Lawmakers back to bickering over state deficit

Despite mutual pledges to cooperate, ‘secret’ talks have Republicans fuming

By GINGER GIBSON — Monday, November 9, 2009

The News Journal

Gov. Jack Markell must present a balanced budget to the General Assembly in January, but the road to the June deadline for passage by the Legislature already looks rocky.

It’s a budget that is going to be difficult, Markell said, given the state’s continuing economic woes. Deficit estimates leaked from closed-door meetings of Markell briefing fellow Democrats put the gap at $337 million.

But the size of the deficit might not be the only problem lawmakers and the governor will face in Dover.

Held-over mistrust from the last session lingers, with some Republicans questioning whether Markell is exaggerating the deficit. The inevitable complications of election-year politics are only clouding the process.

Last year’s budget process was lengthy and bitter, with Republicans blocking every attempt to raise taxes. Markell called Republicans “obstructionist,” Republicans called him “crazy.” Finally, Markell agreed to negotiations that led to an agreement and both sides pledged to cooperate this year.

Markell’s office says its deficit estimate this year, which it won’t confirm, is free of political influence, and the administration is considering “difficult” cuts without tax increases.

House Minority Leader Richard Cathcart said deficit estimates are notoriously full of wiggle room to make things seem better or worse than they actually are. But Republican legislators can’t really evaluate the size of the deficit, he said, because the governor is holding “secret” meetings, leaving his caucus to read deficit estimates in the newspaper.

“The danger of that is, when it’s overstated, you tend to say that the only way we can make up a budget shortfall of that magnitude is to raise taxes,” Cathcart said.

Markell’s office says they’re more than happy to meet with Republicans, and the Democrats just happened to ask first.

When Republican Pete du Pont took office as governor in 1977, lawmakers and the governor fought over the budget bottom line.

“My gubernatorial predecessors, in deciding on what numbers to use, had a meeting, closed the door and worked out on the back of an envelope the numbers they needed politically,” du Pont said.

So he created the Delaware Economic and Financial Advisory Council to be an independent group to set revenue numbers by public vote. Du Pont said DEFAC has made estimates of the bottom line more a fact and less a point of debate.

But DEFAC hasn’t taken politics out of the budget. These days, instead of arguing about how much money the state is expected to take in, Democrats and Republicans argue about the size of the deficit, the difference between anticipated revenues and spending.

Projecting deficits is even trickier than projecting revenues, du Pont said.

The governor’s numbers

Ann Visalli, who is responsible for drafting the governor’s budget, acknowledges that predicting next year’s budget deficit is tough. She said the gap her office is working to fill is in the “hundreds of millions.”

“That number is going to be different tomorrow,” Visalli said. “We get more information from the feds; the debt service number can change; the pension numbers can change.”

The newest DEFAC estimates have revenues increasing 2.5 percent next year, but Visalli said the budget will still be difficult to balance.

Visalli, who won’t use the word “deficit,” said the state’s problems next year are based on several factors. It isn’t going to collect as much revenue as anticipated from tax increases passed last session. About $100 million in federal stimulus money in this year’s budget will also go away. Rising demand for Medicaid and rising school enrollment also could drive up costs.

Questioning the deficit

Charlie Copeland, a former Republican state senator, made DEFAC a campaign issue, saying the committee is not free from political influence because the members are all appointed by the governor. He also contends that using deficit numbers isn’t a responsible way to look at budgeting because it keeps every program in the current budget and assumes they should continue to be funded.

“If I look at the $800 million that we were allegedly short last year, what was built into that was a lot of assumptions about the growth rates of programs,” Copeland said. “We were $800 million short from what we wanted to spend, and not what we were spending.”

Copeland said that assuming all programs this year should continue next year guarantees bigger and bigger government.

“I think that an increase of 2.5 percent in your government’s revenues is absolutely enough to run a government and still meet the increased demands that government is seeing,” Copeland said.

Republican Sen. Joe Booth, who served on the Joint Finance Committee as a member of the House, said he thinks the budget-drafting process forces politics out. The JFC examines the governor’s budget in public hearings each spring.

Last year the JFC went through the budget line by line and discussed each expense, Booth said. Those debates were held mostly in secret, but a law passed last session will make them public.

Now, Booth said, it should be even clearer that the members are acting in the interests of the state and not the party.

The first significant discussion of the budget this year took place out of earshot, not only of Republicans, but of the public. Bond Bill Chairman Sen. Robert Venables, D-Laurel, told a reporter that he attended a budget briefing with Markell and was told the deficit was $337 million.

That meeting, which included House Speaker Robert Gilligan and Majority Leader Peter Schwartzkopf, drew Republicans’ ire.

Cathcart and House Minority Whip Daniel Short penned an open letter to Markell recently asking to be included in the meetings.

“We all have a stake in the budget process, but the governor has chosen to invite only a select few into the process thus far,” they wrote. “Holding secret, partisan budget meetings are not only contrary to this goal, it creates mistrust that is difficult to overcome. … Meeting behind closed doors, even if done innocently, sends the wrong message to a public that has good reason to question the operation of state government.”

Markell spokesman Joe Rogalsky refused to say whether Markell mentioned a $337 million deficit. “We can’t comment on the specifics of the discussions,” Rogalsky said.

When asked whether he told Democrats how big the deficit would be, Markell said it’s too early in the process to put a number on the impending deficit.

Gilligan, who attended the budget meeting, when asked about the figure, responded, “Sounds like you were in the room,” but refused to say that was the exact amount.

“It’s pretty much a dog-and-pony show,” Gilligan said of the meeting. “They just tell us, ‘You have this much revenue and we’re expecting this much cost.’ ”

Sitting down to talk

As governor, du Pont walked into a budget battle his first session. The state was looking at an unprecedented deficit, and he disagreed with House Democrats that the final budget passed by the General Assembly was actually balanced. Du Pont became the only Delaware governor ever to veto the budget. The Legislature overrode his veto.

More importantly, du Pont said, he quickly learned that the best way to get the budget done was to work with all sides.

“There’s politics involved in everything,” du Pont said. Both sides had to acknowledge that at times they would disagree, he said, but they started sitting down to regular informal meetings in the months leading up to June 30. Unlike the official markup process of the JFC, these meetings kept a dialogue going between the governor and lawmakers, du Pont said, and ensured everyone could agree on the final budget.

“We said, ‘As long as we’re meeting, we can get a good budget,’ ” du Pont said.

In contrast, Cathcart said the meetings that he recommended after the last budget aren’t happening this year. On the last day of the session, Cathcart called on members of the Democratic caucus and the governor’s office to start holding meetings before they returned in January.

Cathcart said on the House floor that such meetings would allow for more agreement going into the next session and avoid the problems of last year.

“Now the summer is passed, the fall is coming to an end and we’re running up on January and none of those conversations have taken place,” Cathcart said. Cathcart’s caucus still holds some sway in the Democrat-controlled House: Republicans can block tax or revenue bills, including the gambling legislation the governor’s office is going be pushing.

Election-year politics

When lawmakers return for the second half of the 145th General Assembly in January, the budget debate will be clouded by midterm elections.

Sam Hoff, a Delaware State University political science professor, said budget discussions will quickly become political.

Election platforms might have played a role in the fight over tax increases last year, Hoff said. He said moves like defeating tax increases could be something that Republicans run on in 2010.

Hoff said that as next November gets closer, it will be more common to see parties considering how legislation will make them look on Election Day.

“That’s always in the back of some folks’ minds,” Hoff said.

Cathcart said he doesn’t blame either side for keeping the election in mind, especially since whoever has majority control in 2011 will determine redistricting.

“The question to them is what will you do politically to make sure the Republicans don’t win the majority back,” Cathcart said. “Does that include excluding them from the process?”

Gilligan insists the recent budget briefing by the governor wasn’t politically motivated.

“I don’t think they’re being left out. I think if they’re willing to meet with the governor, he will meet with them,” Gilligan said. “It is a cordial arrangement — periodically we meet with the governor. He is our governor.”