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House Republicans walk out, block bond bill over Seaford charter amendment

House Republican lawmakers staged a walkout on Thursday night after blocking passage of Delaware’s proposed $1.4 billion capital budget – a strategy to force Democrats to approve an amendment to Seaford’s charter that would give artificial entities like LLCs and churches a vote in municipal elections.

The charter amendment, which pits believers in the sanctity of local government decision-making against those wary of expanding the voice of business in politics, has also become a stand-in for Republicans' frustrations with the Democratic majority in the General Assembly.

With the 2023 legislative session scheduled to end on Friday, the stalemate threatens to force lawmakers into a special session that could drag on for days, weeks or months, delaying the release of funding for projects like school repairs and grants for volunteer fire brigades.

The charter amendment first appeared on Seaford’s city council agenda in late February, when Mayor David Genshaw brought forward a proposal to enfranchise businesses who own property withing Seaford’s city limits.

Seaford, like more than a dozen other Delaware towns, already allows non-resident property owners to vote, albeit only if they own the property as an individual, not as an "artificial entity.” Delaware is one of only a handful of states that gives municipalities the right to enfranchise non-resident property owners in local elections. That quirk in Delaware law is largely a response to the concerns of small vacation communities in which part-time residents outnumber permanent residents.

Seaford is not a small beach community. It is Sussex County’s largest city — with more than 8,000 residents — and it is still recovering from decades of decline after the loss of hundreds of jobs in a DuPont nylon factory.

Genshaw told Delaware Public Media that he regularly receives inquiries about voting from business owners — particularly those with property in Seaford’s downtown —who live outside of the city’s boundaries and own property through an artificial entity.

“When we talk about giving a corporation a vote, it can sound like we’re talking about people who wear suits in their skyscraper offices coming down to influence an election in Seaford,” he said. “But the reality is that we’re talking about local people who have invested hundreds of thousands of dollars in our town who have an interest in decisions that affect their businesses.”

And some in Seaford’s nonprofit sector say they also have reasons to support the proposal.

“We’re impacted by the council’s decisions about utilities rates or law enforcement too,” said Susan Kent, who has run two different affordable housing- and homeless services-related nonprofits in Seaford. “Who gets into office matters to us. There are people who might target affordable housing – who view it as a negative addition to our community – and we would want a say in whether they get elected.”

Seaford’s council ultimately considered a charter amendment that would broaden the city’s non-resident voting rights to include artificial entities that own property in the city. Those entities would be required to visit city hall in person to give power of attorney to a designee to vote on their behalf, and a Seaford resident who owns an LLC with property in the city would not receive an extra vote.

But the proposed amendment also drew substantial skepticism, even before it appeared on the radar of state lawmakers.

Seaford is not the first Delaware municipality to consider extending voting rights to artificial entities. Roughly a dozen already allow some types of artificial entities — often trusts — to vote in certain municipal elections. Rehoboth, for instance, allows LLCs and other corporate entities to vote in some special elections through a designee.

The language in Seaford’s proposed charter change closely mirrors that in the charters of Fenwick Island and Henlopen Acres; both Bethel and Dagsboro also give similar rights to artificial entities.

But when Rehoboth’s council considered extending those rights to the city’s annual elections in 2017, the proposal fierce pushback.

Critics included the ACLU of Delaware, which argued the change would give corporate entities an outsize voice in city decision-making and dilute the votes of residents; others noted that Delaware law allows the stakeholders in an LLC to remain anonymous, making it difficult to verify whether a single person who owns multiple LLCs could appoint multiple designees to vote in a Rehoboth election.

Two years later, Newark encountered the latter problem: the city allowed artificial entities to vote in referendums, and in a June 2019 referendum, 22 LLCs registered to the same address cast votes, prompting Newark’s council to roll back voting rights for artificial entities.

In Seaford, critics raised concerns about voter fraud and the ethics of giving property-owning corporate entities a right usually reserved for flesh-and-blood individuals.

“I don’t want us to be in a position where we have to make decisions that benefit business at the expense of society,” said now-ex Seaford City Councilman Jose Santos, one of two councilmembers vocally opposed to the charter amendment.

Santos also says he worries that giving property-owning businesses a greater voice in Seaford’s elections would drown out the voices of Seaford’s younger, less-wealthy residents.

“All the people on the council, our representatives in the General Assembly – they’ve always had someone who represents their interests,” he said. “Now I feel like my generation might not get the same representation.”

Seaford’s proposed charter amendment would also exclude any businesses that rent their commercial property in the city from casting votes – a detail some members of the council raised as an equity issue.

Other critics argued the amendment threatened to add enough new voters to tip the results of tight elections in a city with abysmal turnout.

In city council elections in April 2023, fewer than 350 voters cast ballots – less than seven percent of Seaford’s 5,020 eligible voters.

In that election, Santos lost his reelection bid by roughly 50 votes. By comparison, more than 250 artificial entities own property in Seaford, though Genshaw says it is unlikely that all of those entities would vote in a municipal election. In the most recent election, less than ten percent of nonresident property owners already eligible to vote in Seaford cast ballots.

“Why are we focusing all this time, attention, and effort to identify a few new potential voters when it would be far more productively spent getting more eligible voters to the polls?” Asked Dan Cannon, a Seaford resident who regularly gives public comment before the city's council, during a meeting in April.

Seaford’s city council only narrowly approved the charter amendment. With one member missing during the April 11th meeting, Genshaw cast the tie-breaking vote, sending the charter amendment to the General Assembly for final approval.

By the time the proposal reached the General Assembly, the controversy surrounding it had ballooned.

In a House Administration Committee hearing in May, Common Cause Delaware Director Claire Snyder-Hall – who has since led advocacy against the amendment – told committee members that “in our country, the wealthy don’t get to vote multiple times in multiple places. It’s one person, one vote.”

The ACLU of Delaware also voiced opposition, arguing that by giving businesses that own property rights that are not extended to businesses that rent property, the bill may be unconstitutional.

Even House Speaker Pete Schwartzkopf, whose district includes municipalities that allow non-residents and artificial entities to vote in some elections, expressed mixed feelings on the bill, sponsored by Seaford-area Republican Rep. Daniel Short.

“I would caution people not to do this,” he says. “I’ve been encouraging my towns not to do this. But on the other hand, you have a duly elected town council to run your town.”

Schwarzkopf’s comment set the stage for a greater showdown that largely played out behind the scenes in the final two months of this year’s legislative session.

As the proposed charter amendment drew more attention, including from some national news outlets and advocacy groups, House Democrats – largely from the party’s progressive wing – became firmly opposed to the bill’s passage.

But the General Assembly has historically rubber-stamped town charter amendments: a practice meant to signal respect for small towns’ agency to make their own governing decisions.

“Over my fifteen years in the General Assembly, we’ve never stopped a charter amendment for a town,” House Minority Leader Michael Ramone told Delaware Public Media.

Indeed, the General Assembly has voted on charter amendments dealing with voting rights for artificial entities in the not-so-distant past; in 2004, lawmakers allowed Dewey Beach to extend voting rights to trustees of trusts that own property in the town.

To Genshaw, the pushback on Seaford’s bill felt like retaliation.

“This is legal under Delaware law,” he said. “And the legislature has already approved other municipalities that do this. Why are you picking on Seaford?”

He speculated that after several of Seaford’s past controversies, including a municipal right-to-work ordinance overturned by the General Assembly in 2018 and a 2021 lawsuit by the state after Seaford adopted an ordinance requiring the cremation of fetal remains from abortions and miscarriages, some in the General Assembly may view Seaford with more skepticism than other municipalities.

To address some critics’ concerns, Short introduced a substitute for the original bill to clarify that a non-resident who owns or has a stake in multiple artificial entities with Seaford property would only receive one vote. “You only get to vote one time,” he said. “And for those criticizing our Department of State that doesn’t disclose who owns an LLC, if you want to vote in Seaford, there’s a paragraph that says you’ll disclose who your ownership is and who your partners are.”

But the firm opposition among House Democrats left Short without enough votes to pass the bill, forcing him to pull the bill from the House floor agenda on three separate occasions. The break with the tradition of approving municipal charter amendments inflamed frustrations among House Republicans, who already felt that their Democratic counterparts felt so empowered by their substantial majority in both chambers that they were no longer willing to negotiate.

The final weeks of the legislative session, however, gives House Republicans vital bargaining chips. Delaware’s General Assembly passes budget bills in the final days of its legislative session. Those bills require a three-quarters majority to pass; Democrats do not have a three-quarters majority in either chamber.

Last week, Ramone informed Schwartzkopf that if he could not muster enough Democratic votes to pass the charter amendment, House Republicans would block the last remaining budget bills: the bond bill, which covers capital spending, and the grants-in-aid bill, which provides support to law enforcement, fire departments and nonprofits.

Schwartzkopf promised to arrange the votes needed to pass the charter amendment on Thursday, but in the interceding week, some of those Democrats changed their minds.

On Thursday evening – after an hours-long closed Democratic caucus meeting – only seven Democrats opted to vote in support of it to avoid a budget showdown.

“For my part, I genuinely disagree with it, but I think your point that it was passed by the council of the city of Seaford is pertinent,” said Rep. Sean Lynn, one of the Democrats who voted for the amendment. “Again, I fundamentally disagree, but I think it’s more important to the citizens of Delaware that we complete the bond bill and other legislation we need to do for the people of this state.”

Ramone says that his caucus had already prepared for the possibility that Schwartzkopf could not deliver enough votes to pass the charter amendment.

“They’re losing sight of the leverage we have when we start going to war,” he said. “We’re at the point where our strongest days are the last days when we get to vote on the budget, and frankly, we’re not voting on it. We’re not coming back tomorrow unless I get a call saying we have the votes to pass that bill.”

After the Seaford charter amendment’s failure, House Republicans remained on the floor long enough to prevent the passage of the bond bill. In the process, the House also failed to pass an unrelated amendment to Lewes’ charter – an unintentional consequence of the showdown over local control.

Then, with the bond bill off the table for the evening, Republican lawmakers filed out of the room, leaving their Democratic counterparts to pass more than a dozen bills – including legislation offering bereavement leave to state employees who lose a pregnancy and expanding drug users’ access to clean syringes to combat blood-borne diseases – that only require a simple majority.

“There’s no reason for us to be there,” Ramone said after leaving the floor.

He adds that Republicans may add new demands if the Democratic caucus cannot pass the charter amendment on Friday.

“Now if you come to the table, there may be two things you have to vote for,” he said. “And if you say no again, there may be three.”

Ramone says those demands could include the passage of Republican priorities, including a bill preventing state regulatory agencies from phasing out the sale of internal combustion engine-powered vehicles – an attempt to roll back DNREC’s decision to adopt California’s plan to entirely phase out sales of new gas-powered cars by 2035.

Delaware’s House is no stranger to last-minute chaos. In 2018, lawmakers reached an impasse over an increase in the state’s minimum wage, and when Republicans blocked budget bills as leverage, lawmakers were forced into a special session that dragged well into July 1st.

This time, Ramone says Republicans are willing to hold out well into the summer and beyond.

“It might be days, weeks or months before we give out the grant-in-aid money and the bond money,” he said. “I don’t have any plans for July and August.”

A prolonged standoff, he argues, might push members of the Democratic caucus to pursue compromises with Republicans in future sessions.

If House Democrats can muster the votes for the charter amendment – and any other possible Republican demands – on Friday, both the charter amendment and the remaining budget bills will still need to pass in the Senate.

Senate Republicans also have enough leverage to block the budget bills if their Democratic counterparts do not pass the charter amendment.

Meanwhile, Democratic Rep. Sherry Dorsey Walker has introduced a bill that would explicitly prohibit artificial entities from voting statewide, though the bill is unlikely to be heard this year.

Paul Kiefer comes to Delaware from Seattle, where he covered policing, prisons and public safety for the local news site PubliCola.