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Posts Tagged ‘Jack Markell’

Delaware spends more than 46 other states for per-capita spending per resident, at nearly $9,800 per person per year (National Association of State Budget Officers and the Kaiser Family  Foundation). The News Journal decided to explore this topic in an editorial:

Tax dollars not buying progress for Delaware

How much is it going to cost?

That’s a question we ask ourselves almost daily, whether we’re at Wawa for gas or on amazon.com for, well, you name it.

That’s a question we rely upon our lawmakers to answer when it comes to the major issues facing Delaware.

Lawmakers asked those questions on Thursday.

First, the Board of Education declined to approve the Wilmington Education Improvement Commission’s plan in part because board members want clearer cost estimates.

Then, after Gov. Jack Markell’s final State of the State address, some lawmakers wondered if taxpayers are already spending too much on education.

Based on the health of our state, the question shouldn’t be “How much is it going to cost?” Rather, we need to start asking “What are we getting in return?”

Indeed.

Let’s hope this year our public decision-makers figure out how to balance thew budget without negatively impacting our lives or the future of the state.

Do you believe we’re getting our money’s worth from state spending? Why or why not?

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Bernice Whaley, director of the Delaware Economic Development Office (DEDO), recently provided a glowing assessment of Delaware’s economy in a News Journal article. Ms. Whaley cites a current unemployment rate of 4.7% and growth over the last two years of 4% in Delaware jobs and 6.5% in personal income. And she notes recent increases in high technology employment in the state.

It might be helpful to put these statistics in perspective relevant to the average Delaware household.

The Delaware unemployment rate has thankfully fallen from a high of 8.7% in 2009 to 4.7% today. Two things are worth noting. First, in the year prior to the recession the state’s unemployment rate was 3.4%. Second, according to the most recent Census data, the percent of Delaware residents age 16 to 64 working dropped from 80.7% in 2009 to 76.7% in 2013. In other words, one major reason for a lower Delaware unemployment rate is that a large number of working age individuals have simply stopped looking for employment.

Total jobs in Delaware have expanded by almost 4% (2% per year) over the past two years. While it took more time to get there, this is similar to the job growth rate following the last recession in Delaware. Many of the jobs being added, however, are lower paying positions in such industries as temporary services and restaurants. The result from the Census is that between 2009 and 2013 the inflation adjusted median earnings of working Delaware residents with a high school degree has dropped 7% while that of residents with a bachelor’s degree or more has dropped almost 3%.

The earnings of Delaware workers are on average moving backwards.

Delaware personal income has grown at least 6.5% over the past two years. This compares to 13.8% growth following the last recession. More disturbing, the slowest growing component of Delaware personal income during the past two years has been earnings by residents while the fastest growing component has been transfer payments (e.g., Social Security, Medicaid, Medicare, food stamps, TANF).

Finally, growth in high technology industries in Delaware is positive, but it provides few opportunities for the almost two-thirds of working age Delaware residents who have less than an associate’s degree. Tests of Delaware public school students from 4th grade through high school evidence that the majority of students are not proficient in reading or math.

Obviously it is the job of DEDO to be positive and sell Delaware. And in all fairness DEDO has little control over the poor performing public schools, the green energy policies that have driven Delaware electric rates 35% above the nation, and the lack of a right-to-work law.

Nevertheless, a victory lap seems premature.

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There are many things we’ve been critical of in regards to our state government, but here’s one area where the state earned high regards from one of our associates.

The Heartland Institute published their 2015 Welfare Reform Report Card  which shows a serious effort by the state to control need-based-aid, often referred to as “welfare”, and to get people who are able to work into jobs and not let them sit around collecting a check while they smoke Newport 100s while their left-wing Statist advocates claim we need to spend more “to help the poor”. There is no shame in providing a safety net for emergencies, such as homelessness, immediate unemployment, physical or mental disability (which prevents work or basic living functions), and hunger.

However, Statists from both major parties, but one in particular, have built a large web of government agencies which employ tens of thousands of public employees whose salaries and benefits drain the Treasury, and whose agencies continuously provide healthy individuals with a basic lifestyle that traps too many healthy, able-bodied people in a cycle of dependence, basically unable to get off the program to take care of themselves. They are then pressured to keep voting for those who redistribute the wealth, because those elected officials come into poor communities bearing horror stories of people dying in the streets, babies and pets going hungry, just before the world ends, if they vote for a candidate who wants to curb the perpetual welfare state. Have you noticed just how many able-bodied people who begin to receive these benefits keep earning them forever, unless encouraged to go find a job?

We at CRI believe human dignity and satisfaction best come from feeling a sense of worth to society as a whole, and being able to work a job which offers the ability to provide for oneself and one’s family, while also saving for future goals- a nice vacation, a house, a nice car, or whatever one desires and can earn through savings and interest. Even the argument over falling worker wages can be resolved using the principles of freedom- healthy market competition boosts worker’s wages by encouraging more hiring so there are more better-paying jobs than people, rather than what we have today, which is more people than better-paying jobs.

The Heartland Institute gave Delaware an overall grade of A- for welfare reform, going back to 2009 when Governor Markell was sworn in. We are ranked the 8th best state for welfare reform, dropping five places from 2008, largely because Delaware has done little to change its welfare reform policies while other states have improved theirs.

Some of their findings:

  • Delaware got top grades for work requirements and for “cash diversions”  (policies allowing case workers to give applicants lump sum cash payments to meet short-term needs), a B for service integration (organizing state human services in a way that allows coordinated, holistic, “one-stop” delivery of services and connects these services to the local community and employers), and C’s for aid limits and sanctions on those who don’t meet comply with eligibility requirements.
  • We spent $6,378 per recipient in 2013 (latest available data), and had just over 13,000 recipients of Temporary Assistance for Needy Families, which has declined 75% since 1996.
  • Where Delaware needs to improve is in anti-poverty measures. Close to 25% of Delawareans receive Medicaid, and sadly we have more children in poverty today than we had 20 years ago when the first set of welfare reforms was passed. Finding jobs for the unemployed poor has been an issue for Delaware, and Heartland ranked us 47th in finding jobs for those who are or were receiving TANF benefits. The only area where Delaware got strong ratings for anti-poverty was in having a low teen birthrate.

Heartland recommended Delaware adopt tougher time limits and do more to enforce them, and other eligibility requirements.

Overall, Delaware has done well in managing the welfare reform, in terms of having strong work requirements and helping people quickly and immediately, without losing control over monies disbursed. The state just needs to help people move off the bottom much faster than they are currently doing.

The photo of President Clinton is in the Public Domain and was taken from Wikipedia.

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Every year, the General Assembly finds a way to balance the budget, as they are required to do by our state constitution, or at least use accounting gimmicks to move spending around so future liabilities aren’t held against the current FY budget.

This year, the state’s “in a pickle”, so to speak, or maybe something to do with scrapple would fit better. There is a budget deficit in the neighborhood of $70 million, which increased after legislators caved to state employee demands not to pay additional expenses for their healthcare policies due to a wage freeze for most state employees, a freeze which has lasted for years. Not only did they not make this move at the request of Governor Markell, but they added $21 million to the deficit with money we don’t have to keep their constituents happy.

Meanwhile, the state wants money to pay for infrastructure spending, cleaning up the waterways, investing in startups/businesses to grow the economy, paying for increased Medicaid and public education expenses, services for the increasing number of senior citizens retiring into Delaware, and so on. As spending goes up, the state is collecting less from casino revenue and  personal and corporate income taxes than in previous years. You can see where we’re going to run into problems, and we’ve predicted for some time that the next governor of Delaware is going to have a serious fiscal mess to fix.

So what do our elected officials have in mind to balance the budget? Some new ideas include: raising state income taxes on top earners from 6.7% to 7.6%, increase Delaware’s per-gallon gas tax, motor vehicle fees, and taxes levied on wholesale fuel deliveries to fund new road and bridge improvements, increasing the gross receipts tax, reduce corporate income taxes, eliminating the estate tax, and actually cutting personal income taxes across the board.

“There’s not going to be a split of these issues that will give us the transportation money and we’ll figure this out later,” Lavelle told the News Journal. “I didn’t fall off the banana truck yesterday. I’ve been fooled more than once down there and it ain’t going to happen again.”

Did you see what was missing among these ideas? Ways to cut state spending. This is how our state does “the water dance,” similar to how many indigenous tribes around the world pray for rain; they do a symbolic dance and hope the sky will open up and rain will just fall and provide much-needed water to grass and crops so they will grow and life can continue. Replace the actual dancing with accounting “dancing” (tricks), and the rainfall with moneyfall, and otherwise the concept is the same.

Now some of this has already been done; we know the state Department of Education is about to take a big hit, as Legislators have become increasingly opposed to the Governor’s education plan, which includes Secretary Murphy. Race To The Top funds are phasing out and school district referendums continue to alternate between passing and failing, which means some districts have found themselves cutting back on spending and hiring while freezing wages for some district employees.

Yet when we see the final budget, which must be passed by June 30, where else will the state consider making cuts? Senator Lavelle went on record suggesting that tax increase were off the table unless the prevailing wage law is reformed or repealed. Will Delaware Democrats be willing to stand up to their union supporters and change the prevailing wage law?

Another way the state could make cuts is to get us out of RGGI, which is a regional cap and trade scheme. RGGI does not do anything for the environment, but it does increase our electric bills by an average of $50/year per household, and thousands more per year for most industrial businesses, who have most of the remaining few manufacturing jobs Delaware still has. Will the GA make an effort to pull us out of RGGI?

Delaware has plenty of room where cuts could be made, the only determination will be whether they make them or not. In the meantime, please visit caesarrodney.org

for the latest news and information you can use to learn about our state’s fiscal situation and click on the “Impact Delaware” link to learn more about how you can make a positive impact on Delaware.

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rightwisconsin.com

Today’s News Journal article “Seeking Delaware manufacturing jobs, GOP targets unions” talks about the concept of a “right to work zone”, which differs from Right to Work in that RTW laws covers whole state while a RTW zone covers only a specific geographic area. Senator Greg Lavelle has proposed one this year; he did the same last year.

As expected, the unions were out in full force against it:

“Sam Lathem, president of the Delaware AFL-CIO, the umbrella organization representing Delaware unions, called Lavelle’s legislation a “desperate reach” that would lead to lower wages.

“We need to find a way to re-create and grow the middle class. Right-to-work isn’t going to do that,” Lathem said.”

The News Journal article pointed out the problem, though whether John Starkey intended to do so is another idea.

“Now Republicans are reviving a proposal they hope will revitalize Delaware manufacturing. But the plan, which would make it harder for unions to organize, is controversial and deeply polarizing in a state where the governor’s office and the General Assembly are controlled by Democrats, who still count union members among their staunchest base supporters.

Markell, a Democrat, appears poised to oppose the legislation. A spokeswoman said available studies on whether right-to-work legislation creates jobs are “inconclusive at best.”

“Gov. Markell remains focused on efforts that employers tell him are most important for job and economic growth, such as providing training for a skilled workforce and spurring innovation,” spokeswoman Kelly Bachman said.”

To quote from Hamlet, “Ay, there’s the rub.” You can see very quickly why even just a zone- not the whole state, but an area to try this idea out- is considered a threat to organized labor and those who benefit from it.

Here’s the summary of the Law, SB 54:

“This Act allows the Director of the Delaware Economic Development Office to create right-to-work zones as part of its inducements to bring new businesses to Delaware and requires these zones to be offered for manufacturing businesses hiring at least 20 employees. It also exempts those manufacturing businesses from their gross receipts taxes for their first 5 years.”

Let’s talk about these zones. Suppose GM’s former plant on Boxwood road was turned into a right to work zone, along with say 1000 square acres surrounding the plant’s legal boundaries. Only businesses locating in these zones would be able to receive the benefit, and with only 1000 square acres there would be a limit. However, those businesses which do receive a space in the RTW zone would be able to avoid the problems which modern day labor unions bring: namely, the political activity (including which many union members may not agree with) and the pressure to give workers more money and benefits even if the company is unprofitable or if doing so makes the company unprofitable. They can make an effort to grow manufacturing and if the effort succeeds, then more zones can be replicated, or perhaps if the General Assembly and Governor see the benefit of one, they can enact a RTW law for the entire state.

On the chance the law is not beneficial, or even proves detrimental, the zone can be removed and the rest of the state is unaffected or the law can be repealed if the zones are a failure.

Now, other factors will affect the success or failure of these zones. Notice that the gross receipts tax would not apply for five years. This is because our state’s gross receipts tax is a job-killer; businesses who meet a certain income threshold pay a tax on all revenue over the threshold, not counting profit and loss. So even if your business has a bad year, you still get socked with higher taxes.

Electricity is expensive in this state, about 23% higher than the national average. Plus, the crime reputation for Wilmington, and to a lesser extent Dover, absolutely gives a negative vibe to outsiders looking to relocate a business or build a new factory. Don’t let anyone tell you Wilmington’s crime problem isn’t hurting the reputation of the entire state.

But RTW zones might give the state a chance to attract capitalists without having to “invest” (subsidize) large businesses to move here, because most of the biggest “investments” go to major companies like Fisker, Bloom, Kraft, etc.. If you owned a casual sit-down restaurant, and the only way you could get customers is to pay them anywhere from $30-50 to get them into the store, who is going to look at customers coming in and say “yes, this is a successful restaurant” just because a few customers are inside your restaurant now?

We hope the state will look at ways to improve our economic climate, to attract businesses and “job creators” of all types, from start-ups to established companies, from sole proprietorships to multinational corporations, to anyone who has job opportunities for Delawareans and is willing to invest in our state for the long-term. These goals are achievable, they work, and they offer a new chance to get our economy going again.

By the way, the courts have found right to work zones are legal. What is not currently legal (and is being challenged) is right to work at the County/City level. This is due to how local government entities are structured.

Lastly, if you need more proof that manufacturing in Delaware is in serious trouble:

Delaware manufacturing employment

1990: 43,200

1991: 48,600

1992: 44,800

1993: 44,100

1994: 44,200

1995: 44,300

1996: 39,700

1997: 41,5002

1998: 43,100

1999: 44,400

2000: 41,300

2001: 39,000

2002: 38,300

2003: 35,000

2004: 34,900

2005: 33,500

2006: 35,000

2007: 33,700

2008: 32,300

2009: 29,900

2010: 26,800

2011: 25,600

2012: 25,600

2013: 25,600

2014: 25,600

2015: 25,800

Source: U.S. Department of Labor, Bureau of Labor Statistics

Yes, we have lost roughly 40% of our manufacturing jobs, and most of these workers are NOT in a private sector labor union, which has even lower numbers. Given the situation, what can and should unions do to keep their members supporting their unions? How could union leaders improve their offering which helps both workers and employers?

In our next blogpost, we’re going to introduce a new concept called “Union Economies”. This idea is pretty interesting, and it comes from our friends at the Mackinac Center.

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Division of Energy and Climate in the Department of Natural Resources and Environmental Control (DNREC)

If you missed this story, Delaware has a new “climate action plan” based on dubious data which assumes more state control of private land use will somehow save us from “man-caused climate change”. Below is our response.

For the most part, the state’s new climate plan could have been titled “Let’s Plan for the Storm of the Century”, a basically sound idea. Unfortunately, the plan also promotes a continuing un-Constitutional effort of the state to take over land use planning from the counties and municipalities. It also promotes the concept there will be catastrophic impacts from global warming which some key state leaders follow with religious like fervor. The facts show no upward trend in global average temperatures for the last eighteen years, and point to modest impacts on our environment from global warming.

Recent lawsuits have upheld local control of land use issues, as delegated by the Delaware Constitution, by over turning state attempts to write land use regulations. The state Strategic Planning Office must approve local land use plans as it relates to state funded infrastructure such as highways. Some key goals of the climate plan are directed at influencing land use planning. The office is adding a request local land use plans consider climate change, and will enforce it by weighing infrastructure investment in favor of localities that include climate considerations that conform to the state plan.

Additionally, DNREC will specifically use their excessive estimates of global warming induced sea level rise estimates and increased rainfall estimates to push for more control over storm water management (an issue already involved in a lawsuit), shoreline management, beach replenishment, and expanded tidal wetlands maps. DELDOT will use the presumption of more temperature influenced high ozone days to consider driving restrictions during air quality events. DEDO will encourage real estate agents to spread out weekly beach rentals to different start dates, an idea which has some merit but will be disruptive to the tourist industry. It should be noted all of these efforts will likely lead to higher cost for private industry.

The climate plan forecasts sea level rise from greenhouse gas induced global warming at 1.5 to 5 feet by 2100, and used three feet to develop Flood Risk Adaptation Maps which will be used for state planning purposes. Meanwhile, the report also quotes the National Oceanic & Atmospheric Administration estimates of only 1.1 feet of sea level rise by 2100, including about half that amount from localized land subsidence at the Lewes Tide Gauge, an amount roughly equal to sea level rise that occurred during the twentieth century. Most of the state is not subsiding, and land height actually increases for estuaries from deposition of sediments from upstream erosion. A realistic expectation is about six inches of sea level rise by 2100.

The plan also assumes rainfall will increase during major storms because of global warming. Even the UN climate change report admits no linkage has been confirmed between global warming and storm intensity.

The state wants to abandon the use of Federal Emergency Management Agency hundred year Flood Insurance Rate Maps which look at historic trends and current flood plain data. The complaint is these maps don’t forecast future trends. We submit the FEMA maps are updated frequently enough to be used for infrastructure planning over the likely lifespan of most infrastructure projects. The use of DNREC’s Flood Risk Adaptation Maps uses questionable forecasts and will result in un-needed additional expense for both the state and private interests. The expanded wetland maps will take a large amount of private land without compensation.

Climate change estimates will be used to force a review of electric rates by the Public Service Commission which could lead to higher rates. The Department of Health & Human Services wants to increase low-income fuel assistance even though higher average temperatures would have a net impact of lowering utility bills as much more money is spent on heating then on cooling. Every state agency has an action step in the plan to increase education of the reality and impacts of catastrophic climate change, an effort some would call propaganda.

Finally, the state has adopted a plan to reduce greenhouse gas emission by 30% by 2030 from a 2008 base year. The plan admits carbon dioxide emissions were already reduce by 25% by 2010 and so is looking for an additional 5% reduction from new initiatives by 2030. Appendix C of the plan provides the key assumptions used in developing emission forecasts. The plan used the U.S. Energy Information Agency 2009 forecast which assumed carbon dioxide emissions would increase 0.7% a year to 2030. The more recent EIA 2014 forecast assumes emissions will decrease by 0.2% a year. Based on the more recent forecast, the 30% reduction target will be met without any new initiatives needed.

The legislature, and all Delaware citizens, should question any legislation, budget, or regulatory changes driven by the “Climate Framework for Delaware”.

Dave T. Stevenson, Policy Director

Center for Energy Competitiveness

Caesar Rodney Institute

                                              

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The big news in Delaware today (not the awesome magazine, but today today) is that the state Department of Education has issued Christina School District with an ultimatum: close the three “Priority Schools” in the district (Stubbs Elementary, Bancroft Elementary, and Bayard Middle School) by the end of February 2015 or else turn them over to an outside manager. If they don’t comply the state will take them over.

Whereas Red Clay SD countered the state’s takeover plan with one of their own which did not require teachers to reapply for their jobs or for school principals to be fired and replaced with new $160,000 a year principals, Christina SD did not come up with a plan the state finds acceptable. Their school board also voted to reject the turnaround plan. So now the state is flexing its political muscle to get control over these three schools.

If you look at a map of Christina (click this link) you’ll see the district boundaries make no sense.

Christina serves the city of Newark and the suburban area around it, and then a piece of downtown Wilmington about 12 miles from its easternmost edge. Newark and Wilmington are not the same city and each has its own challenges. We at CRI believe there should be changes to how districts are drawn and the City of Wilmington should have its own school district. All three of the schools scheduled for closure or loss to outside managers or the state are in the city limits of Wilmington. Nonetheless, Christina is in charge and must come to a decision soon. What will they do?

If the past is any indicator Christina will fight the state all the way to the last week of February. In 2013 the district initially rejected Delaware’s requirements under Race To The Top but changed a portion of their plan when the state threatened to withhold $2.3 million in RTTT funding from the district unless it complied with federal directives. However, Governor Markell and Secretary Murphy are not exactly pushovers; we expect them to stand their ground on this issue and fully take over the schools at the end of the month if Christina doesn’t counter the Priority Schools plan with one the state finds acceptable. However, in the end the Governor has more power than the district and they know it; they will have to implement some reforms or else those three Wilmington schools will probably be turned into charters or turned over to private “for profit” entities who will (most likely) hire private management to oversee a turnaround effort.

Whatever happens, we will be watching with interest. From our end we have no stake in this battle except to see education in Delaware turn around. Again we repeat: 51st in SAT score performance, 9th in per-student per-year spending, and 4th in per capita administrative budget (number of administrators to students). Without serious education reform the state will continue to see businesses decline to invest here (unless they get goodies from DEDO) because our public education system isn’t “world class” enough to produce enough educated young people needed to take the high-paying jobs which move people out of poverty. Parents with children who have jobs in New Castle County will move over the border to Pennsylvania or send their children to one of Delaware’s private schools (we are #1 in the country for highest ration of children in private schools as a percentage of the total student body).

We are involved in our own education reform efforts. Look for CRI, in the days and weeks ahead, to continue to talk about Education Savings Accounts and why Delaware needs them. or visit http://www.caesarrodney.org and learn about what you can do to Impact Delaware.

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