We need a balanced approach to the state budget

We need a balanced approach to the state budget

I don’t often agree with Rep. Ruth Briggs King, but referring to the budget passed last month by the General Assembly, she said: “We’ve been kicking the can down the road; we’ve been passing the buck.” She’s right. For the past several years, the GA has failed to do the necessary work of reforming and restructuring the Delaware State Budget.

I happen to know a little bit about budgeting. I have nearly 30 years experience in budget and finance at the federal level. I served as the deputy CFO and budget officer of a $1 billion agency. I know an unsustainable budget when I see one.

What’s the Problem?

In short, the costs of critical programs, education, health care and employee benefits continue to rise, yet state revenue streams are unstable and inadequate. Some are closely tied to corporate profits that fluctuate wildly, while 15 percent comes from “unclaimed property,” a scheme that may soon be ruled illegal. Last year one-time mortgage settlement money was commandeered to close the budget gap.

This year, in the face of our ongoing budget crisis, the General Assembly gave away over $60 million in tax forgiveness to dying industries and wealthy corporations. The expressed purpose was to maintain old or generate new jobs, yet the money was given away with no guarantees or claw-back provisions if the companies failed to meet their commitments (and without any evidence that these giveaways actually work!). Last year, hard-working state employees were denied a raise, only to find out that GA Leadership, including Speaker Schwartzkopf, gave their personal staff double digit raises.

We cannot continue to balance the budget with gimmicks, one-time fixes, and a reliance on discredited “trickle-down economics.”

Every year, legislators complain about how “hard” it is to cut the budget. Nonsense! Cutting programs is easy – particularly when they serve vulnerable populations who don’t have political clout. What is truly difficult is looking Delawareans squarely in the eye and saying, “We simply can’t operate like this anymore. We need a balanced approach to creating a balanced budget, one that examines potential cost savings AND revenue streams.”

How Can We Fix It?

Let’s look at a just a few things of the things we could do.

On the cost side, we could be smarter about criminal justice spending. According to a recent study, Delaware has the seventh highest per capita incarceration rate in the country, and many of the incarcerated were convicted of non-violent drug crimes or suffer from mental illness. It costs approximately $33,000 per year to house a prisoner in Delaware. According to a study from the National Institute on Drug Abuse, the average cost of a one-year methadone maintenance treatment program is approximately $4,700 per patient. So we could save over $28,000 per person if we invested in drug treatment instead of incarceration. Moreover, full out-patient, mental health services in Delaware cost approximately $10,000 year, so treating the mentally ill outside of prison could save us $23,000 per year per person. Let’s use more common sense about how we spend our resources.

On the revenue side, two bills – both buried by Speaker Schwartzkopf this year – could help generate significant new, stable revenue for Delaware.

The first bill would modify state income tax rates to make them more fair. Currently, all annual income over $60,000 is taxed at the same rate (6.60 percent). The bill proposes taxing income over $125,000 and $250,000 at slightly higher rates, lowering the rates on income less than $60,000 and adjusting itemized deductions. This bill could generate $100 million.

The second bill would raise the corporate franchise tax ceiling from $180,000 to $195,000 on the 1,650 wealthiest companies, which would generate just under $25 million. And don’t listen to the doom-sayers who predict a mass exodus of corporations. They would still be getting a great deal compared to other states.

After too many years in office, legislators become too cozy with wealthy special interests, too satisfied with the status quo that benefits them, and too disconnected from the people they are supposed to serve. So they take the easy road and balance the budget on the backs of those with the least power.

But time is running out for unsustainable budgeting in Delaware. We need new thinking, new perspectives, and new leadership. That is why I am running against Mr. Schwartzkopf in the 14th District (Rehoboth) – his first primary challenger in the 14 years of his tenure.

I understand budgets, am committed to making government work for all Delawareans, and have the courage to make hard choices and stand up to wealthy special interests. That is why I am asking the citizens of District 14 to vote for me, Don Peterson, in the September 13th primary.

Don Peterson lives in Rehoboth Beach after retiring from a government career and running his own business as a leadership coach and organizational consultant. He is active in social justice and anti-racism work in Sussex County.

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