Last Friday, March 27, 2009, President Diane Donohue, Executive Director Howard Weinberg and Tim Barchak, DSEA’s Director of Legislation and Political Organizing met  with Governor Jack Markell and his Chief of Staff, Tom McGonigle. 

The purpose of the meeting was to keep the lines of communication open about the Governor’s proposed budget. To recap; in order to make up the $750 million budget deficit, the Governor’s proposed budget includes all of the following:

• $331 million from spending reductions (91.7 million of which is the 8% salary cut, loss of three days....)
• $40 million from reallocating special funds
• $166 million from increased revenues
• $155 million from the federal stimulus fund
• $12 million from additional fines and fees
• $55 million from a sports lottery (reauthorize a sports lottery in DE; allow sports lottery at casinos and other venues; increase the state’s share of casino revenues; and add up to three new casinos)

We communicated to the Governor that an 8% salary cut is unacceptable. This type of salary cut would be devastating not only to public education employees, but to the public education system. We shared that DSEA believes that, while the Governor did propose a significant increase in revenue; that his increased revenue proposals do not go far enough. We believe that any revenue proposal must be adjusted in whatever way necessary to raise the additional $91.7 million (the value of the 8% cut). 

The Governor stated that he is open to sharing any information regarding additional revenue sources. At his encouragement, DSEA will be submitting a list of questions/recommendations which we believe could help bring additional revenues to the state and give the Governor and General Assembly a way to eliminate the need to cut salaries by 8%.

The Governor also indicated that he and DSEA will both be keeping a keen eye on the April, May, and June meetings of the Delaware Economic and Financial Advisory Council (DEFAC) because with weakening trends in the economy, it is certainly possible that revenue projections could continue to decline, which would lead to an increase in the shortfall from $750 million to something bigger. 

The Governor indicated that he recognized the challenges these proposals place upon state employees and tax payers. He reiterated that these choices were driven by the state’s obligation to balance an historic $750 million shortfall and the wage cut was an alternative to laying off 1,500 people. 

And we reminded him that our priorities are no layoffs AND that an 8% salary cut is unacceptable. DSEA believes that this type of wage cut will not produce a world-class education system or economic prosperity and will, in fact, produce significant hardships for the families of Delaware and their children. 

He also said that he was committed to the proposed wage cut being temporary and that is why he has also asked DSEA to support the gaming revenue in his budget proposal which is currently under attack from the state’s casinos, racetracks, race horse organizations, even the NCAA. The NCAA is threatening to not give any Delaware team home advantage during playoffs if sports lotteries come to Delaware. 

At the present time, DSEA has no official position on the expanded gaming which the Governor is proposing. Be that as it may, the state does need this revenue and without it, the state’s budget situation would be $55 million worse.We would need to find not only the $91.7 million (the 8%), but also the $55 million that would be generated from the expanded gaming proposal, or another $145 million would need to be found. 

What happens next?
The development of the state's budget is ultimately the responsibility of the General Assembly. The Joint Finance Committee will take the Governor's proposals and decide where to make any adjustments. This joint committee will then introduce their final bill to the General Assembly in time for them to vote on it by the end of session, June 30.

DSEA's position is clear:
Cutting education and other core state services will not grow our economy, and is irresponsible and unfair

During these tough economic times, we have to establish the right priorities for Delaware. Our objective is not simply to close the state budget deficit, but to close the education deficit and the jobs deficit. We need to grow our state's economy for the long-term and our public schools are a vital part of that strategy. Education, after all, is the cornerstone of economic development.

The state deficit is not the fault of public school or state employees who work hard to educate our children and provide critical services.

In the state budget, we need to put education and essential state services first. For years we have neglected to pay for quality schools compared to our neighboring states.

The last thing we need to do is cut our future, our children's future, cut core services in those very areas that will help our economy grow for the long-term. Doing less is irresponsible.

It is also unfair, given that there are revenues available simply by making our state's tax system fairer.

How is that?
1. Our personal income tax structure is obsolete and unfair to people earning $60,000 or less.
2. Our corporate climate is one of the most favorable in the nation thanks to the Chancery Court system, no usery laws, and the corporate tax structure. We believe that with some adjustments to the franchise tax, for example, we could see millions in additional revenue.
3. By reinstituting the tax on inherited wealth (which was eliminated in 2005), we could bring in $45 million - half of the $90 million gained from the 8% cut to state employee salaries!

Governor Markell believes that he has made the best of bad choices. We disagree: there are other choices that we believe are more responsible and fairer to Support Our State and Support Our Schools.