit your own displays. Your family dog and local fire company would appreciate that. – Doug Rainey, chief content officer
