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?

TaxesSB 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 Es-cheat 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 aban-doned property statute. The Delaware State Chamber of Commerce participated in dis-cussions that led to amendments to the leg-islation improving its value to the business-es 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 de-clare and pay their estimate of the tax due on the gain recognized from the sale before the deed will be recorded.

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 477 Exempting Pharmaceutical Shipping From Gross Receipts TaxThis legislation clarifies that a pharmaceu-tical 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 re-lation to the responsibilities of the Inter-agency Management Resource Committee (IRMC) and the Early Childhood Council (ECC), and aligns the ECC with new feder-al requirements for State Early Childhood Advisory Committees. After a dormant period, the IRMC is op-erating again as originally conceived, and carrying out responsibilities in accordance with the Delaware code and those added through epilogue language.

Consumer Protection

HB 247 Unification and Update of the State Consumer Protection Statute AmendedThis 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-

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 as-sist the consumer without hampering the conduct of the free market.

HB 317 Restrictions on Door-to-Door Sales AmendedThis 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 AmendedThis legislation establishes universal recy-cling in Delaware by requiring the imple-mentation of comprehensive residential and commercial recycling programs by munici-palities and waste haulers. It establishes the Delaware Recycling Fund and the Recy-

cling-

cling Grants and Low-Interest Program to de-fray 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 Re-cycling Public Advisory Council in law, and ensures that DSWA provides a location in each county to accept source separated re-cyclables. 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 VetoedThis Act is intended to close a potential loophole in Title 7, which could allow in-dustrial 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 re-newable sources of energy.

LaborHS1/HB 230 Misclassification Of Employ-ees Penalties AmendedThis Act applies to the construction ser-vices industry and provides for adminis-trative remedies and civil penalties against an employer who knowingly misclassifies

an employee as an independent contractor. As amended state and federal government agencies, sole proprietors and single-mem-

ber corporate or business en-tities are exempt from the re-quirements of this Act.

Health CareSB 231 Establishes the Delaware Health Informa-tion Network (DHIN) as an Independent Entity This legislation provides a more permanent governance structure for the Delaware

Health Information Network (DHIN), by re-moving the DHIN from the organizational structure of the Delaware Healthcare Com-mission and by moving toward a more tra-ditional 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 com-munity, 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 al-low 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 sam-pling of beer no matter its tenure in the

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

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 employ-ment 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 ar-rangement 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 Spon-sor 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 pro-gram 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 insur-ance 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.”

Victories

Retired State Rep. Pamela Thornburg in Legislative Hall.

Above: Legislators give a round of applause. Right: State Rep. Valerie Longhurst talks with

State Rep. Peter Schwartzkopf.

2 2010 Legislative Wrap-Up 2010 Legislative Wrap-Up 3

On The Cover

From the top, Left to Right:

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

Daniel Short.

Photos by Dick Dubroff/Final Focus

DELAWARE STATE CHAMBER OF COMMERCE1201 N. ORANGE STREET, P.O. BOX 671, WILMINGTON, DELAWARE, 19899-0671

(302) 655-7221 • FAX: (302) 654-0691 • WWW.DSCC.COM

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 Per-mits for Funding Fire Departments

This Act codifies New Castle County’s authority to im-pose 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 addi-tional 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.

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 diver-sify 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 char-ter holder, in connection with an application to expand its grade configurations, to recognize the individuals who provided significant contributions to the expan-sion 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.

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 estab-lishment of a two-tier pension system with newly hired employees receiving a reduced pension benefits while the current employees would remain under the current pen-sion 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.

Operating Budget 3,305,257,100 State Funds 630,678,800 ASF (Federal Funds) 344,880,200 TFOTotal 4,280,736,100

Capital Bond Bill Total: 389,748,831 Includes Transportation Trust Fund (DelDot) 140,990,200 School Construction 102,369,107 Strategic Fund 30,437,400 Diamond State Port Corp. 10,100,000 Farmland Preservation 2,950,000 Riverfront Development Corp. 2,350,000 DE Health Information Network 1,151,617 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 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 develop-ment 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.

Anti-Business Legislation De-RailedProposed legislation successsfully

prevented from becoming law.

Budget

Key:

Passed Rejected