Difficult Times For Delaware 2014

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.

Man Of The Year

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…….

Chik-Fil-A …Hate Da Gays…..Chik-Fil-A …. Hate Da Gays…..

It’s from a video spoof called Sheik Fil A….. Delaware Liberal introduced to us a week and a half ago.

A lot of people, especially men have trouble dealing with anal penetration of the buttocks, especially when that anus belongs to another man.

For that reason,  their squeamishness causes them to be against da gays.  Those most adamant against this act usually come from areas where if that act is done, it is not done in love, but is instead used as a brutal weapon.  Bluntly put, it is used in rural America,  Arab nations, and areas of the inner city, as rape, … a crime of violence and not mutual respect.

Therefore those from areas where this constantly occurs ( a more violent version of Mitt Romney pinning a boy down and cutting his hair,) tend to be consistently  against that act.   Ironically, most often none tend to see anything wrong when that practice occurs between heterosexual couples.  It is safe.  It is harmless.  It is exploratory, and it is consensual.   Most often, those who are violently against da gays, see nothing wrong with two old ladies living together.  They never venture to wonder what goes on in that old house.  But they have no problem with them being roomies.  Likewise they see old men living together as acceptable.  They are old.  Surely nothing goes on inside that old house…

Because of the horrible trauma that they have endured,  they fail to see that marriage equality is about love… nothing more.   People don’t stay together for years just to get off.  They stay because that person is who they want to spend their time with.   Every day they face a question?  Do I want to go to a club and hook up, or do I want to go home to my best friend, and every day they choose to go home to their best friend.

To be fair the same choice exists for hetero-sexual couples.   Should I take this easy lay being offered at work, or should I go home to my life-partner… It appears now that 50% of us choose to go home to our spouses.  The other 50% take the easy lay.   Based on divorce figures that is…

The more you look at it, the more two gays in a relationship appear better if not as good, as a man and a wife in a relationship.   It certainly isn’t about sex in a hetero sexual marriage.   Those of you who have been married forty years…. how often do you have sex now?  How about thirty?  Twenty?   Sadly there are an awful lot of people out there not having sex these days… despite the invention of viagra…

So why is it “only” about sex in a single sex couple?  It isn’t.  It is about finding someone you love, and choosing to last long enough together to see what that love will grow…..

So if you are against single sex marriage, you are against love.   And in the words of our Lord and Saviour, being against love,  is not where you want your heart to be when you pass over to the other side…

So what do you do about Chik Fil A appreciation day.  Their chicken is soooo good,  like butter… butter it is..  It is the only thing worth waiting for in a Drive Thru line…  So how does one balance ones innate desire to support something soo good you can’t do without, versus  someone else’s problem with someone expressing their freedom of speech…..

What if instead of gays, Chik Fil A was busting on Christians?..  What if they were busting on Muslims?  What if they were busting on Catholics?  What if they were busting on Jews?  What if they were busting on wet backs?  What if they were busting on Spics?  What if they were busting on Pollacks?  What if they were busting on Talley’s?  What if they were busting on Indians?  What if they were busting on Mexicans?  What if instead of gays, we were in the deep south of the 60’s, and they were busting on blacks, saying blacks shouldn’t get married; saying blacks can’t vote; saying blacks can’t go to restrooms with whites; saying blacks have to sit on the back of the bus;  saying blacks can’t sit at the part of the counter that plainly says…. “white’s only”?   Would you be one of those southerners laughing it off as something them northern city-fied liberals were instigating, and damn it, someone with southern pride was gonna buy every piece of chicken that Chik Fil A put down in the grease?

If so… I hope you choke on your chicken……..

GM Is Growing; Bin Laden Is Dead

And what have the Republican’s done?

Shut Down government.
Dropped America’s Credit Rating
Cut over 700,000 high paying jobs

What works America? Bain capitalism?

Bottom line,

GM is growing, Bin Laden is dead. Don’t forget it…

Taxes and The Wealthy

Right click to open full image… Pictograph Courtesy of Viral..

So, can someone tell me again, why we shouldn’t tax the rich, and instead, balance the budget on the backs of everyone else?…….

I seem to be missing that little detail where that all makes sense……

Reasons Why GE Should Build in Delaware

1. Proximity to one of the top research Universities in the country..

2. Well trained work force, ex Chrysler, GM, DuPont, Siemens,

3. Good relations between unions and management at all Delaware companies.

4. Proximity to Dupont Headquarters.

5. Delaware’s Corporate Legal System.

6. Delaware’s own underutilized and “cheap” access port for import and export ocean traffic .

7. Close proximity to the moneyed and power towns of Washington, New York, Baltimore, and Philadelphia, which is good for investor relations.

8. Nearby beach as incentive to draw top engineers from around the nation.

9. Soon to be built, cheap offshore wind power, which will help to moderate utility costs against the ever rising price of coal and natural gas.

10. By getting foot in Delaware’s door, GE could have an inside track at building and installing their top rated turbines off Delaware’s shores…

GE is looking for somewhere to build a new solar plant... Not one requiring tons of sun, but a place to manufacture the thin film necessary for the exchange of electrons necessary to make electricity. Driving down the cost of this film, will drive down the cost of solar electricity.. The lower the cost, the more it will be used, meaning less coal will be burned….

Lower Delaware is the best place in the nation for it.

.. and thanks Nancy for bringing this to our attention…. 🙂

Why BP is a “Good Thing”

Photo courtesy of the Telegraph

George Bush was considered a good leader after we had just gotten socked by 17 people in four hijacked airliners, when he picked up a megaphone and set the war against terrorism in motion…

Fact: that war has diminished terrorism.

Today we are fighting in Afghanistan against Afghanistan people who think we and what we offer, are not the best thing for their future…

They have that right, just like you or I would have that right if an uncertain future were being imposed on us, as say 30 years ago, was portrayed in the movie Red Dawn…. But although the words terrorism get thrown about, …. most of us honestly think far less of terrorists now, than we did even during the most glorious days of the Clinton reign…..

I will say that is a success, one which can be measured by a quantified analysis of results. The US achieved success by diminishing global terrorism. Pretty unbelievable, based on the paradigm of the world we had 10 years ago….

But where I’m going with this,…. is that an event happened that impacted American prosperity, and everyone got together to overcome it…

Today, dead plant and animal material of 250 million years ago, is being forced out at high pressure into an underwater basin. Oil is washing up on shore; oil is creating a desert of life where once life thrived…

The equivalent of 9/11 would to not just simply go after BP, but to go after all of terrorism or in this case… dirty energy…. A real leader doesn’t solve a problem. He changes the paradigm….

What we need to do, is to leverage this unfortunate blemish upon the practices of the past, into a understanding and movement towards weaning ourselves off “dirty energy”….

Today, Obama did just that…

“We cannot consign our children to this future. The tragedy unfolding on our coast is the most painful and powerful reminder yet that the time to embrace a clean energy future is now. Now is the moment for this generation to embark on a national mission to unleash American innovation and seize control of our own destiny. ”

The time to embrace a clean energy future is now……

Two years ago, Delaware was poised to be the first state to have off shore wind… Legislation was passed, signed… the investment firm was pumped up… and then…. Babcock and Brown… collapsed.

The tragedy in the Gulf ….like a boot camp bugle too early in the morning, means that at this moment… we need to jump up, and go forward with upgrading the plans and building a 600 MWh wind farm off the Delaware coast…

Since private investors can’t handle it… we need a government who can…

We set a very similar precedent seventy five years ago…

Between July 1933 and March 1939 the PWA funded and administered the construction of more than 34,000 projects including airports, electricity-generating dams, aircraft carriers, and bridges, as well as 70% of the new schools and 1/3 of the hospitals built between 1933-1939. Some of the most famous PWA projects are the Triborough Bridge and the Lincoln Tunnel in New York City, the Grand Coulee Dam in Washington, and the Key West Highway in Florida.The PWA also electrified the Pennsylvania Railroad between New York and Washington, DC. The PWA did not create as much affordable housing as supporters would have hoped, building only 25,000 units of in 4½ years.

Those necessary structures today, would not be there without the Publc Works Adminstration. Simply put… It’s goal was to spread big bucks, on big projects… There is some argument that these expenditure did little to alleviate the Great Depression. The geography of the problem was too great: the solutions too small.. Only with the outbreak of WWII and Roosevelt’s realization that deficit spending was now mandated, did this nation begin to work its way out of the Great Depression.

Now try to imagine getting into New York today without either the Lincoln Tunnel or the Tribourough Bridge… Try imagine Boeing in the Northwest developing without the cheap power off the Columbia River…. Try imagine the US developing the atomic bomb without Oak Ridge, a subsidiary of the TVA…. Try imagining the Empire State, without the public funded Niagara Power Project, which held the price of power consistently from 1961 to 1981…

In each case, the long term benefits to the community far outweighed the benefits caused by just the new jobs alone…

Therefore it is time for us to do the same with Wind and Solar…

Private investment is stalemated; the active engine of the economy is (like it or not), the federal government…

For as little as 2 billion, we could begin construction within a year. The dreams of developing a wind farm construction-center right here in New Castle County, would again take wing. The dreams of importing the brains of energy to set up homes in Delaware, would once again become reality…

$2 Billion spread over 20 years… averages out at $100 million a year… Getting a return on that investment with wind energy, would be fairly simple… Between jobs, economic growth, full governmental coffers, and very cheap electricity for all… we could easily show that investment to be worthwhile…. And not to mention, were we to clear a little of our air, who can guess how much of a medical saving each household would garner?

But dreams mean little without action.. Now is the time to begin the pursuit of landing a large government contract to begin off the coast of Rehoboth as soon as possible..

We all know it works. Evidence as been there in the above structures… all our lives… We just need to do it….

So…

Do it.

……. and if that happens…. this BP disaster will have been a good thing in the long run…..

Energy Moves to Delaware’s Forefront

Delaware last week was on the cutting edge of energy technology… Fisker announced the building of electric cars in our state. NRG is rumored to buy a controlling stake in Bluewater Wind, and Claymont Steel may become the manufacturer of towers off the coast of Rehoboth.

An interesting fact was brought out in the Fisker deal that ties all of these together…

To lure Fisker, Delaware officials offered the company a five-year, $12.5 million loan at zero interest to make improvements to the plant’s structure, including a new facade and new plumbing, ventilation and lighting systems. If the plant employs 2,500 workers and Fisker has spent at least $175 million renovating the facility after five years, the loan would convert to a grant.

A seed of $12.5 million yields $175 million within five years. Not to mention that 2500 workers at $50,000 each pumps $125 million into our economy each year. If taxed at 2% (6 million per year) the $12.5 million investment gets paid off in 2 years.

The next line is the tell tale factor…

The state has also offered Fisker a $9 million grant to offset utility costs at the plant. New Castle County has offered to abate property taxes at the plant for five years, an incentive worth an expected total of $1.3 million.

The last line is a no brainer. Were the plant empty over the next five years, no property taxes would be collected anyway….

But more telling is the comment that a $9 million grant was given by our state taxpayers to offset Delmarva Power’s higher than average cost of providing electricity.

The East Coast will always pay more for electricity than its sister states in the Midwest, unless they are able to generate power on their own more cheaply….

Always.

Unless they build offshore windfarms… An offshore windfarm provides electricity between 3 and 4 cents per kilowatt. Currently coal cost 3.5 -4 cents per kilowatt without considering the other costs associated with it… Having offshore wind farms costs less than transporting electricity from Ohio over an antiquated power grid.

Bottom line, if we want industry to bring jobs to Delaware, we need offshore wind to keep our prices down.

Now, NRG combining their wind and coal under one system could keep prices down to a reasonable level… When the wind fails, the turbines turn on. When the wind picks up the turbines shut down. Having both under one roof, can temper the impact to the grid that wind fluxes can cause.

Unfortunately coal will always be around. But, having wind as a primary source and coal as the back up, can make Delaware competitive when it comes to luring new jobs to this state, without having to offer a $9 million grant to offset Delmarva Power’s monopolistic high energy prices….

And if we move forward on wind, as NRG is prone to do, we will need steel towers on which to place the turbines… Having Claymont Steel provide those locally, would trim transportation costs and bring more jobs into Northern Delaware.

In the middle of a recession, jobs are nice to have…..