Lawmakers draft bill for stimulus checks to residents

Delaware’s Legislative Hall | DBT PHOTO BY JACOB OWENS

DOVER — State lawmakers and Gov. John Carney plan to use part of the state’s surplus to give each resident a $300 stimulus check, after weeks of discussion of providing some kind of economic relief to Delawareans.

The $186.6 million plan, paid out of the state’s surplus, would send a direct check to any Delawarean that filed a 2020 tax return, impacting about 600,000 residents. Legislation is being drafted and is expected to be introduced during the upcoming session break and up for consideration when the General Assembly returns in April.

The bill is expected to be fast-tracked, since it has support from Republican and Democrat parties, and Gov. John Carney has already endorsed the effort.

“My hope is these direct payments will provide some measure of relief for Delaware families who are dealing with higher costs at the grocery store and the gas pump,” Carney said in a prepared statement. “These direct payments to Delaware families are part of a broader, responsible budget proposal that will invest in education, our economy, and Delaware communities, and increase our reserves to prepare our state for the future.”

Earlier this month, House Republicans unveiled a plan that would direct $100 stimulus checks to Delawareans, in lieu of a cut of the gas tax. Delaware levies a tax on 23 cents per gallon of gasoline and 22 cents per gallon on diesel, according to the state code. That tax funds the Transportation Trust Fund, which pays for road projects, and cannot be lowered if there are projects bonded out.

But as the COVID-19 pandemic enters into its second year and people have adjusted to the new normal, the supply chain has been besieged with delays and workforce shortages and unable to keep up with skyrocketing demand. The annual inflation rate in the United States accelerated to 7.9% last month, the highest in 40 years.v

Throughout the pandemic, Delaware’s financial situation has performed better than expected, including the Delaware Economic and Financial Advisory Council. 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 state has hundreds-of-millions of dollars more than what is needed to pay for our annual funding bills, including prudently setting aside money in reserve,” State House Minority Leader Danny Short (R-Seaford) said in a prepared statement. “Hopefully, this rebate will not be treated as a final solution, but rather as a good start towards balancing the state’s needs with those of our citizens.”

At one point, the Delaware Economic and Financial Advisory Council  (DEFAC),forecast that the state would end with a surplus of more than $975 million at Fiscal Year 2021 – about a fifth of the state’s total operating budget.

Earlier this week, DEFAC met and updated revenue projections to an additional $206 million more than previous predictions for FY 2022. In total, the surplus would be approaching $1 billion.

House Majority Leader Valerie Longhurst touted the proposed compromise, noting that “economic issues like inflation are not partisan” issues.

“Now, we have the opportunity to invest in our residents and provide direct relief to every taxpayer in the state,” she added. “These rebates are one way we can help offset residents’ recent hardships and ease the burden many are facing. I’m looking forward to a swift and strong passage of this proposal.”