2010 Delaware Legislative Wrap-up

2010 Legislative Wrap-Up a

little extra money can only go so far. But it can keep the wolf away from the door, at least until the next year.

With $300 million in additional revenue showing up in DEFAC reports, the General Assembly was able to give little increases here and there, while fending off most of the Governor’s proposed budget cuts.

While this strategy is no surprise in an election year, the question remains:

What will Delaware’s financial situation be next January?

Victories Taxes SB 209 Renewal of the Historic Tax Credit This act provides a 10-year extension to the Historic Preservation Tax Credit Act, which was scheduled to expire in June 2010. Since its inception in 2001, the State has awarded $34 million in tax credits that have leveraged more than $166 million in private-sector rehabilitation expenditures plus additional tens of millions of dollars on site acquisition investments.

SB 272 Amended Bill Establishing an Escheat Appeals Process This act improves the administration of the Delaware Abandoned and Unclaimed Property Statute by providing holders with additional clarity and certainty regarding the enforcement of the Delaware abandoned property statute. The Delaware State Chamber of Commerce participated in discussions that led to amendments to the legislation improving its value to the businesses with abandoned property obligations.

HB 349 Requiring Non-Residents to Pay Transfer Tax This bill will require non-resident persons, corporations or pass-through entities that sell real estate owned in Delaware to declare and pay their estimate of the tax due on the gain recognized from the sale before the deed will be recorded.

HB 477 Exempting Pharmaceutical Shipping From Gross Receipts Tax This legislation clarifies that a pharmaceutical wholesaler located inside or outside of the state that ships pharmaceutical drugs to a pharmaceutical distribution wholesaler in this state is exempt from the gross receipts tax.

Education SB 263 Establish Teacher Tenure Standards This bill adds a requirement that a teacher show 2 years of satisfactory student growth within a 3 year period before the teacher may receive the highest level of notice and hearing protections.

HB 470 Early Childhood Education This act updates the Delaware code in relation to the responsibilities of the Interagency Management Resource Committee (IRMC) and the Early Childhood Council (ECC), and aligns the ECC with new federal requirements for State Early Childhood Advisory Committees.

After a dormant period, the IRMC is operating again as originally conceived, and carrying out responsibilities in accordance with the Delaware code and those added through epilogue language.

Consumer Protection

Retired State Rep. Pamela Thornburg in Legislative Hall.

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2010 Legislative Wrap-Up

an employee as an independent contractor.

As amended state and federal government agencies, sole proprietors and single-member corporate or business entities are exempt from the requirements of this Act.

HB 471 Clarifying Code on Escheat Collection This act remedies confusion that exists as a result of the current statutory construction of the escheat collection law.

HB 247 Unification and Update of the State Consumer Protection Statute Amended This bill presents extensive revisions to Chapter 25 of Title 6, and to Chapter 25 of Title 29, pertaining to consumer protection, in order to bring greater clarity and consis-

marketplace.

The law will now also allow the sampling of spirits that are more than 80 proof. The sampling of the spirit would still be limited to no more than ½ ounce.

Economic Development

Health Care Above: Legislators give a round of applause.clingRight: State Rep. Valerie Longhurst talks with State Rep. Peter Schwartzkopf.

tency to the statute and to strengthen and increase the enforcement authority of the Department of Justice. The Delaware State Chamber of Commerce joined several other business groups to work with the Attorney General’s Office and the General Assembly to amend this bill in a manner that will assist the consumer without hampering the conduct of the free market.

HB 317 Restrictions on Door-to-Door Sales Amended This bill provides that any person who solicits door-to-door sale shall display a door-to-door salesperson identification card which shall include the person’s name, employer, employer telephone number, employer address and State of Delaware business license number. The Delaware State Chamber of Commerce and some of its members worked with the sponsor to exempt certain types of businesses and non-profit organizations who were not the intended targets of this legislation.

Energy & Environment SB 234 Establish a Statewide Recycling Program Amended This legislation establishes universal recycling in Delaware by requiring the implementation of comprehensive residential and commercial recycling programs by municipalities and waste haulers. It establishes the Delaware Recycling Fund and the Recy-

cling Grants and Low-Interest Program to defray the costs of implementation, and funds, with funding derived by the conversion of the current bottle deposit to a recycling fee on beverage containers. It also establishes reporting requirements, establishes the Recycling Public Advisory Council in law, and ensures that DSWA provides a location in each county to accept source separated recyclables. The State Chamber working with several members provided amendments that make the program practical.

SB 311 Putting Restrictions On The Use Of Wood Waste For Energy Incinerators Vetoed This Act is intended to close a potential loophole in Title 7, which could allow industrial incinerators capable of incinerating solid waste to operate near residential areas by burning wood. The Governor vetoed this legislation because it is too broad and might conflict with efforts to attain innovative renewable sources of energy.

Labor HS1/HB 230 Misclassification Of Employees Penalties Amended This Act applies to the construction services industry and provides for administrative remedies and civil penalties against an employer who knowingly misclassifies

SB 231 Establishes the Delaware Health Information Network (DHIN) as an Independent Entity This legislation provides a more permanent governance structure for the Delaware Health Information Network (DHIN), by removing the DHIN from the organizational structure of the Delaware Healthcare Commission and by moving toward a more traditional public/private corporation model of governance. This legislation is the product of significant input and effort from the Joint Sunset Committee and its staff, members of the current DHIN Board, members of the Delaware healthcare and business community, the Administration and the primary sponsors of this legislation.

Small Business HB 371 Allow Proof of Insurance as Collateral Delaware law currently does not allow the parties in commercial loan situations to agree to require insurance policies be given to lenders as evidence of insurance on the collateral, thus inhibiting the freedom of contract. The purpose of this change is to allow parties to have such an arrangement be an enforceable contract. This change does not affect residential owners, who were the intended beneficiaries of the law.

HB 432 Allow Sampling of Wine, Spirits & Beer This Act would permit the tasting or sampling of beer no matter its tenure in the

HB 380 Economic Development Finder Fee This tax credit intends to create incentives for existing businesses to partner with the State in the effort to create new employment opportunities for Delaware citizens, and to stimulate the Delaware economy by expanding the tax base. A finder’s fee, a tool used commonly by businesses, is an arrangement by which an intermediary finds, introduces, and brings together parties to a business opportunity. This bill creates a tax credit program that would award each Sponsor Firm and each New Business Firm with a $500 annual tax credit per Delaware job created by the new business, with the tax credit available for three years. The program would require that the new business be brought to Delaware as a result of the efforts of the sponsor.

HB 314 Expanding the Types of Captive Insurance Companies That Can Domicile in Delaware This bill adds two types of captive insurance companies to those that can currently be licensed in Delaware. The two new forms of captive insurance companies are “agency captive insurance companies” and “branch captive insurance companies.”

On The Cover From the top, Left to Right: * * * * * *

State State State State State State

Sens. Catherine Cloutier and Dori Conner Rep. Peter Schwartzkopf Sens. Patricia Blevins and Anthony DeLuca Rep. James J. Johnson Reps. Donald Blakey and Dave Wilson Reps. Larry Mitchell, William Oberle and

Daniel Short.

Photos by Dick Dubroff/Final Focus 2010 Legislative Wrap-Up

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Budget

Anti-Business Legislation De-Railed Proposed legislation successsfully prevented from becoming law.

SB 226 – Limiting the first time home builder tax credit in New Castle County to properties that sell for under $400,000.

SB 81 – Requiring restaurants to put the nutritional value of food on their menus.

SB 318 – Authorizing oversight by the Board of Medical Practice of health care work for hire contracts.

SB 241 – Expanding the current chronic environmental violators statute.

HB 18 – Eliminating of Employment at Will.

HB 30 – Increasing the Appoquinmink School District development housing impact fee.

HB 231 – Expanding the code relating to employment practices that grant parent’s unpaid leave for attending children’s school events.

HB 277 – Changing the standard for ratemaking purposes from “waste, bad faith or abuse of discretion” to the “prudent person” standard.

HB 426 – Requiring universal design for new housing receiving government funds.

Operating Budget 3,305,257,100 State Funds 630,678,800 ASF (Federal Funds) 344,880,200 TFO Total 4,280,736,100 Capital Bond Bill Total: 389,748,831 Includes Transportation Trust Fund (DelDot) School Construction Strategic Fund Diamond State Port Corp.

Farmland Preservation Riverfront Development Corp.

DE Health Information Network Grant-In-Aid Total: 35,228,200 21St Century Fund Total: 2,838,600 (Clean Water Infrastructure Fund) Total State Budgets Including Federal Money: 4,673,675,818

Disappointments SB 28, HB 110, HB 145, and HB 153 Restrictions on Prevailing Wage Each of these bills would have put restrictions on the use of the prevailing wage on public projects especially for education, therefore offering savings to the state and school districts. None were released from committee.

SB 212 New Castle County Surcharge on Permits for Funding Fire Departments This Act codifies New Castle County’s authority to impose a surcharge on building permits for the fire service.

The Legislature has previously authorized the imposition of a surcharge by Kent County, as is currently done by Sussex County and a number of local governments.

SB 247 Restricting the State Paid Health Insurance For Both Working Spouses This Act would repeal 29 Delaware Code §5202(d), which requires the State of Delaware to assume additional health care insurance costs in cases involving two State employees who are married to one another.

SB 256 A State Bidding Preference for Delaware Small Businesses A number of states give local businesses some sort of preference when they contract for goods and services.

140,990,200 102,369,107 30,437,400 10,100,000 2,950,000 2,350,000 1,151,617

Preferences may be “all other things being equal” it goes to the local business. This Act simply says that whatever another state does to Delaware businesses, Delaware may do to businesses from that State.

SB 294 Creation of a Green Business Economic Development Incentive Fund This Act establishes the Job Incentive Fund, which is designed to provide grants to firms that expand and diversify the most vital components of Delaware’s economy, provides a multi-year funding source for the grants by earmarking Abandoned Property revenues and removes the sunset from the State’s “Blue Collar Tax Credit” program and leaves it in effect.

SB 301 The Expansion of Charter Schools The intent of this Act is to assist existing charter schools with expansion. This Act allows an existing charter holder, in connection with an application to expand its grade configurations, to recognize the individuals who provided significant contributions to the expansion as “founders” of the school. Delaware law provides an admissions preference for the children of a school’s founders, subject to the limitation that no more than 5 percent of a school’s student population may be admitted under such a preference.

Key: Passed

Rejected

Two issues that were not legislation but were of interest to the State Chamber were the roll back of the FY 2010 state employee 2.5 percent salary reduction and the implementation of a two tier pension system.

The Governor and some legislators agreed to give back the reduction after learning there was additional revenue for FY 2010 and FY 2011.

On the other hand, the Governor requested the establishment of a two-tier pension system with newly hired employees receiving a reduced pension benefits while the current employees would remain under the current pension system. This plan is similar to what other states have implemented to reduce future costs. The State Chamber believes it would have been wise to tie the two issues together in negotiations rolling back the salary reduction in return for measures to reduce future employee costs through changes such as a two tier pension plan.

DELAWARE STATE CHAMBER OF COMMERCE 1201 N. ORANGE STREET, P.O. BOX 671, WILMINGTON, DELAWARE, 19899-0671 (302) 655-7221 • FAX: (302) 654-0691 • WWW.DSCC.COM