Legislative Program

Section II: Fiscal Policy

The Chamber calls on policymakers to address the stateÕs spiraling personnel and entitlement costs. While we are encouraged by efforts on the part of the Markell Administration to address the structural problems with the State budget, real solutions will require willingness on the part of the General Assembly to make difficult choices. Tax and fee increases will not solve our long-term budget issues. The only sure way to long-term revenue enhancement is economic growth.

Given the current economic environment, the Chamber continues to oppose tax and fee increases, as well as the enactment of legislation or regulations that would increase the cost of doing business in our State (absent a compelling and immediate health and safety rationale). Many challenges lie ahead as Delaware competes with other states and other nations for jobs and investment. The Chamber urges the development of comprehensive revenue protection and enhancement strategies that broaden the tax and revenue base while keeping taxes as low as possible.

The State cannot tax its way out of the financial crisis, it cannot cut its way out of the financial crisis, the State must grow its way out of the financial crisis by fostering job creation. This can only happen when existing Delaware companies expand; when out of state companies relocate into Delaware and when entrepreneurs start new businesses. Business expansion and job creation generate more revenue for state and local governments through the existing tax structure. More companies mean more franchise tax, corporate income tax, gross receipts tax and greater prosperity for our state. More jobs mean more paychecks and that means more personal income tax. The formula is simple:

Economic Growth = Companies + Jobs + Paychecks

1) Taxes

The Chamber opposes any tax increase that will increase the cost of doing business in our State. Economic conditions over the last few years have caused a reduction in revenue for almost every business and they have responded by cutting operating and employment costs. The State should do the same. The Chamber urges policymakers to seek ways to reduce and ultimately eliminate the Gross Receipts Tax. This tax was originally intended as a ÒtemporaryÓ tax when enacted in the 1970Õs, it continues to negatively impact DelawareÕs competitiveness as a location to locate and expand businesses Ð particularly in the manufacturing sector.

2) Spending

The Chamber continues to call for the limited growth of Delaware State government and its budget. Steps must be taken to address serious structural problems with the StateÕs operating and capital budgets to ensure our StateÕs economic vitality in decades to come. Over the last nine years the StateÕs pension costs have risen at an annual rate of 66% while their health care costs have risen by an annual rate of 28%. The Chamber supports Governor MarkellÕs efforts to reign in these costs. Without a reduction in employee benefit costs there will be a Òcrowding outÓ effect on other government spending for essential services particularly education and economic development. Adjusting the StateÕs expenditures for employee benefits is a sound approach to reducing the cost of government, maximizing the use of tax dollars and avoiding a tax increase. The Governor and the General Assembly must be prepared to make difficult political decisions to gain control of State spending.