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"Fractured" Democrats face steep hill in 2016 budget battle

Delaware Public Media

After more than six months of negotiations between Republicans and Democrats failed to produce a long-term budget solution last June, political factions and interest groups are already staking out positions on how to address another shortfall expected in 2016.

Delaware Public Media’s James Dawson takes a look where the lines in the sand are being drawn…

It started before the General Assembly even gaveled out of session on the early morning of July 1.

A group of six House Democrats voted against the operating budget – largely as a protest over the use of one-time legal settlement money to plug holes and the lack of a long-term revenue fix.

The rebellion signaled discord in the House under the watch of Speaker Pete Schwartzkopf (D-Rehoboth Beach) who now has to placate from within as well as outside his own caucus.

“Frankly, I think you look to a leader to bring your people together and we’ve not had any efforts to bring people together since June 30," said Rep. Paul Baumbach (D-Newark) one of the lawmakers who broke from his fellow Democrats. "To me, we appear as fractured as we were on June 30.”

Schwartzkopf had to broker a midnight deal with the GOP to keep a budget afloat that Baumbach and his group dismissed as the further erosion of the middle class support structure.

Baumbach says now is the time to be rekindling bipartisan talks to avoid another stalemate, as well as to show Republicans more respect in day-to-day legislative dealings to foster trust and goodwill.

“Efforts have to happen. It’s seemingly not happening and we’ve pretty much, in my eyes, wasted two-and-a-half months, so it would be nice if we could actually have some vision for the future and be moving forward on that vision," he said.

Schwartzkopf acknowledges he’s only spoken to one of the six detractors since June 30, also noting no bilateral talks are currently scheduled.

But he rejects the notions of a fractured caucus and broken relationships across the aisle.

“I don’t think any of us are very happy with how things ended up and how it went right down to the last minute before we got the votes to do anything. I don’t think that helps anybody and I think the Republicans feel the same way. I’m hoping that we’ve all learned something out of this,” Schwartzkopf said.

State budget officials peg next year’s projected deficit between $130 and $160 million, though those figures could vary wildly over the coming months as revenue projections fluctuate.

And that’s why House Minority Leader Danny Short (R-Seaford) says it’s far too early to dig your heels in.

“We’re already predicting multiple hundreds of millions of dollars that we’re not going to have when, in fact, I think that’s very, very premature. If in fact we do have. As predicted, a $100 million deficit, there’s ways to deal with that,” Short said.

Early budget hearings don’t begin until November and there will be two more revenue forecasts issued before Gov. Jack Markell cements his proposed spending plan in January.

But already the Markell administration, Democratic legislative leaders and the GOP have also been sparring for the past two months over the makeup of a committee to analyze state spending.

Republicans say lawmakers should have no part in leading the initiative – just as they didn’t head a similar group that recently dissected Delaware’s revenue system – and any further delay cuts the amount of time left to deal with the budget.

“I’m not interested in waiting all the way to June to make the decisions we need to make," said Short. "I’m interested in getting that expense committee up and running and having a report come back in a very reasonable amount of time to allow us to have some good deliberations, some good talks.”

A group of Delaware CEOs called the Business Roundtable is also entering the fray, recently issuing a gloomy report predicting severe budget deficits by FY2025 barring legislative intervention.

The report points out that outcome is unlikely, praising the state’s year-to-year budget management – but the roundtable is advocating for spending less on the public workforce and their health benefits, the state education system and Medicaid. In turn, the group calls for the General Assembly to reject tax increases that they think will hinder economic growth.

Democratic leaders are dismissing the report, calling it a “breathless, sky-is-falling view into the future” in an op-ed written by Senate Pro Tem Patricia Blevins (D-Elsmere) and Schwartzkopf.

Joint Finance Committee chair Sen. Harris McDowell (D-Wilmington North) quipped to the News Journal that “…free advice is worth the same amount you pay for it.”

But he also notes it won’t be completely ignored.

“To the extent that they’re willing to pay consultants to come up with thoughts and analyses that we can, in turn, look at ourselves, fine. We’ll take that. It doesn’t mean that it trumps everything else that’s out there,” McDowell said.

Democrats are already beginning to coalesce around a bill that would increase Delaware’s corporate franchise tax ceiling, in turn raising about $100 million per year.

Schwartzkopf says he would’ve liked to pass it this past session, a notion shared by the burgeoning progressive wing of the party.

“It’s not something that’s going to hurt any Delaware small businesses; it’s not something that’s going to hurt any resident of our state and to me, it’s a pretty easy daggone vote to take.”

Ensuring its passage may be one way to begin mending those hurt feelings inflicted through one of the more politically bruising sessions in recent history.

But it still leaves out the one faction needed to green light it at Legislative Hall - state Senate Republicans. 

Without a super majority in the Senate, Democrats need to garner some GOP support to get tax and fee bills through that chamber.

And Senate Minority Whip Greg Lavelle (R-Sharpley) says they currently have no intentions of passing a tax increase – regardless of whom it affects.

“If they think they’re going to get a $100 million tax increase in January, they have some reality checks to look at,” Lavelle said.

It’s the same rhetoric heard in 2015 – but after the concessions it forced in the early hours of July 1 this year, Democrats not only need to take it more seriously – but also transcend broken alliances to avoid an even later night again next June.

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