Legislators must cut unnecessary expenses
A new committee formed by the Delaware Economic and Financial Advisory Council will report this spring to the governor and legislature on Delaware’s tax base.
They are looking for new ways to pay for the swelling cost of state government. Ken Lewis, a University of Delaware economics professor who is on the committee, was quoted in the News Journal saying “the group will consider recommendations for new taxes, as well as ways to broaden taxes already imposed by the state…Nothing is off limits.”
While this is going on, wouldn’t it make sense to appoint a second council to review the state’s spending to find ways to cut costs and create efficiencies to save money. If we only focus on raising Delaware taxes and fees, we’ll make it more difficult to attract new businesses to Delaware and we’ll continue to chase away the ones we have. Since 1990, the state has lost 17,400 manufacturing jobs. Without job creators, the state will fall into a deeper financial fix.
Why are we ignoring cost savings that are so obvious to residents and business owners?
For starters, Delaware, a state you could walk across in a day, has 19 regular school districts and three vo-tech districts. Matt Denn, in a speech to the Wilmington Rotary last year, said that from 2001 through 2010 Delaware’s district-level administrative staff increased by 39.2 percent. That compares to the national average of 12.1 percent. The state pays only part of the cost, but its projected tab alone will be $1.3 billion for schools in 2016. And that’s just for operating expenses. The state will pay another $89 million for capital expenditures. Wouldn’t some consolidation of our districts save money?
Although 1,000 state jobs were cut in the last year, government historically has been a growth industry in Delaware. In 1990, 22,900 people worked for our state government. Today, 31,600 do, according to the U.S. Bureau of Labor Statistics.
Legislators could save money now by rethinking the Cadillac benefits those tens of thousands of employees enjoy.
State employees get benefits available to few taxpayers. State workers pay $62.34 monthly for family coverage under the state’s basic plan, and $236.54 for family coverage under the state’s most comprehensive PPO plan. How much do your employees pay for your businesses family coverage?
For decades, public employees had excellent benefits but lower wages than their counterparts in the private sector. That wage gap has closed, and state workers still enjoy better benefits than most of the taxpayers who pay the tab.
The state will pay a projected $743 million for employee and retiree health benefits next year. That’s almost double the $382 million we paid in 2006. Who can bankroll that long-term?
These are just two examples of unsustainable costs the state now bears. Think how much more could be saved if we had a committee working to review state spending, like we do to review how to increase our taxes. If we only focus on increasing revenue, it will be tougher to attract new business to Delaware and existing businesses may not expand here.
Legacy costs add up. Our legislators need to start doing some subtraction. ♦