DOVER — As Delaware emerges from a two-year pandemic with families facing historically high inflation, Democratic and Republican lawmakers and Gov. John Carney announced a plan Thursday to provide direct economic relief to taxpayers.
The proposal, agreed to in principle by leaders of the four party caucuses, would send $300 in direct payments to every Delawarean who filed a 2020 tax return, which is the most recent year returns are available.
Legislation being drafted to enable the relief payments is expected to be introduced during the upcoming session break and considered in April.
If passed, the relief would cost around $186.6 million.
“Like most of the country, Delaware has weathered a difficult storm during the pandemic,” said House Majority Leader Valerie Longhurst, D-Bear. “Our economic recovery has been strong in many ways, but it has also slammed residents with new challenges of increasing costs in almost every facet of their life. Delawareans emerging from the pandemic are facing higher prices at the grocery store, at the gas pump and for many of the goods and services they rely on every day.”
House Republicans shared a plan March 14 to create a bill to require Delaware to issue a one-time $100 million tax rebate that would give each resident $100. A family of four would get $400 from the state’s expected surplus revenue of nearly $1 billion.
“This proposal is consistent with what our members have been proposing since early last year,” said House Minority Leader Danny Short, R-Seaford. “Our state experienced huge revenue surpluses last year, without enacting any significant tax-reduction measures. We have again been gifted with large surpluses in the current fiscal year. There is simply no excuse for not moving forward with targeted tax cuts and rebates, returning some of this excess cash to our citizens.”
As part of the economic recovery, the state has experienced a significant revenue surplus, which the General Assembly has used to provide record funding for the state’s capital budget, known as the bond bill.
But with a projected fiscal 2023 budget surplus approaching $1 billion, lawmakers determined that providing direct relief to residents is the best way to address current economic hardships.
“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,” said Gov. Carney. “Every taxpayer I’ve ever talked to expects us to manage their money in a way that’s responsible and sustainable over the long term.
“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.”
With gas prices climbing more than $4 per gallon, lawmakers also considered a gas tax holiday. However, revenue from the gas tax is pledged to the Transportation Trust Fund.
Further, there is no guarantee that the entire savings would be passed on to the consumer, nor would a gas tax holiday help lower-income residents who rely on public transportation.
The relief rebate would provide a direct payment to residents and allow them to use those funds to offset additional expenses.
“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,” said Rep. Short. “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.”
Earlier this week, the Delaware Economic and Financial Advisory Council met to review updated revenue projections for the current fiscal year. DEFAC is projecting an additional $206 million above previous estimates, which would be used to fully fund the rebate program.