2011 Legislative Wrap-Up this
was supposed to be the third consecutive legislative year fraught with difficulty and controversy. Instead, it turned out pleasantly routine. Thank an unanticipated $650 million in extra revenue projected through the next fiscal year. budget bills were completed days before their deadline. The money committees—Joint Finance and Bond—made their decisions in publicview with limited quarreling or dissent, and their colleagues in each chamber generally agreed with the committee members’ decisions. key proposals in economic development, education, and infrastructure financing gained steam. A ny controversial legisl ation wa s a ddressed early in the session. These factors and more made for a successful legislative session for Delaware’s business community.
Victories Taxes and Spending HB 22 Simplifying the Abandoned Property Statute This bill makes the statue easier to understand and adds a provision that the language used in the forms of applications, notices and declarations should be simple and non-technical. HB 127, 128 and 129 Reductions for Gross Receipts, Personal Income and the Public Utility Taxes These bills provided a $25.9 million reduction in the Gross Receipts (GRT), Personal Income (PIT) and the Public Utility (PUT) taxes. Although the GRT and the PIT top rates are not back to the low rates seen in 2008, these cuts did come two years before the complete rollback scheduled for 2013. Additionally, supermarkets statewide saved millions in taxes when the two-tier tax structure was eliminated. The food market industry, along with the Delaware State Chamber of Commerce, has lobbied for this change for several years. The PUT cut is designed to assist manufacturers wrestling with high utility costs. Contained in the PUT legislation is a $5 million fund to assist manufactures implementing energy efficiency systems at their facilities. HB 142Defining Petroleum Products not eligible to Pay GRT This act clarifies that the sale of all feedstock petroleum products would be ex-
senators Colin Bonini and Joseph Booth 2
2011 Legislative Wrap-Up
form Partnership Act (the “Act”), to keep it current and to maintain its national prominence.
empted from the GRT, along with the sale of crude oil. It is anticipated that these changes will not cause a decrease in the Gross Receipts Tax. This corrects a technical error in the current statute. SB91 Bank Franchise Tax Credit for Job Creation This bill increases the incentives for financial institutions to locate their charter and operation in Delaware. To encourage job creation and retention, the state will offer a 10-year tax credit for banking organizations that add 200 or more jobs after 2011.
Education HB 1 Implementation of Needs-Based Formula Since 2004 the needs-based flexible spending structure has proven to be beneficial to the 12 districts that participated in a pilot project. This legislation allows Delaware’s 19 school districts and all charter schools to fully adopt the needs-based system. HB 205 Charter School Quality The intent of this bill is to ensure that individuals governing our charter schools have the appropriate background and qualifications. In addition, new charter schools would receive less funding at the start of the year, with the remainder of the funding provided throughout the year after a review by the Department of Education to ensure that the finances of the school are sound. The legislation also requires an annual external audit of charter schools and adds charter schools to the Finance Recovery Team portion of the Delaware Code. The legislation also moves up the deadline by which charter renewal decisions must be made so that, if a charter is not going to be renewed, that decision is made prior to the school choice deadline. Furthermore, it creates a mechanism for permitting a high-performing charter operator to open a school that would serve students at a charter school that is slated for closure, provid-
Energy & Environment Above: sens. Catherine Cloutier, Margaret Rose Henry and Liane Sorenson Right: Reps. Michael Mulrooney, Stephanie Bolden (seated) and Debra Heffernan
ing greater opportunities and avoiding significant disruption for the students. HB 213 Allowing the Collection of Data by the Department of Education This act allows the Department of Education to collect data and to promulgate regulations governing the collection and use of educational records. It provides for the ability of other researchers to access the database for approved research studies through defined processes with the oversight of the P-20 Council. SB 16 Allowing Schools Districts to Hire Teachers Earlier in the Year This legislation will result in the creation of an estimated unit count each March. The state will guarantee that school districts receive unit funds for the following school year equivalent to 98 percent of the estimated unit count. This will allow districts to make employment offers to new teachers in the late spring and early summer.
economic development HB 10 Exempting from the GRT gross receipts realized in certain intermediate transactions engaged in by petroleum product refiners with certain specialized trade parties during the petroleum refining process This legislation is part of the agreement to reopen the Delaware City refinery. About 2,000 construction workers are in-
volved with the reopening process. When the refinery is fully operational 600 permanent workers will return to the site. SB 40 Updating the Blue Collar Tax Credit program, which is the state’s primary economic development tax incentive program A round of changes boosts the program’s effectiveness by increasing the amount of corporate or personal income tax credits and modernizing the program’s scope by including provisions specifically designed to attract manufacturers of advanced clean energy technology power generating devices and systems. SB 124 Allows the energy output from fuel cells manufactured in Delaware that can run on renewable fuels to be an eligible resource to fulfill a portion of the requirements for a commission-regulated utility under the Renewable Portfolio Standards Act This legislation is associated with the plan for Bloom Energy to construct its east coast manufacturing plant on the former Chrysler site now owned by the University of Delaware. Bloom Energy projects to employ 900 people.
Corporations SB 74 and SB 95 These bills continue the practice of periodically amending the Delaware Revised Uni-
HB 163 Providing Funding for the State Brownfields Program This bill enables the Department of Natural Resources and Environmental Control to assist with the cleanup of 21 federal Superfund sites and 204 state-led sites, contribute to the revitalization of 155 Brownfield properties, and close 187 leaking underground storage tank locations. The act also supports emergency response efforts for hazardous chemical spills. HB 186 Reauthorizes the Clean Air Act Title V Operating Program This program oversees the state’s largest manufacturing, industrial and commercial sources of air emissions. By law the program sunsets every three years and is subject to review by the Title V Operating Permit Program Advisory Committee. The legislation maintains permit fees for the next three years at the same level as they were during the period 2008 through 2011.
Labor SB 108 Continues the Effort to Update Sections of the Worker Compensation Statute This Bill will ensure that Delaware medical providers do not take advantage of a section of the statute that allows the opening of a facility across state lines to perform procedures on patients, which then permits the collect of higher fees. It also provides for the physician report to serve as the triggering event for the completion of the employer’s report of modified-duty availability.
Health Care HB 28 Enabling small employer health insurance carriers to make ‘stop-loss’ insurance coverage available to small employers with more than 15 employees. SB 146 Clarifies the Definition of a “Conversion” pertaining to a BCBSD Merger The bill clarifies the General Assembly’s intent that the act does not consider a Delaware not-for-profit healthcare entity affiliation with another not-for-profit entity to be a “not for profit healthcare conversion.” The Act has recently been interpreted by the Delaware Attorney General as requiring that result in a specific transaction involving a not-for-profit Delaware health service corporation seeking to affiliate with another not-for-profit company, where both entities will retain their not-for-profit status post affiliation. In the event of a not-for-profit conversion, the bill requires an annual financial report to the Secretary of State. It also ensures that change of control transactions involving Delaware health service corporations do not result in the dissipation or improper use of the reserves or surplus of such health service corporation. On The Cover From the top, Left to Right: • Sen. Dori Connor • Rep. Donald Blakey • A staff member with sen. joint finance committee chair Harris McDowell • Reps. larry mitchell and Gerald Brady • Sens. bobby marshall and david mcbride • rep. michael ramone Photos by Dick Dubroff/Final Focus
2011 Legislative Wrap-Up
Anti-Business Legislation De-Railed Proposed legislation successsfully prevented from becoming law.
HB 89 Elimination of Employment at Will
Delaware Development Office
HB 194 The requirement that business entities destroy documents containing personal information
Strategic Fund New Jobs Infrastructure Fund Diamond State Port Corporation Riverfront Development Corporation
HB 221 Making the Workplace Fraud Act applicable to all employees, except those in domestic, agriculture, fishing, and hunting
$31.9 million $55 million $10 million $3.1 million
Health and Social Services
HB 222 Requiring that the Department of Labor publish the names of employers who have violated the Workplace Fraud Act
Delaware Health Information Network
SB 82 Authorizes New Castle County, any municipality or any school district the right to appeal decisions of the Board of Assessment Review to the Superior Court. This will apply to any decision changing the assessment of a non-residential property by more than $500,000.00
Natural Resources and Environmental Control Brownfields Development $3.1 million University of Delaware
This legislation will grant now non-existent appeal rights to New Castle County, all municipalities and school districts. This will also extend the time before final resolution is reached, while allowing the appealing government entities to hold the money of the property owner until the a final decision is rendered. This bill is now in the House Administration Committee.
Delaware State University
Disappointments * These bills, along with those mentioned above, will carry over for consideration during the second session of the General Assembly in January 2012. Repeal of the Estate Tax HB 18 Left in the House Finance Committee this session. Regulatory Flexibility for Small Business HB 54 Passed the House, but was not addressed in the Senate this session. Tax Credit on Telephone Lines and Transmitters HB 181 Left in the House Appropriations Committee this session. Implements a five Year period for the Calculation of the Prevailing Wage and Makes Reporting Mandatory SB 14 Left in the Senate Labor Committee this Session.
Bond Bill Grants-in-Aid Operating Budget Transportation Trust Fund
DELAWARE STATE CHAMBER OF COMMERCE 1201 N. ORANGE STREET, P.O. BOX 671, WILMINGTON, DELAWARE, 19899-0671 (302) 655-7221 â€˘ FAX: (302) 654-0691 â€˘ WWW.DSCC.COM
FY12 Allocation $444.4 million $41.2 million $3.5 billion $219.5 million $ 4.2 billion