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GOP pushes fiscal reform while Dems eye tax increases

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DOVER, Del. (AP) β€” Democrats are proposing a new personal-income tax bracket starting at $150,000, while Republicans are calling for broad fiscal reform as Delaware lawmakers struggle to fashion a budget for the upcoming fiscal year.

Frustration remained evident among Republican and Democratic legislative leaders Tuesday as the July 1 fiscal year looms closer with no budget agreement in sight.

“We have tried reasoning with Democratic leaders, but it’s been futile. … We want to negotiate. They want to dictate,” said Republican House Minority Leader Danny Short.

Democrats, meanwhile, accused Republicans of “showboating” and “antics” for holding a news conference to discuss a proposed fiscal reform plan, which House Speaker Pete Schwartzkopf said does nothing to address the immediate budget problem.

“Not one thing they mentioned here helps our budget. Not one thing,” said Schwartzkopf, suggesting that Republicans seem to be pushing budget writers toward potentially drastic spending cuts rather than agreeing on an equal mix of cuts and tax increases, as proposed by Democratic Gov. John Carney.

“I honestly feel like they’re trying to make us into a Third World-type state, where we don’t provide services for our people, where we don’t provide a good education for our kids,” Schwartzkopf said of Republican lawmakers.

“They are pushing these cuts. We don’t want to cut. We want to raise the revenue and continue to provide the services for the people of our state that they’re used to, and they like.”

While Republicans are the minority in each chamber, Democrats need their help in reaching the supermajority votes needed in the House and Senate to pass tax increases.

“It’s not the same as it was two years ago,” Schwartzkopf said. “They have a seat at the table because we can’t pass revenue. They know that.”

Among the proposals presented by GOP leaders Tuesday was creation of a budget stabilization fund, which would be funded with surplus revenues in flush time and could be drawn on in lean years, helping to eliminate year-to-year fluctuations in the revenue stream and providing more consistency to the budgeting process.

Republicans also are calling for a new fiscal framework in Delaware, where spending is constitutionally limited to no more than 98 percent of projected revenues. Republicans suggest that rather than always spending up to the legal threshold, spending limits should be linked to predictable factors such as economic growth, inflation and population increases.

Republicans also want to exempt local governments and school districts from state prevailing wage requirements for three years. Republicans say the prevailing wage, set by the state Labor Department based on employer surveys β€” and often driven by union wages β€” needlessly drives up the cost of taxpayer-funded construction projects.

Responding to the GOP proposals, Carney said he agrees with lawmakers from both parties that the state needs to address long-term spending issues in areas such as health care and education.

“And I’m ready to move forward, assuming that legislators are just as serious about voting on a responsible, long-term plan to raise revenue,” Carney said in a prepared statement.

Republicans noted, meanwhile, that after approving less than half of the roughly $192 million in budget cuts recommended by Carney, Democrat-led legislative budget writers were told by Schwartzkopf and Democratic Senate President David McBride late last month to halt their work. The directive came amid public outcry about some of the cuts the panel had approved.

While Republicans have tentatively agreed to increase corporate franchise taxes, paid mostly by out-of-state companies, lawmakers have been unable to agree on raising income tax rates or creating new tax brackets above the current top bracket of $60,000.

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