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April 2008

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IT WORKED: A "tremendous outcry from administrators and teachers" brought quick relief from public schools having to feel full effects of state government's prospective budget cuts, according to Terry Spence, speaker of the House of Representatives. He revealed that Governor Ruth Ann Minner and budget director J.J. Davis sought General Assembly approval of a reduction from $80 million to $30 million in the amount of cuts to be borne by the Department of Education. The House and Senate on Apr. 24 immediately approved a joint resolution to that effect after a meeting of leaders in the governor's office, Spence said.

"We decided we could cut elsewhere rather than take it from the kids," he said. So far, DelDOE and the 19 public school districts are the only state agencies exempted, at least in part, from a proposed across-the-board 8% budget reduction for the coming fiscal year. Brandywine schools superintendent Jim Scanlon and some of his counterparts in other districts, said deep cuts would require layoffs, larger class sizes and elimination of some programs. Spence did say that the current budget situation might provide impetus for advocates of reducing the number of school districts. (CLICK HERE to read previous Delaforum article.)

    

The proverbial welcome mat is already out, and New Castle County is preparing to also roll out a proverbial red carpet for businesses connected with expansion of Aberdeen Proving Ground.

A proposed ordinance recently introduced by Councilmen Joseph Reda and Robert Weiner and referred to the Department of Land Use and Planning Commission for their advice would amend the Unified Development Code to provide a menu of relaxed density, traffic, parking and buffer requirements and an expedited approval process to a variety of research and 'technology development' firms seeking to build facilities related to the planned consolidation of military research from Monmouth, N.J., and other locations at the Army ordnance base in Harford County, Md., about 30 miles from the Delaware line.

Specifically, the measure targets a share of the estimated 30,000 "direct, indirect and induced" jobs to be created within commuting distance of the base by 2011. The incentives will go to firms which pledge to provide 25 new-to-the-area jobs within two years of completing construction -- or 10 jobs if the building is smaller than 20,000 square feet -- and post a bond to insure their keeping the promise. 'High paying' is defined as 10% above per capita income in New Castle County. Development plans would be treated as minor plans, which carry by-right approval if they meet technical requirements, regardless of building size.

    

First step in a move to use a new-to-Delaware financing method to help pay for infrastructure for Renaissance Village was put off after several County Council members balked at the idea.

Although a resolution sponsored by John Cartier was described as non-binding and little more than a way to assure future compliance with an Internal Revenue Service regulations, its sudden appearance on the agenda was challenged at a finance committee meeting before Council's Apr. 22 session. The resolution, which was tabled, would have declared Council's "official intent" to issue up to $18 million of tax-exempt bonds to reimburse the cost of sewers, streets and the like serving the Claymont project. The long-term bonds would be repaid by tax on incremental increases in assessed value of the property.

"This is nothing but a government bailout; this is another Bear-Stearns," William Tansey declared. David Tackett said there had not been enough time to wade through "the confusing verbiage" in both the proposed measure and bond counsel Timothy Frey's attempt to explain it. George Smiley said the resolution "pulls us farther into this project than I was ever led to believe we would be." Cartier denied that it would carry any financial risk for county taxpayers and said such assistance is necessary to offset the higher cost of redeveloping a blighted area than are required for 'greenfield' development. (CLICK HERE to read previous Delaforum article.)

Until recent enactment of enabling legislation by the General Assembly, Delaware was joined only by South Dakota in not using tax-increment financing to encourage redevelopment, Robert Weiner said.

    

Coping with the impact of the state's budget crisis and defining equitable attendance zones are the major challenges facing the Brandywine school board, candidates for three seats on it agreed.

Beyond saying that preserving existing programs that are now working should be given priority and that maintaining diversity in the student population should be a goal, none of them offered specific  proposals at a sparsely-attended meet-the-candidates session on Apr. 22. Incumbent Aletha Ramseur and Cheryl Siskin are running for the one year remaining in the term to which Ramseur was appointed last year. Board president

Brandywine school board candidates are (from left) Joseph Brumskill, Cheryl Siskin, Aletha Ramseur and Ralph Ackerman.

 Joseph Bumskill is unopposed in his bid for re-election. Ralph Ackerman, a former board member, is seeking the seat to be vacated by Sandra Skelly and also is unopposed.

Ramseur said programs for children in the middle range of student achievement "and often forgotten" need to be strengthened. She favors full inclusion of special-needs youngsters and noted that children of diverse backgrounds are "coming together with each other's culture." Siskin called for a strong effort to attract parents who send their children to private schools and to promote a greater degree of parental involvement. Ackerman, who led a community committee looking into the feasibility of a separate Claymont district, said that, as a board member, he will "represent the entire district."

With reference to the potential of significant cuts in state financial support, Brumskill said, "We must galvanize our resources to reverse this thing."

    

EXEMPTIONS EYED: With county government's revenue pinch showing no signs of easing, Council members are taking a jaundiced view of some exemptions from the property tax. Acting chief financial officer Ed Milowicki told a budget hearing on Apr. 21 that total exemptions are 'costing' the county $24.5 million. By far the largest share -- $19.6 million -- are properties used for government, religious, health-related and other traditionally favored purposes. The second-largest category consists of partial exemptions that elderly property owners enjoy which, although recently tightened, are worth nearly $4 million.

Council members at the hearing zeroed in on an economic-development incentive enacted during the 1970s in conjunction with the city of Wilmington, which none of them apparently knew about. Businesses that expand, providing new jobs, get a break, applied to the increase in assessment, which declines annually for 10 years. Milowicki also reported that revenue from the real estate transfer tax continued to decline in comparison with last year, during March, but at a lesser rate than in the previous two months. In  the first quarter this year it amounted to $4.6 million, down 35% from $7 million during the like months of 2007. (CLICK HERE to read previous Delaforum article.)

    

Although told the economic outlook may not be as bad as first thought, official budget watchers decided to again pare their estimates of state revenue this fiscal year and next.

"I'm amazed how well the economy has held up," economist Fred Dixon told Delaware Economic & Financial Advisory Council's  revenue committee before it trimmed $34.6 million from its recommended projection for the current year and $12.7 million from fiscal 2009. Standard practice is for the full council, which meets on Apr. 21, to accept the committee's recommendation. The current projection will drive the Minner administration moves to slash already approved spending and the General Assembly must use the council's final 2009 projection as the basis for the budget it will adopt for the year which begins July 1.

Dixon told the committee on Apr. 18 that he concurs with the consensus that the national economy is in recession, but described it as a "very mild" one. On the other hand, he said the softness is likely to extend well into the next calendar year. "This thing really [won't be] over until the housing market stabilizes," he said. Most of the decline in the forecast stems from an expected drop in abandoned-property revenue, with both personal and corporate income tax contributing lesser shares. Part of the current year's shortfall will be met, the panel was told, by using about $9 million in interest income from special funds for general spending. (CLICK HERE to read previous Delaforum article.)

Delaware will be able to collect a windfall $10 million in franchise tax and penalties stemming from Lehman Brothers' 1999 acquisition of Delaware Savings Bank if the U.S. Supreme Court lets stand a state Supreme Court ruling adverse to the firm's mortgage banking operation.

    

PLAY BALL:

County councilman Robert Weiner addresses the crowd as Talleyville Girls Softball League opens its four-diamonds complex on the site of the former Old Mill Lane School. Also participating in the inaugural on Apr. 12 were former state representative Wayne Smith and Barbara Meredith, an administrator with Brandywine School District. League president Mark LaVere said about 450 girls on 33 teams will participate during the coming season.

    

ALARM RAISED: Brandywine School District would 'lose' between $6 million and $7.5 million in state revenue in the coming fiscal year as a result of reductions in state financing being considered by the State Budget Office, according to schools superintendent Jim Scanlon. In a message distributed to subscribers to the district's 'e-news' service, he said all superintendents and heads of state departments have been asked to prepare alternative budgets anticipating an 8% to 10% reduction in state support to cope with a projected $212 million shortfall in the state's proposed fiscal 2009 budget, now pending in the General Assembly.

"This has been presented to us as merely an internal exercise at this point," he said. But he indicated that the district will mount an effort to head off significant cuts. "If the state does eventually decide to pull back funding for education, we will ask our community to please contact their legislators about the importance of education and to let them know your support for our schools. Education must be a priority," he said. Brandywine is in the process of preparing a preliminary fiscal 2009 budget. Its current operating budget includes $65.5 million of state revenue, which is about 45% of total revenue.

    

WITHIN BOUNDS: Cost of the settlement reached with the first of six unions representing county employees comes in under the Coons administration's intent to cap increases in wages and fringe benefits at 4.5% over the life of new contracts, according to communications director Charles McLeod. On Apr. 10 he 'released' a summary of the contract with the local representing park and sewer maintenance workers ratified by union members the previous day. The ratification vote was not disclosed. He said union leaders agreed last week to put management's latest proposal to a vote to avoid having to take it to arbitration.

McLeod told Delaforum that the administration "is hopeful this will serve as a blueprint for negotiations with the other five unions." Those contracts expired Apr. 1; the maintenance workers had been without a contract since Apr. 1, 2007. According to the summary, they will get a retroactive 3.1% cost-of-living increase this fiscal year; a one-time payment of $250 next fiscal year; no increase the following year; and a 1% cost-of-living increase in fiscal 2011. Automatic annual increases in the pay scale for those who have not reached the top rung will continue. A 'no-layoff' clause in the former contract has been eliminated. (CLICK HERE to read previous Delaforum article.)

    

Contracts with all seven unions representing county government workers have expired, opening the toughest phase of the administration's battle to control spending to stave off a budget crisis.

Going into what promise to be tough negotiations, County Executive Christopher Coons has drawn a proverbial line in the sand at a 4.5% increase in the combined cost of salaries and all benefits. He says that is the only way to avoid layoffs and having to cut key services to county residents. The unions represent about 85% of the county workforce and personnel costs account for nearly 75% of county spending. Following past practice, the talks themselves will likely remain shrouded in tight secrecy, but pickets at Coons's recent budget address made it clear that workers don't intend to sacrifice their interests.

Observers believe it is all but certain that workers bearing a share of the cost of health insurance and at least modifying the sacrosanct automatic annual 'step increases' on top of cost-of-living adjustments, common in public employment, are pivotal issues in the bargaining. An indication of how that might play out is expected when an arbitration decision is handed down resolving stymied talks on the park and sewer workers' union's contract, which expired a year ago. Until new agreements are reached, the terms of the present contracts remain in force. County workers are prohibited by law from striking.

    

HEARINGS START: Council president Paul Clark opened the series of County Council budget hearings by telling his colleagues to "not look at whatever we want anymore, but what we really need." Chief administrative officer Jeff Bullock then told Council members that a director of public safety is something that can be done without. The position is now vacant. "When things are running pretty well, there is less of a need," he said while presenting the public safety department's request for $81.8 million. The 5.35% increase is the largest of any in County Executive Christopher Coons's $239.8 million proposed fiscal 2009 budget.

The only significant questions during the session on Mar. 31 discussion had to do with amounts budgeted for overtime for police officers and paramedics. The amounts -- $1.7 million and $1.1 million, respectively -- are mostly to cover vacations, sicknesses and other absences, Council was told. "We're looking at overtime. ... Are we better off hiring more people -- not necessarily to save money but for health and safety reasons?" Bullock said. Police chief Rick Gregory told the hearing that only 28 of 364 authorized positions are 'desk jobs' and said that officers who hold them also voluntarily take patrol duty from time to time. (CLICK HERE to read previous Delaforum article.)

    

STRINE RESIGNS: Michael Strine, county government's chief financial officer, has resigned to become executive director of financial planning and analysis at Johns Hopkins University in Baltimore. In that position, he will be involved with a $3.5 billion annual budget. Strine joined county government in 2005. Prior to that, he was executive director of the Delaware Public Policy Institute and served in the state Department of Finance. Ed Milowicki, who has been a county employee for 30 years, will succeed Strine in an acting capacity.

Last updated on April 29, 2008

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