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Pushing the data of the Moody’s Analytics regarding Delaware being the only bad risk in the country, some other illuminating factors emerge.  The revenue data taken from our tax receipts over the past two years, portends to ever decreasing departmental budgets state wide in 2013 and 2014.

This problem will be compounded further, by this fourth quarter competing with the largess of last fourth quarter.  If you remember, incomes were very high in December 2012, as a lot of capital gains were cashed in to beat the tax increase beginning in 2013.  There was a huge flood of tax revenue that pushed up estimates, both in personal and corporate income taxes.  The December revenue was 23.3% higher than December 2011.

That largess won’t be coming in this year and we will have to deal with the difference.

Second, due to impingements to our economy, our tax revenue will be under last year.

Delaware employment is growing slowly.  Yet there are only 18 states with a total unemployment (U6) higher.  As a result, personal income tax revenue is down.  This was compounded by a tax decrease recently given to the top 1% of earners. Passage of this tax rate decrease, means those who were the only people actually gaining income, will now, not be paying any of their increases into the treasury, as is being required of everyone else.

Across the nation, total state tax revenues first quarter 2013 rose 6.8%.  Across the nation state income taxes grew 18.4%, state corporate taxes grew 9.4%, and state sales taxes grew 5.5%  ….  Delaware does not have a sales tax.

Only 6 states had declines in personal income tax that same quarter.  Delaware led the pack as having the largest decline at 15.8%. States less shy about raising taxes, California and New York had the highest gains.  $6.3 billion and $1 billion respectively.  Incidentally as correctly predicted by the kavips economic model, both economies are thriving.

Based on withholding data, Delaware’s amount withheld dropped from a 9.3% increase in last quarter 2012, to a 2.0 increase in first quarter 2013, both over the previous year.  At the outset, the potential exists for a loss of that 7.3% difference in fourth quarter 2013.

The wealthy pay in the form of estimated payments.  They don’t use withholding.  The average estimated payment’s percentage increase over 2012, was 12.2%.  However the 4th quarter payment was a jump of 23.3% over the fourth quarter of the previous year.  Meaning the average of the previous 3 quarters was a negative or -3.7% from the year 2011.  Only that windfall of the fourth quarter, driven primarily by federal tax changes, gave Delaware its positive increase in estimated payments for 2012. Bottom line.  We were lucky. First quarter 2013, they are up 7.9% in comparison.

Corporate tax.  Overall across the nation, corporate tax increased by 9,4% this first quarter of 2013 over the same quarter last year. 30 out of the 46 states that have corporate income taxes showed increases. 16 of them were double digit increases.  Virginia suffered the largest decline: $87 million.  New York showed the biggest gain:  $239 million.

Tax Revenue is directly related to economic growth.  Growing economies increase personal income taxes and sales taxes as income gets spent. Delaware’s economy is estimated by the Federal Reserve of Philadelphia for the three months prior to June 2013, to lie between the growth rates of 0.1% and 0.5%.

Take the first quarter of 2013.  It is a harbinger of things to come….  In Delaware, the amounts collected Jan-March.

  • Personal income tax:  2012 = $411 million   2013 = $346 million …. drop of $65 million or -15.8%
  • Corporate income tax: 2012 = $65 million    2013 = $73 million …. increase of $8 million or 12.3%
  • Total with other (fees) included:  2012 = $956 million  2013= $883 million…. drop of $73 million or -7.6%….

Our current state budget is running $73 million in the red based on actual versus revenue projections.  And this does not even include the fourth quarter drop off. Delaware was one of only 5 states capturing less personal income taxes in 2013’s first quarter than in 2012. Rhode Island, Indiana, Utah, West Virginia were its team mates. Delaware lost $65 million (-15.8%); West Virginia was second losing a comparative paltry $21 million. or -5.4%.  The others:  Rhode Island -$13 million (-6.4%); Indiana -$5 million (0.5%); Utah -3 million (0.6%)

It was estimated that over the year Delaware’s tax decrease would cost the state $70-80 million.  if averaged per quarter, that would be $17 to $20 million lost to the state every 65 working days.

One would conclude that a big part of Delaware’s state revenue problem is a direct result of that tax break we handed over to the top percent of Delawareans…. There are 15 states with higher top marginal tax rates than Delaware.  All but one of them (Idaho) are showing better growth than Delaware.  The belief that lower taxes creates jobs and better state economies does not agree with reality experienced by other states on a daily basis.

Again, the national economy as a whole is looking better.  Delaware is looking like the exception.  After the Great Recession the national total of state revenues dropped for 5 consecutive quarters. The national total of all state’s revenues has since grown 13 consecutive quarters…

The same criticism that applied to Obama after the Obamacare vote, applies now to Markell after the SB 165 vote.  Instead of trying to fix something that was working fine, one’s attention should have been spent on all that which isn’t (working fine)….

Recommendations for 2014:

Go to multiple tiered tax rates:

  • 10% on $1 million or more
  • 9% on $500,000 or more
  • 8% on $250,000 or more
  • 7% on $125,000 or more
  • 6.75% on $60,000 or more
  • Spend most of our money on Delaware’s people.  Hire empty positions. Keep the money here in state as much as possible.
  • Cut out from budget most consulting fees for out-of-state entities.
  • No hiring of outside specialists or corporate buddies.
  • Add more teachers, firemen, policemen where needed.
  • Push for building an offshore wind farm; override all Pepco’s objections.

I heard from  Nancy that some dubious fact finders are trying to embarrass Markell and Democrats by raising the fact that the new data center going into Newark is NOT going to use Bloom boxes; then tsking away with their patented headshake and a :  “my, isn’t that special.”  They are trying to imply that if a new business won’t use the product being made here in Delaware, it had to be a bad idea to invest in putting that product here.

Before this gets out of control, let me explain why this isn’t so.

A data center uses tremendous amounts of power. The cost of power per year is usually equal to the cost of the initial capital investment.  Bloom Boxes do not have sufficient output.

The scale of argument being made by some on the right, could be likened to asking why a Walmart being built, won’t cool its buildings with portable window units.

Silly, right? Which is why the “Right” should stay out of arguments over its head, and should retreat back to arguing only what it knows best:   which actually, is nothing, really.

Although the year is barely out, we do have our first nomination for the spot to be announced in December 2013.  With the Kinder Morgan Deal now on hold semi-permanently, even they are pointing to our hero of the year as the man most responsible for allowing the port to remain state owned….

I can say it was Julius Cephas who was behind almost every move to combat the loss of good jobs at our port.  He is being pointed out as the villain by the capitalists at Kinder Morgan.  In Delaware’s eyes, that elevates his hero’s stature even more…

In truth, he is no villain and knowing him, he will probably shun the acclimations being made by us common folk as being our hero.  In his eyes, he was just doing what needed to be done because no one else was there at that very moment to do it, and as that task swelled, it took a lot out of him….

Capitalists always need a villian.  But it was the “truth” which actually is what killed this deal.  Kinder Morgan WAS going to cut back on jobs, and their change of heart and blaming Julius instead of others, points exactly to the core of their problem with our port… …

People in Texas, do not understand unions.  They simply can’t fathom or understand how there can be an actual law that lets people strike and shut you down, whenever you try to pay them less..  In their eyes, you work for what they want to give you and if it is too little, ..humph.  go elsewhere….

The second culprit (after the “truth”),  was our office of economic development.  We gave Kinder Morgan too many “eager” signals that set us up as being seen as an easy pick.  They truly thought they could waltz in, pick up a top notch East Coast Port for a song, and we would eagerly give it up…  Again, that was because everything was done in secret.  Had a meeting been forthcoming in the very beginning,  Kinder Morgan might have moved on earlier when it became readily apparent, that southern Texas practices do not bode well in the Northeast…

Of course, being a corporation, they will blame the whistle blower.  (Ironic since the whistle blower of Enron works for them)..   Of course.  It is not like they find anything immoral in taking a state asset for a song, in firing those skilled dock workers, and replace them with some Spanish speaking Texans who never even heard of a union….

And Julius did blow that whistle. .  Like Rose on the Titanic, he took the whistle off of Jack (pun intended), and blew softly at first, then harder, and harder.   Gradually the sound registered on others ears….

Without Julius, Bob Marshall would not have pushed through Senate Bill 3.  Without Julius, most of the links showing up in everyone’s blog, would have not been found.  Without Julius, the case for protecting workers would not have even made the rounds of the Norman Oliver show….

There were many helpers. Bob Marshall, Nancy Willing, Norman Oliver, Norinda, Helene Keeley, Al Mascitti, Liz Allen, John Kowalko, and (an other blogger too shy to be mentioned here). When one looks back through all of them one sees from everywhere, there in the center of the universe,  stands a normal human being just like us, known to most … as Julius.

There will come a time when a better deal will arrive.  Could even be this year. There will come a time when a suitor who does care about Delaware, who does care about unions, about human beings, about those businesses on the outside, and who will want to upgrade the port for everyone’s interest, not just their own… And that suitor in this day and age, could even come from abroad.  Germany is very committed to union labor, to the environment, to being a good neighbor…. There are a great many possibilities out there that are immeasurable…. We definitely dodged a Texas bullet with this one….

When that suitor arrives… Julius’s stature will be set in cement….  For he did nothing really Herculean, except argue the truth…  He didn’t lie.  He didn’t connive,  He didn’t threaten….

That was done by our office of economic development.  Instead and unlike them, Julius told the truth.  He told the truth to anyone who would listen.  He told the truth enough, so many “did” listen….

And that is why, he  deserves this nomination as Delaware’s Man of the Year.  I know it is early into 2013, but great things just do not wait!!….

You will hear smears that Julius tubed the deal… I saw the letter and it is already out on WDEL and the Delawareonline’s News Journal… But as an impartial blogger, I can tell you exactly what killed this deal.

It was “the truth”.  The truth of what this deal would cost us Delawareans….. is what turned the tide and caused the outcry that rose up against it….

If Kinder Morgan really wanted this deal, they could have easily said… “we are expanding and putting 5 new berths out into the river.  We are buying the port for the bargain price of $5 billion.   We need those businesses outside the fence because the jobs we get, will soon be too big, we can’t do it ourselves.  We will keep the union just as it is;  Wilmington needs good jobs and we are going to do our part….  We are also going to contribute into an emergency fund to be used for any spill or environmental accident that takes place under our tenure….

Kinder Morgan could have done any of those things, … and didn’t…. The blame doesn’t lie with Julius after all…. Especially when you consider the following…

This Economic Council erred on Fisker Automotive.  Then it erred on Bloom Energy.  Then it tried to Kinder Morgan us out of our port…..   Someone rushed in  with a save to make sure that last one didn’t happen.

That person is now hereby nominated for Delaware’s Person of the Year…….


Quote by Wallace Stevens.

In my case, Bloom is obviously referencing the new site occupying the railroad tracks on the site of the ex-Chrysler manufacturing plant. If you saw today’s News Journal, you probably saw the piece regarding the lawsuit being brought against it.

Sigh. I guess the election was the moon passing before the sun… a major drama extinguishing interest in the sunspots occupying the suns surface at the time…

(Explanation of that metaphor: a total eclipse is an unnerving event if ever experienced. However it does no damage as neither would the shadow of a passing cloud. However, our entire solar system and particularly our electrical, communications, and space technologies, live and die by explosive sunspot activities. Where and when a burst does occur, can have a profound impact upon us, far more severe than an eclipse in the Indian ocean off Australia might. But an eclipse will dominate our entire thought process, the same as our election blocked very important local matters from our view; matters that have far more effect on Delaware than says who wins the 4th or 19th Senate might.)

The complaint is filed by John Nichols, clone extrodinaire of the Caesar Rodney Foundation. This foundation is a quasi information function set up by unelectable Republican operatives to offer false evidence against scientific principals… They are primarily known for saying Global Warming is a hoax created by Al Gore because they have proof it has since snowed in Pakistan; no kidding here so yeah, you know the types.)

Bloom Energy wants to build a manufacturing spot on the East Coast… Their operation will probably be as big as the Chrysler operation was during its heyday. The equivalence of this in scale, is that if we had lived in the horse and buggy days (1911), and someone wanted to introduce a new technology to manufacture an item called the horseless carriage, we would probably have the ancestor of John Nichols, along with a company specializing in rubber buggy bumpers, around to interfere with the investment of THAT, too… (In other words, nuisance lawsuits are allowed by our Constitution although complaining against REAL progress as such, benefits no one.)

What are Bloom boxes? If you don’t know, here is an interesting video that fairly quickly explains not only how they work, but gives you the vision of just how important they can be if Delaware jumps on the bandwagon first….

The Bloom boxes create electricity while providing heat and hot water to neighboring businesses, and creates little pollution.

With that in focus, one can see that a vendetta against science of which John Nichols is the tip of the spear, is simply that. The use of false science conveniently made up by the Cesar Rodney Institute, to dismantle a viable economic program that actually has no real cost to John Nichols or anyone else…

Here is the complaint that was filed…. I should note it is being helped along by a major competitor of Bloom Energy, called FuelCell Energy, based out of Danbury, Connecticut. So in this odd combination, we have a non science proponent, teemed up conveniently with a competitor who gains prodigiously if Bloom is shut down. Instead of duking it out in the market place, FuelCell Energy has jumped on this case to metaphorically pull a King Herod, … kill all babies two years or less in Bethlehem…

The complaint has three legs.

The first is violation of the Commerce Clause. FuelCell cannot come in and compete.

The second is John Nichols is being forced to pay more to Delmarva for electricity than is market.

The third is equity issues. These charges would be paid by Delmarva customers but not by Tidewater or other company’s customers.

So we will respond to all three.

The first complaint is that REPSA (Renewable Energy Portfolio Standards Act) violates the commerce clause because it restricts unfettered business across state lines. This may appear worthy on the surface of such a claim, but this particular claim totally fails to justify how not regulating greenhouse gases was not in the interest of every state resident. In fact, the complaint does not mention the greenhouse equation at all. The REPSA was the legislature’s acknowledgement that considerable costs to society derive from its use of energy. Any accounting for one’s energy cost, in fairness must include the total cost to society, and not just the cost of the fuel…

Bluntly put as a rudimentary example. I could pour fuel oil into a hole dug in my backyard, set fire and keep it burning indefinitely. However, my fumes would sicken my neighborhood and spread for miles around. I might pay back some of those costs to society upon going to the hospital the next time I got sick, in paying them the higher fees that my risk had created… But in my own world, I could say, I’m free, this is cheap. In the larger picture, someone else is paying dearly for my freedom and my cheapness….

So, for those who know the players, it is obvious that this is little more than a philosophical measure being brought to penalize an imaginary enemy of “liberals”, who dared enable legislation that marginalizes profits of someone’s patron: the petrochemical companies…. It has nothing to do with John Nichols paying an extra dollar or of FuelCell being competitive.

Here is why. The Commerce Clause gives the Federal Government the right to regulate commerce between the states; (hence for future reference it will be called the “interstate commerce clause” here as is common practice.) The question in this case becomes: why would the Federal Government want to?

Doing so would disrupt a major economic deal in works, a big negative. It would prevent the gigantic manufacturing facility from being built, a big negative. It would eradicate the possibility of over a 1000 building and manufacturing jobs, lasting for at least 21 years, a big negative. It would delay the implementation of the Carbon Control program, a big negative. It would create environmental hardship, by continuing unabated the current CO2 levels possibly leading to higher oceans and storms like Sandy, a very big negative.

The argument being given in this complaint, states that FuelCell Energy, “could have” provided a competitive bid. But because of this legislation, it now cannot do so….

On the surface this may appear to have merit. However, once stepping back, it is laughable in its reality. Along the same lines as this argument, would we allow some of Middletown’s center city businesses to void their obligations on their legal requirements, simply because Wal*Mart moved and built a gigantic operation on the outside of town? Of course not! Timing of the signature on a contract, is a very important part of any equation.

In the perfect Conservative dreamworld, if FuelCell had competed at the time we were negotiating with Bloom and presented a lower rate, and had we not months ago signed an agreement with Bloom, (even though that still would have been within our prerogative), their case could be stronger. But to come suddenly too late, and say annul the agreement, is again, laughable based on the basic tenants of contract law. It would be as if married to my spouse, and suddenly a new prospect transfers into my employment, and angrily demands my marriage be annulled,… Why? …So they can have a fair, equal chance to compete… Uhh, excuse me, Honey; if you’d been here through the courtship, your pleas then could have been considered. But to annul a marriage just because “you didn’t get your chance”? As I said, in business such lawsuits are unfortunately allowed under the Constitution. So hopefully this one gets thrown out with no major expenses incurred by Delaware taxpayers.

The second plank of the complaint is that John Nichols will have to pay more for electricity than is the current market price. As mentioned above, his market in the case, is smaller than the market considered by REPSA. All health benefits, all savings due from clean energy, all savings from keeping the ocean as low as it is, all quality of life issues, are included in the cost under REPSA. Paying cheap fuel, then getting hit with a $250,000 medical bill is not cheaper, for anyone. Better to pay slightly more per kilowatt, and have NO medical bill! That is the wisdom behind REPSA.

REPSA is sanctioned by our government. It is the will of We, The People. John Nichols may not consider himself to share in the view of the majority of Delaware’s population. That is his right. However, we too, are under no obligation to also be forced to share the view of one crackpot minority. Global warming is real, and the majority acted to do something about it.

Secondly, the issues being brought by John to augment his case, would continue to be in place regardless of whether Bloom or FuelCell Energy was providing this same option. Costs would be closely the same. Pollution would be the same. The contract would be the same. If FuelCell had wanted a piece of this market, they should have made a cold call. The only difference between FuelCell and Bloom is jobs. Bloom will build a plant that hires 1000 people in Delaware for 21 years. FuelCell Energy builds its boxes in Connecticut. We will grow jobs there while spending the same cost we would be paying Bloom here….

As a state, “We the People” have the option to choose the best deal for ourselves. 1000 people working at $50,000 a year pumps, $50,000,000 into our economy. Over the course of twenty one years, a little over a trillion dollars will be plunked directly, infused into Newark’s economy. That investment must be coupled alongside any cost to determine what will be the true benefit Bloom Energy provides us, We the People who live in this state’s confines….

So when John says he will pay more for electricity, he is wrong because whoever takes Bloom’s place will charge him the same, yet the economic recovery which benefits everyone, would be absent. The net loss or cost, would be far more than John is complaining about now.

The final point of his complaint, is equity issues. John says the costs of this deal only apply to Delmarva Power customers. They won’t apply to those customers who opt out on one of the green plans Delmarva offers, or those on City power grids, or those on grids downstate under other private companies’ ownership.

Again, John is looking just at the surcharge. He is not counting the fact that Delmarva Power Customers pay less than do others whose grids have to buy smaller, higher priced amounts. Those entities lacking the negotiating power of Delmarva, pay more already. For John’s argument to have merit, the court must require all companies to charge all Delawareans the same. Despite that fact that regional distribution differences (it costs more to provide power further away from the source) would rather severely penalize the other companies. Therefore, because costs vary, if you decide that the other companies are to be “allowed” to charge what they need, then that same rule must also apply to Delmarva Power. It “needs” to charge more for Bloom energy.

John’s argument is just out of luck. On its merits alone, the court will decide to dismiss.

Now, let’s look at the extenuating factors.. This is the fun stuff. FuelEnergy just ten days ago, announce a huge deal with a South Korean consortium to provide fuel cells there. For it to make Delaware’s fuel cells, we would have to wait an awful long time.

FuelCell is rapidly becoming the monopoly in the fuel cell wars. John is playing right into their hands in reaching out to them to join him here. They would like nothing better than for Bloom to go out of business. Bloom is scheduled to begin returning on its investment this year…

Fuel Cells are tailor made for the East Coast. No pollution using cheap natural gas, they can be fired up providing electricity during peak times right where it is needed. When peak demand hits at 2:30 pm on a summers day, these boxes can kick on, easing the load of the grid, quietly, pollution free, no CO2, right where they are needed. In fact, one can imagine these boxes on top of skyscrapers, providing an entire building’s energy needs, as well as providing its heat, and hot water too. Putting a coal powered power plant in the heart of Manhattan is not an option. Yes, the demand is such; these boxes will sell….

Western State Connecticut University is powering such a building beginning December this year. In this article the University’s administration brings up their hope to teach fuel cell technology to their students. The proximity of Bloom to the University of Delaware, also creates the possibility of creating a hub of fuel cell technologies spinning of the Bloom plant and expert talent from the University.

Here is the op ed piece place in the Washington Times by John Nichols. Obviously it is a one side attempt in a business friendly paper to drum up support for getting rid of the Greenhouse Gas Initiatives. Bottom line: most people don’t want to give up and throw in the towel on global warming, especially if we can fix it for only pennies a day.

Here is a fuel cell up and running in Orange County California. It’s by-product is hydrogen which is used in gas stations to power hydrogen cars from LA to San Diego.

Here is what FuelCell Energy is working on in South Korea. It will be the largest fuel cell manufacturing plant of its kind. Soon, we may be giving our technology edge to Korea thanks to FuelCell Energy who is providing the expertise for this South Korean adventure.

Finally, the lawyer representing John Nichols and FuelCell Energy is part of a DC operation that tends to be one sided on their lawsuits. Cause of Action by its name alone, suggests a history of barrity… the legal equivelent of ambulance chasing.

I was more intrigued with Amber D Abbasi’s case here, than with the case on unsure footing she filed here in Delaware….. Again, the evidence there too does not decide in her favor. There is a valid reason two lesbians who want to artifically inseminate with a mutual friends sperm, must have it tested, whereas married heterosexual couples who already would have shared any risks of STD’s between, would not necessarily need to….

Bottom line, It is probably a good thing overall that this lawsuit over Bloom Energy was recently filed. Just to reiterate again to Delaware’s public (and prove Rick Jensen wrong) just how good this deal will be for all of Delaware as soon as it gets moving forward, barring anymore litigation from the Dinosaur’s Anonymous wing of the Anti-Global Warming Club.

Wow. For a small state, we sure got more than our fair share of kooks here, didn’t we?