Solving problems by creating them

We're not getting what we paid for with three Special Sessions.

I guess the new motto is, if you can’t succeed in a six-month session, just keep calling them back.

Normally a Delaware state legislator has his or her schedule worked out for them: session runs from early January until the end of June, with the rest of the time being theirs. But this year there have been three special sessions called, and to be honest they’re dealing with problems the state created in the first place.

The first Special Session occurred back in August and was called regarding issues with the state’s reassessment process, more specifically those of New Castle County. It stems from a court case the state settled back in 2021, one where the state agreed it was underfunding schools because properties had not been assessed for decades. (Sussex County had not been assessed since 1974. It was the worst offender; then again, the population has only pretty much tripled since then.) Naturally, the company hired to assist with the process, Tyler Technologies, botched a lot of it, making for some unhappy property owners; moreover, some school districts were taking advantage of state law to increase their take by 10 percent following reassessment, without a messy vote on a tax levy to worry about.

A brief second Special Session occurred last week in order to extend the deadline for New Castle County property taxpayers to make their payments due to ongoing litigation surrounding the events of the first Special Session. This led to Special Session #3, deemed an “Extraordinary Session” where the Senate bill from session 2 was formally approved by the House.

But the stated purpose for session 3 was addressing the federal passage of the One Big Beautiful Bill, which state bean counters claimed would “cost” the state $400 million. In legalese, this is what the House voted on since the Senate chose to only do a pro forma session in order to resume business this coming Wednesday.

This Act decouples select provisions of Delaware’s tax code from provisions of Public Law 119-21, also known as the federal “One Big Beautiful Bill Act” (OBBBA). Absent legislative action, most provisions of federal tax law are automatically incorporated into Delaware’s tax law. This Act does not eliminate depreciation of property or expensing, but instead modifies the timing of deductions that were impacted by the OBBBA. For corporations taxed as separate entities, commonly called “C corporations,” this Act does the following: (1) Continues expensing provisions for domestic research and experimental expenditures made after December 31, 2021, but on or before December 31, 2025, under the provisions in place before the OBBBA. (2) Decouples from the OBBBA provision for full expensing of certain business property acquired and placed in service after January 19, 2025. (3) Decouples from the special depreciation allowance for qualified production property. For individuals with business income such as an S corporation or a partnership, the following changes are made to Delaware’s personal income tax code, beginning January 1, 2026: (1) Decoupling from the OBBBA allowance for full expensing for certain business property acquired and placed in service after December 31, 2025. (2) Decoupling from the special depreciation allowance for qualified production property acquired and placed in service after December 31, 2025.

I hope accountants who read this understand the gobbledygook, because I sure don’t. But I suspect the state preferred the previous tax law because they never met a tax cut they didn’t hate.

The House also passed a resolution allowing remote voting as long as a quorum is present, since some members had already made other plans.

But have you noticed a common denominator about these special session proposals?

They always seem to be about how the state is missing out on money from taxpayers.

• Reassess because it’s claimed the state doesn’t have enough money to properly fund schools.

• Set up differing tax rates for commercial and non-commercial property to figure out which turnips to best squeeze for blood.

• Penalize small businesses for taking advantage of federal tax code when the state was counting on those funds.

And as Charlie Copeland of CRI explains:

But this isn’t a new problem caused by Washington. As the Caesar Rodney Institute (CRI) has documented for years, Delaware’s fiscal challenges stem from persistent, state-driven spending growth. The structural issues that were evident a decade ago are the same ones driving the shortfall today, and they are the result of long-standing budget decisions made by Delaware’s state government in Dover.

We first moved to Delaware in 2019; my wife and I wanted to live here because it’s more rural (at least in this area, which is truly slower lower Delaware) and the taxes were less. In FY2020, which was in effect when we moved here, the state’s budget was $4.4 billion. Six years later, the recently-signed FY2026 budget - which was “reset” by the incoming Governor Matt Meyer from that submitted by his predecessor John Carney - was nearly $6.6 billion.

If you assume the estimate of 1,067,410 Delawareans is currently correct, as compared to the 2020 Census number of 989,955, that means our population has increased by 7.82% over six years. Moreover, the federal BLS inflation calculator is telling me that the dollar I spent in 2019 takes $1.26 now. Give or take, these numbers tell me the state budget should be about 1/3 higher - so, based on the old TABOR rule, why are they dragging an extra $700 million out of us? (Note that the source of the TABOR rule also thinks it doesn’t allow states to extort enough money out of taxpayers, but it’s a simple illustration of the principle.) It’s certainly not helping the schools out or making us richer.

What we need is a truly extraordinary session, one where the state goes on a fiscal diet. It’s funny that the $400 million we’re supposedly going to be “short” is an issue, but the state is happy to brag about getting $1 billion in federal grants - ironically, from the same OBBB that seems to be a problem with the tax numbers - to bolster rural health. (As a rural person, we’ll see about that. It’s likely to have the same effect as promising broadband for all of us out in the boonies, for which I’m still waiting five years after the initial target date.)

Sometimes I think all this state knows how to do is grease the palms of those connected, because they’re not giving me a whole lot of bang for my buck. As George Carlin once said, “It’s a big club and you ain’t in it.” It’s bad enough they have almost six months a year to do damage, so Lord knows they don’t need any more time than that.

In the meantime, though, you can Buy Me a Coffee, since I have a page there now.