Thursday, January 20, 2011

Analysis of Gov. Markell's 2011 State of the State Address

Today's Delaware State of the State Address highlights very fundamental confusion by the Markell Administration on how to fix Delaware's ailing economy, schools and transportation departments.  Let's address these one-by-one:

Markell Proposes Job Creation Infrastructure Investment Fund

The entire premise behind this concept hinges on offering tax credits.  Rather than utilizing more taxpayer funds for this fund, why not just lower the corporate tax rate?  Delaware's corporate tax rate as of 2010 stands at 8.7 percent.  Regional competitors such as Virginia offer a corporate tax rate of 6.0%, which is more business friendly.

Another recommendation is to reduce and eliminate the gross receipt tax.  This tax punishes businesses, as it taxes them on goods produced or services rendered in the state.  Punishing businesses on what they must do to thrive is a deterrent to stay in business and create jobs.

Announcement of Joint Effort with Delaware Manufacturing Association

Only after General Motors, Chrysler and Valero shut down operations and shed thousands of manufacturing jobs does the light bulb go off with the Markell Administration.  Talk about being a day late and a dollar short. 

While this is a step in the right direction, this is a reactive measure by an administration that was elevated to office by union labor that was employed at at least GM and Chrysler.  Where was this administration when they were losing their jobs?

Education Proposals on Language Requirement and Science/Technology/Engineering/Math Focus

Governor Markell should be commended for realizing that educating Delaware's children is a driving factor to having a workforce that businesses want to hire.  The language requirement is essential to have a workforce competent of global perspective and conversant with another non-English nation.  While Delaware may be home to several non-US businesses (e.g. Astra Zeneca) it does have businesses that conduct business globally.  This is step in the right direction.

Markell's second proposal to create Science, Technology, Engineering and Mathematics was sorely need and refreshing to read and hear.  This focus has been long overdue and there is no reason why Delaware cannot be a STEM hub to complement what the chemical giants have done to make Delaware home. 

State Employees Health Care and Pension Cost Obligations

With the revealing that taxpayers have been bearing the burden of the explosive health care and pension cost obligations, Delaware leaders can now focus on reducing this burden.   It was very startling to hear that the health care burden by taxpayers explode by 594% and the pension costs exploded by 257%.  This clearly is unacceptable.

Delaware needs to address health care costs by increasing competition by allowing more health insurers to compete in Delaware, implementing tort reform and asking state employees to share the health care cost burden just like it done in the public sector.  It is not fair for private citizens to fund their own health care for themselves and also that of the state employees.  For this, the state must act like a business and ask employees to share more of the cost after they improve competition and availability of more choices for health care coverage via the private sector.

Markell must make a stand and reject Obamacare.  Join the other twenty-six states and demand that we inject state reforms on health care to diffuse the unconstitutional federal government mandate.  This issue commands leadership, and now is the time.  Compel Attorney General Beau Biden to do his constitutional job and invoke nullification of Obamacare, for this legislation is violation of the U.S. Constitution on the mandate requirement.

The explosive pension cost burden borne by taxpayers is no different.  It is not fair that private citizens must finance their own retirement and that of state employees.  Delaware must do a multitude of things to address this problem.  The first is to switch from a defined benefit pension plan to a defined contribution plan where state employees contribute to their retirement.  This is the same decision many private sectors firms faced, and government employees should be no different. 

Markell must renegotiate all union employee contracts to reign in employee costs.  Consult with New Jersey Governor Chris Christie on tactics on how to negotiate with the DSEA and other unions.  It won't be easy, but it must be done.


Delaware's fiscal picture is bleak due to state health care, Medicare and pension cost obligations.  Delaware'[s schools need reforming.  While recognition of these areas is a first step to recovery, the road to sanity is a long one.  The time for tough and unpleasant decisions is now.  The time of the public's financing of fiscal recklessness and failed leadership is over.

No comments:

Post a Comment