State of State reflects hard times

Acknowledging the state is in its most dire economic situation since the Great Depression, Gov. Jack Markell’s first State of the State speech Tuesday was measured — renewing the state’s prosperity is critical, he said, but first it must solve its immediate fiscal crisis.

“I understand how significant the tasks before us may seem,” Markell said. “It’s as if our ship of state is stuck in the middle of a financial storm and it seems the only option available is to keep busy bailing us out. But bailing out without sailing ahead is not a long-term solution.”

He acknowledged his proposal for balancing the state’s budget “is not easy or popular,” including both 8 percent pay cuts for state workers as part of an effort to cut state spending by more than $300 million and the introduction of sports betting to raise an estimated $55 million in revenue.

“My proposal is a realistic and responsible solution to a serious problem and meets the challenge of balancing the budget while maintaining three core principles: fiscal responsibility, keeping our core commitments and shared sacrifice,” he said.

Markell reminded the General Assembly that any portion of his plan that doesn’t pass will require making cuts elsewhere.

“At the end of the day, the numbers must add up; our budget must be balanced,” Markell said. “And so the response of ‘don’t look here, look elsewhere’ to balance the budget is no longer an answer we can afford to hear.”

Markell used the speech to chastise casino owner who have helped delay his sports-betting proposal, saying if the state’s casinos want to add sports gambling, they must be willing to make a change in the state’s share of video slots revenues.

“Let me be clear: The exclusive franchise for video lottery and sports lottery belongs to the taxpayers of this state, not the casino owners,” Markell said. “The owners are the taxpayers’ partners in this venture and they need to act like partners.”

Even as the General Assembly works against a daunting deadline to balance this year’s budget by June 30, Markell said it’s important for them also to look ahead to creating an economic climate that will attract businesses and help existing Delaware companies grow.
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To that end, Markell used the speech to promote his CORE Prosperity agenda, which includes focusing on energy efficiency to save money, generate jobs and protect the environment; establishing a federal-stimulus-funded job training program; streamlining the business-licensing process to a single, statewide license; and supporting small-business development through the low-interest LIFT loan program announced last week.

Markell said he would seek legislation requiring a 15 percent cut in per capita energy consumption and a 15 percent reduction in peak electricity demand by 2015. He also said his administration will propose new, energy-efficient building codes and require consideration of conservation or renewable energy sources before new conventional supplies are considered, as well as energy-conservation investments for state buildings.

John Byrne, a University of Delaware professor who directs the school’s Center for Energy and Environmental Policy, said Markell’s proposals are ambitious and aggressive but within the state’s reach.

“It’s good to have leadership of this kind,” Byrne said. “The governor is trying to provide it at one of the most difficult times economically. In many ways, this is the right time.”

New Jersey’s Energy Master Plan, adopted in October, calls for a 20 percent reduction by the year 2020 — a goal that could cost more than $6 billion, while saving consumers more than $16 billion, Susan Coakley, executive director of the Northeast Energy Efficiency Partnership, said.

“Delaware is actually surrounded by states which have already made this commitment,” Coakley said, “which is actually very good news, because retailers and service providers already are gearing up to respond.”

Delmarva Power President Gary Stockbridge said the company was “aligned with Gov. Markell’s vision for the state,” and said that Delmarva was looking forward to seeing details of his proposal.

“The governor has been very supportive of our rollout of smart grid technology in Delaware. Eventually all of our 300,000 customers in Delaware will be served by smart meters,” Stockbridge said in a written statement. “With this technology as a foundation, we look forward to helping the governor meet his goals, helping our customers reduce their energy use and helping them save money.”
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Rob Book, spokesman for the Delaware Electric Cooperative, did not comment in detail on Markell’s plan but offered a word of caution about alternative energy, saying, “I think we need to look at all the different types of technologies that are out there. You certainly have to weigh the costs with the proposed benefits. A lot of the renewables out there have very high price tags.”

Addressing education, which accounts for a major portion of the state’s expenditures, Markell said the state must refocus its spending from administration to the classroom.

He proposed overhauling the Delaware State Testing Program, giving districts more discretion in using state funds and consolidating school district administrative services into four regional centers by fall 2010.

Answering those who have called for consolidation of the state’s 19 school districts, he said the state will look closely at the idea — one that has long generated fervent debate — and report its findings in a year.

Markell’s proposals, most of which the governor has put forth before, drew mixed reviews.

House Speaker Robert F. Gilligan said school district consolidation, while it bears looking into, could prompt a political brawl with no guarantee of significant savings.

Christina School Board member John Mackenzie said consolidating administrative services makes sense, but called consolidating school districts “foolish.”

“Teacher salaries will have to be leveled up, not down, so there goes your cost savings,” he said. Plus, “local control keeps communities involved with their own schools, and when local control is replaced with state control, local support seems to evaporate.”

Dover Downs CEO Ed Sutor was disappointed with the speech.

“We have not had the chance to meet with him directly, though we’ve tried,” Sutor said, adding that the governor’s characterization of the casino owners “is not a fair assessment of the industry.”

“We’ve had four meetings and the casino industry has [offered proposals] three times and the administration has not moved at all,” Sutor said. “We don’t think that’s reasonable.”

Sen. Nancy Cook, D-Kenton, said Markell did a good job both of presenting goals for the future and emphasizing the need to balance next year’s budget.

“I’m pleased to see he outlined the need for us to focus on balancing out next year’s budget,” said Cook, who co-chairs the Joint Finance Committee. “The Legislature can’t be reminded enough about the responsibility we have.”