Posts Tagged ‘budget deficit’

Have Delaware’s parties flipped?

May 22, 2009

Democrats often get labeled as the tax and spend party. This week, Delaware’s Republicans, responding to the state’s increasingly large budget deficit, looked more like the Democrats than the Democrats themselves. Rather than cutting the wages of the state’s workers by 8 percent as Gov. Markell has proposed, the Republicans instead proposed an increase in state income taxes and corporate franchise taxes.

The move is politically understandable. State workers, at 30,000 plus, represent the largest voting block in Delaware. They’ve been upping their public displays of disapproval and the phone lines of legislators have been lighting up.

No big surprise. Who wants to see their pay cut? But from the party of less government, the Republicans, where’s the recognition that with a budget reduced by $800 million, there’s less work to do and the government needs to shrink? In the private sector, companies – to survive – have already made hard choices through layoffs and wage reductions. Now, on top of that, the Republicans propose raising their taxes as well.

Last November, Republican Sussex County lawmaker Gerald Hocker said there was no way to tax ourselves out of this problem. And a few weeks ago, fellow Sussex County Republican lawmaker Joe Booth wrote in a column in the Cape Gazette that he would oppose any increases in taxes until he saw the size of Delaware’s government decreased. Now, with the ticking of the June 30 budget deadline growing louder and louder, Republicans appear to be abandoning the hard choices and are settling instead on the old tried and true tax increase. Obviously, compromise is in the air.

Best bet at this point is that the proposed wage cut will be reduced and to offset that we will see some increase in our personal income taxes.

If Markell was using the eight percent wage decrease as a way to smoke the Republicans away from their resistance to any kind of tax increases, the strategy is working. But, Markell says the long-term solution to our problem is neither taxes nor cuts, but growing our economy. Most of the time, increasing taxes is seen as increasing economic drag, not a boost.

Even if the compromise strategy works to balance this year’s budget, the fact remains that Delaware’s government is too large for its level of revenues and will remain a drag on efforts to grow our economy until it is brought into line.