Rebate program would send $300 to every state taxpayer this spring
DOVER – As Delaware emerges from a two-year pandemic with families facing generationally high inflation, Democratic and Republican lawmakers and Governor John Carney announced a plan Thursday that would provide direct economic relief to state taxpayers this spring.
The relief plan, agreed to in principle by the leaders of each 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 tax year where returns are available. Legislation being drafted to enable the relief payments is expected to be introduced during the upcoming session break and considered when the General Assembly returns in April.
“Like most of the country, Delaware has weathered a difficult storm during the pandemic. 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,” said House Majority Leader Valerie Longhurst.
“All four caucuses recognized that economic issues like inflation are not partisan – they impact everyone in every corner of our state. Fortunately, the state has been blessed with a record surplus that has allowed us to make numerous investments in our infrastructure and environment. Now, we have the opportunity to invest in our residents and provide direct relief to every taxpayer in the state. These rebates are one way we can help offset residents’ recent hardships and ease the burden many are facing. I’m looking forward to a swift and strong passage of this proposal.”
The global pandemic that began two years ago led to record unemployment and severe economic hardships for thousands of Delaware families. As the state and country have undergone a historic economic recovery, national inflation has risen significantly. Although these inflationary factors are beyond our control in Delaware, residents have experienced rising prices for goods and services during the past year.
“Throughout the COVID-19 pandemic, my colleagues and I in the General Assembly have fought to help Delaware families struggling to keep food on their tables and roofs over their heads, strengthen our economy and chart a path of recovery and progress,” Senate President Pro Tempore Sen. Dave Sokola said. “We have raised the minimum wage, improved investments in primary care, expanded access to free higher education, and in the coming weeks, we will finally have a paid family and medical leave program in the First State.
“Now, with a record $1 billion surplus on the table, we are putting aside our political differences to put money back into the hands of Delawareans. These direct payments will help stimulate our economy, help families pay their bills and provide much needed relief to a workforce that labored through one of the most difficult moments in our nation’s history. This legislation is more than good public policy. It’s the right thing to do.”
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. These investments in infrastructure mean that roads and bridges are being repaired, schools and libraries are being built, and broadband internet is being spread to all corners of the state.
But with a projected fiscal 2023 budget surplus approaching $1 billion, lawmakers determined that providing direct relief to residents is the best way address the economic hardships that rising prices at the grocery store and gas pump are creating.
“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 Governor 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.”
“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 State House Minority Leader Danny Short, R-Seaford. “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.”
With gas prices climbing well north of $4 per gallon, lawmakers considered a gas tax holiday. However, tax revenue from the gas tax is pledged to our bonds in the Transportation Trust Fund making a holiday difficult because the state would be in immediate default of its bond agreements. Further, there is no guarantee that the entire savings would be passed onto 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.
“Delawareans are struggling, and this rebate will help provide some much-needed relief as we deal with rising inflation and high fuel prices,” said Senate Minority Leader Gerald Hocker, R-Ocean View. “I am pleased that the four caucuses were able to come together and work on this proposal to help the citizens of our state.”
Providing a $300 rebate for each of the more than 600,000 Delawareans who filed a 2020 tax return would cost approximately $186.6 million.
Earlier this week, the Delaware Economic and Financial Advisory Council met to review updated revenue projections for the current fiscal 2022. DEFAC is projecting an additional $206 million in revenue for this fiscal year above previous estimates, which would be used to fully fund the rebate program.