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May 2009

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IT'S MOSTLY LUCK: Because winning football pools involving results of more than one game and point spreads is more chance than skill, the proposed sports-betting scheme now being set up passes muster under the Delaware constitution. In an advisory opinion issued on May 27, the state Supreme Court evidently cleared the way for the betting to begin with the start of the professional football season in September. Observers, however, expect a further challenge from the National Football League which, in general, alleges that legal gambling impairs the integrity of the sport.

The key question addressed in the 21-page opinion, requested by Governor Jack Markell and written by Chief Justice Myron Steele, was the extent to which the scheme is a lottery. In deciding that it is, he cites a 1974 opinion by federal judge Walter Stapleton which held that if chance trumps skill that's a lottery. But the Steele opinion said that the skill-versus-chance argument can go either way when it comes to predicting the outcome of a singe game and, therefore, he declined to say whether that would be constitutional. The governor promoted sports betting as a new state-revenue stream to help alleviate the budget crisis. (CLICK HERE to read previous Delaforum article.)

    

FIRST BRANCH: Credit card giant Bank of America plans to open its first retail banking branch in Delaware in a new building replacing an existing one at the southeast corner of Concord Pike and Naamans Road. County Councilman Robert Weiner disclosed that the plan, apparently filed in March, has received preliminary approval from the Department of Land Use. No rezoning is required. Final approval is expected "in the next few months," Weiner said. He said he and Robert Valihura, of the Council of Civic Organizations of Brandywine Hundred, "will be carefully monitoring the project" during subdivision review.

    

Coons administration officials briefed County Council on its plans for lay-offs affecting the police force, but the public was shut out from the discussion.

"It's not our intention to publicly discuss the number [of persons affected] at this time," administration spokesman C.R. McLeod told Delaforum. He said negotiations with the police union are continuing. The union so far has rejected a 5% pay cut or an equivalent concession to help deal with the county's fiscal situation. At what was billed as a 'public hearing', Coons's chief of staff Nicole Majeski said the police lay-offs would 'save' the equivalent of everyone on the force taking the 5% reduction. That was the cue for the nine Council members present to vote unanimously to go behind closed doors "to discuss personnel matters."

During the open part of the session on May 18, acting chief financial officer Ed Milowicki presented an outline of four amendments to the pending budget ordinance which would reduce spending on operations from the requested $165 million to $161.2 million. That would be 3.7% less than $167.5 million, the most recent estimate of expenditures during the current fiscal year. The biggest change would be $4.4 million 'saved' by spreading an increase in pension contributions over five years. With the amendments, the budget would authorize taking $6.6 million from reserves instead of the $10.5 million Coons originally proposed. (CLICK HERE to read previous Delaforum article.)

Council is scheduled to approve the budget -- almost certainly unchanged from what the administration is asking, including a 25% property-tax hike -- on May 26.

    

ROLLBACK: State representative Michael Ramone reputedly has prepared legislation reducing the size of New Castle County Council from 13 members to nine. The six Council districts which existed before the expansion in 2004 would be restored and two members as well as the Council president would be elected at-large. County Executive Christopher Coons and several Council members have objected on the grounds that the expanded Council has better served residents than its smaller predecessors did. Ramone did not respond to a Delaforum request for comment.

    

State government's official forecasters expect sports betting to bring in about $50 million next fiscal year, but about half will be offset by continuing decline in personal income tax receipts.

In a good news-bad news discussion, the Delaware Economic & Financial Advisory Council's revenue committee on May 15 decided to recommend that the full council, when it meets on May 18, increase its fiscal 2010 projection by $29.1 million from a month ago to $2,938 million. That is largely the net of a $53.5 million increase in tax receipts from gambling and $19.7 million less from the levy on residents' earnings. The General Assembly is required by law to base the state budget on those figures. Governor Jack Markell's office said the legislature must now cover an expected shortfall that has swelled from $778 million to $800 million.

David Gregor, the state finance department's director of research and analysis, told the committee that he is "not aware of anything that is going to slow us up" as regulators move to prepare the three privately-owned casinos to begin accepting bets by the time the National Football League season opens on Sept. 10. The league, however, is expected to mount a court challenge to the new law. Even more significant, Richard Cordrey suggested, is the extent to which bettors will be willing to turn away from bookmakers and go to the casinos to make their wagers. (CLICK HERE to read previous Delaforum article.)

Commenting on the outlook for the underlying national economy, economist Fred Dixon pointed out that "the same people who couldn't call this recession ... are now telling you that it's going to be a very long mild recovery."

    

PAY REVEALED: Dane 'Andy' Brandenberger will be paid the hourly-wage equivalent of superintendent Jim Scanlon's $170,417 salary for the time he spends on the job as acting superintendent of Brandywine School District until Scanlon's replacement takes office. But, according to chief financial officer David Blowman, Brandenberger will not receive health care and other employee benefits. Blowman also disclosed, in response to a Delaforum inquiry, that the University of Delaware's Institute of Public Administration will be paid $16,100 to conduct the search for a 'permanent' superintendent. (CLICK HERE to read previous Delaforum article.)

    

ONE-TWO PUNCH: Not only did the slumping real estate market buffet county government finances, but the decline in investment values also dealt the county a body blow. As a result, the soon-to-be-enacted fiscal 2010 budget will provide $11.8 million, or 12.2% of payroll, to support its employee pension plans. That's not as bad as it could be, County Council's finance committee was told on May 11. The 'contribution' would have to be 19% if the full deficit were to be covered. On the advice of the autonomous pension board, the make-up is being spread over five years.

Acting chief financial officer Ed Milowicki told Delaforum that the pension fund lost about $130 million in assets, about a third of their value. Council approved a resolution setting the new contribution rate, up from 10.4% of payroll in the current fiscal year. Absent a dramatic recovery in the investments market, it probably will have to rise to somewhere in the neighborhood of 14% in fiscal 2011. Council president Paul Clark suggested that pension plans might have to be adjusted to spread the risk, but Councilman David Tackett cautioned against emulating private companies in trouble which "first go after their pension plans."

    

Incumbent Cheryl Siskin easily won a full five-year term on the Brandywine school board, defeating challenger Aletha Ramseur by a comfortable 59%-to-41% margin. As is usual, the election on May 11 attracted a sparse turnout -- 10,030 votes.

    

Unless the state Senate agrees to a law permitting sports betting, there can be "no hope" of reducing the proposed 8% across-the-board pay cut for state workers, Governor Jack Markel said.

Speaking to an overflow audience at the University of Delaware Academy of Lifelong Learning, he indicated he would like to trim that rate, but, with the prospect of the fiscal 2010 budget shortfall possibly growing between now and June 30, it could actually have to be increased absent offsetting revenue, he said. Responding to questions at the session on May 11, he unequivocally rejected a sales tax as an alternative and said he will not tap the 'rainy day' emergency fund. It would be necessary to lay off 1,500 state employees to achieve the spending reduction that will come from the much-disputed pay cut, he said.

The bottom line, Markel explained, is that the legislature must enact a balanced budget on or before June 30. "There [can be] no continuing resolution; we can't afford the old budget," he said. "If the General Assembly doesn't do it, the government will shut down." With an uncertain economy as far as most observers can see, Delaware's long-term future lies in aggressively promoting economic development. On the other hand, he warned, "we have a lot to be concerned about" with stirrings in Congress toward a federal role in corporate governance which would "significantly impact" the state's role in chartering companies.

    

TEACHER CUTS: Five Brandywine district teachers are being notified that their contracts will not be renewed for the coming academic year. Chief financial officer David Blowman said that is considerably fewer than had been expected. Retirements and resignations will account for the other 40 positions that are expected to be lost as a result of budget cuts. Some vacant administrative positions will not be filled, he said. Under state law, teachers must receive 'reduction-in-force' notification before May 15. In past years it has been the practice to recall some when enrollments and financing are later determined.

    

HE'S BACK: Dane 'Andy' Brandenberger, who began his teaching career in a predecessor district and who spent many years in administrative positions in the Brandywine School District before moving to the Cape Henlopen district from which he retired as superintendent, will serve as interim superintendent until Brandywine finds a successor to Jim Scanlon. "It's like coming back and helping out an old friend," he told Delaforum after the school board voted unanimously to hire him. Three years ago he filled the superintendent's post while Scanlon was being recruited and hired.

The board also agreed unanimously to engage Jim Flynn, a consultant with the University of Delaware's Institute of Public Administration, to conduct a search for Scanlon's successor. Board president Debra Heffernan said the community will be involved in that process, beginning with a survey conducted on the Internet. There was no discussion in public about either decision before the formal votes were taken during the May 11 board meeting, which followed a closed-door executive session. Delaforum could not immediately learn either Brandenberger's compensation or the charge for conducting the search. (CLICK HERE to read previous Delaforum article.)

    

The Catholic Diocese of Wilmington has spent nearly $6.7 million to settle 19 suits arising out of sexual abuse of children. There are 28 cases still pending in the courts.

In the most comprehensive public accounting yet of the effects of the scandal which has rocked the Catholic church nationally since 2002, bishop Francis Malooly, who took office last September, said, "[I]t is not our desire to litigate and possibly cause added pain, but to reach out in the name of Christ and bring about healing." In an open letter published in the May 7 issue of The Dialog, the diocesan newspaper, Malooly said that, in addition to an apology and "pastoral outreach," victims are entitled to "some reasonable financial assistance." But, he added that "no amount of money can make up for the crimes committed."

The accounting said that court settlements since the late 1980s, also included more than $1.3 million paid by insurance. Related legal fees cost $968,000 in fiscal 2003 through 2008 and are estimated at $1.5 million in the current fiscal year, which ends June 30. Settlements and fees, it said, all have been paid from a reserve fund built up since the 1970s. That fund will be exhausted before pending cases are ended and the diocese expects to sell "certain hard assets" to meet its liability, it said. The accounting did not cover cases involving priests and employees of autonomous religious orders which operate in the diocese.

The diocese currently is conducting its annual giving campaign, seeking to raise just short of $4 million to finance various activities and ministries.

    

The Coons administration's proposal to 'defund' $17 million worth of parks and open-space spending drew sharp criticism as County Council reviewed the requested capital budget.

Discussion at a hearing on May 4 was largely academic since it centered around money the county doesn't intend to raise during the coming fiscal year and has nothing specific to spend it on. Acting chief financial officer Ed Milowicki said postponing, among other things, $8.3 million previously authorized for parkland acquisition and $3 million for farmland preservation until later fiscal years resulted in a negative-$1.7 million proposal. "We're not planning a bond issue for a year to 18 months," he said. That, he explained, involves real -- not virtual -- money. It costs $80,000 a year to service each $1 million of bonded debt, he said.

"It's huge mistake to deauthorize these [accounts]. It's not actual money sitting out there. If something is offered to us, we wouldn't be able to move," said Councilman David Tackett. Councilman William Powers said, "With the [real estate] market down, it would be a good time to acquire properties." When Brenna Gaggin, of the Delaware Nature Society, testified that property not acquired when available is property lost forever, Council president Paul Clark expressed doubt that many advocates of such spending would also support higher tax rates necessary to make it possible. (CLICK HERE to read previous Delaforum article.)

After calling what he charged was disproportionate deauthorization of capital spending in southern New Castle County "discouraging," Councilman William Bell pointedly got up and walked out of the hearing.

    

Approving appointment of an interim superintendent and engagement of a search firm to look for a new one to replace Jim Scanlon are prime topics on the agenda for the May 11 meeting of the Brandywine school board.

    

COONS TO CUT COPS: County Executive Christopher Coons said his administration will begin the process of laying off an undisclosed number of police officers. Their union's rejection of his request for a 5% pay cut left no alternative, a press statement issued late in the afternoon on May 1 said. The Fraternal Order of Police represents 365 cops and eight deputy sheriffs. Coons previously announced that nine paramedic trainees and rookies will be let go on May 6. More than 900 of the county's approximately 1,500 employees have either agreed to or been told that they will take pay cuts, the statement noted. (CLICK HERE to read previous Delaforum article.)

    

Candidates for the Brandywine school board seat to be filled at the May 12 election propose slightly different approaches to coping with effects of the state's budget shortfall.

Aletha Ramseur, who wants to recapture the spot she lost last year, said she would prefer to see limits on class size sacrificed in order to preserve arts, music and special programs. "What's best for the children is a well-rounded education," she said. Cheryl Siskin, who unseated Rumseur to fill out the final year of an unexpired term, said she wants the board to prepare for the proverbial worst-case scenario when it decides how many teachers and staff members will get lay-off notices this month. "I don't want to be in a position where we didn't cut enough." she said. "Hopefully, we'll be able to bring some of them back."

The candidates made those comments at the only scheduled 'meet the candidates' event -- a sparsely attended question-and-answer session -- on Apr. 30. As is usual on such occasions, there was considerable agreement on most responses. Ramseur cautioned against "bringing the top down and the bottom up" in order to close the 'achievement gap' between white and black students. Siskin opposed pending legislation to align board elections with general elections on the grounds that would eliminate the continuity that goes with having board terms coincide with the academic year. (CLICK HERE to read previous Delaforum article.)

Both said the board should recruit a new superintendent who combines professional credentials with personal qualities necessary to maintain effective rapport with teachers, students, parents and the community.

Last updated on May 29, 2009

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