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Proposed changes to Delaware's revenue streams head into lawmakers' hands

Delaware Public Media

A new state report recommending changes to Delaware’s revenue streams could produce cuts to some areas - like the corporate income tax - as well as hikes to others such as the gross receipts tax.

The report from a group of state lawmakers, Markell Administration officials and others says Delaware needs to reduce its reliance on “silver bullet” items and diversify its base.

The proposed framework, which is revenue neutral in year one, also recommends eliminating the estate tax, something Republicans have been pushing for this year.

Delaware currently relies heavily on volatile sources like abandoned property and lottery revenue and also carries 80 percent of costs for statewide services, compared to a more even split between most states and their counties or municipalities. 

The personal income tax and incorporation taxes have always been a bedrock in a state with low property taxes and no sales tax, but they haven't kept pace with increasing budgetary pressures.

"It's not a new problem. We haven't had a good revenue year since [Jack Markell] became governor," said Secretary of State Jeff Bullock, a member of the committee and former chief of staff to then-governor Tom Carper who oversaw years of steady and increased cash flow.

State Treasurer Ken Simpler points out much of what makes up smaller, but significant chunks of revenue are volatile and can’t be relied upon for much longer.

“We really lack this entire middle part of the portfolio that would bring us diversification and benefits from a responsiveness standpoint in volatility and you start looking around for what could be in that middle category and the list is short," Simpler said.

The impetus now is on state lawmakers who have roughly a month left before adjourning for the year, but their agendas have no shortage of bills to be worked. Immediate concerns include finalizing a transportation spending package and filling a large hole in the proposed operating budget.

“They will have to, at some point, re-calibrate the revenue sources," said Finance Secretary Tom Cook. "This gives them a roadmap on how to do it and how to do it properly so that when the revenues grow, they grow with the economy.”

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