Delaware rebate bill fast-tracked out of House

Delaware’s Legislative Hall | DBT PHOTO BY JACOB OWENS

DOVER — Delaware lawmakers are fast-tracking a bill that spends some of the state’s record-setting surplus by mailing a $300 check to every Delawarean, as the proposal cleared the House on Thursday.

House Bill 360, known as the 2022 Delaware Relief Rebate Program, was heard April 6 in the House Administration Committee, which quickly released the bill after a small revision that would expand the pool of residents eligible for a rebate. 

The 35-3 vote in the House saw Republican Reps. Richard Collins, Bryan Shupe and Michael Smith vote against the measure. Three legislators were absent.

The bill is to be heard in the Senate Executive Committee on April 13. With record-setting inflation and high gas prices, Gov. John Carney and top state lawmakers had made it clear their intent was to get HB360 quickly passed and send it to the governor’s desk to be signed.

“We have a surplus, and I think this is a good way to give it back to the people of Delaware,” House Majority Leader Valerie Longhurst (D-Bear) said on Thursday afternoon right before the floor vote.

HB360 relies on 2020 tax returns to mail $300 checks directly to Delawareans. But a recent amendment to the bill expanded the scope of the rebate program, granting the state Department of Finance authority to share information with other state agencies. That would help to identify another 150,000 residents that may not have made enough income in 2020 to pay income tax. 

The plan now would spend down $236 million of the surplus, and would reach 750,000 Delawareans. The earlier version of the bill would impact 600,000 people, or roughly two-thirds of the state’s population.

Within six months, the Department of Finance will also set up a website that allows Delawareans who may still fall through the cracks to request a rebate.

Throughout the pandemic, Delaware’s financial situation has performed better than expected, including the Delaware Economic and Financial Advisory Council (DEFAC). In March, DEFAC revised their forecast to add $260 million to the budget limit, which included a $800 million surplus.

While Carney did pause some of his planned budget measures in the first months of the public health crisis, state revenues held firm. Corporate revenues were not hampered by the dramatic shift of work, the real estate market remained red hot, and high-earners were still working and continued contributing to the state’s income tax. 

The governor has already made his support of the legislation clear, and his administration reportedly has been working with the Delaware legislature on the bill Finance Secretary Rick Geisenberger weighed in on the amendment to ensure that the check would reach Delawareans who don’t have tax returns, Longhurst said.

House Minority Leader Danny Short (R-Seaford) said that he believed the one-time rebate was the right path to tread, noting that the Maryland legislature had fast-tracked a gas tax holiday, and was now facing pressure to extend it.

“Maryland is in a bit of a quandary right now, and what we have done is the equivalent of multiple weeks of gas relief, depending on the car you drive, or it can go to groceries or anything else,” Short said. “However, I do caution that we can do more and I think it’s time to revisit the conversation of how we can help citizens that have given this big surplus.”

Rep. Jeff Spiegelman (R-Smryna/Clayton) echoed those thoughts. The legislature could not temporarily cut the gas tax, since it legally cannot be lowered if there are projects bonded out. He argued for a similar measure that would trigger another rebate if surpluses reach record-highs once more.

“This happened last year, and it was unprecedented then and now we’ve got a second unprecedented year. Two is enough of a pattern for me,” Spiegelman said. “I’d very much like to work with colleagues on both sides of the aisle to work on a similar mechanism so that if we do have a surplus of this magnitude, we don’t have to get creative to return money back to the people.”

In a comment to the Delaware Business Times, Shupe, Smith and Collins said they voted against HB360 because they believed that more lasting change could be impacted through tax-cuts rather than a one-time payment.

“There were a couple of reasons, but the main reason had to do with addressing the growing ‘politics over people’ mentality in Dover. Families were struggling last year. Yet, where was the concern for giving tax relief then? It didn’t exist,” Smith said.

“Given the massive state surplus over the last two years, I believe we need to enact tax cuts,” Collins said in a separate statement. “The rebate, while well intentioned, undermines efforts to reduce the tax burden on our citizens and businesses … Tax reductions provide fuel for structured economic growth. The impact of the rebate will be fleeting, at best.”

The two representatives are sponsors on four bills combined that address taxes, including raising the senior tax credit, reducing the realty transfer tax, creating a tax credit for Delawareans with student loans as well as waiving agriculture and forestry use for tax assessment.

“While I understand the good intentions of the rebate, I do not believe this was the most appropriate mechanism to fix the structural imbalance in our revenue steam,” Shupe said “Instead of the quick fix of a rebate, we should be looking at more lasting changes that will have real, ongoing benefits for all Delawareans for years to come. Even more frustrating is that repeated attempts by the minority party to provide long-term financial stability for Delaware families have been largely ignored, even during the last two unprecedented years that the state raked in a surplus of over $1 billion dollars.”