It appears that after 3 years, the leaders of Delaware state government are finally starting to realize we're in a serious economic situation. RC

Budget panel reviews grim facts

Retirees' lobbyist says they're due pension increase, not cuts

By J.L. MILLER • The News Journal • February 1, 2011

DOVER -- The Joint Finance Committee got a sobering look Monday at the economic situation facing the state -- and a preview of the pressures the budget-writing panel will face from constituents worried about budget cuts.

Between now and late June, the JFC will reshape Gov. Jack Markell's proposed $3.4 billion budget, a budget that calls for $100 million in spending cuts to help close a revenue gap of $216.4 million.

The JFC began its first session of the new General Assembly with an overview of the economy, courtesy of David Gregor, deputy finance secretary. "It is in fact the worst recession we've had in decades," Gregor said, adding that the state and the nation are "in a period of extraordinary uncertainty."

That is because of three factors, Gregor said: the financial meltdown, a moribund housing industry, and structural pressures that include the pending retirement of the baby boomers. "Now they're moving toward retirement and that puts pressure on the state budget and the federal budget," Gregor said.

According to Ann Visalli, director of the Office of Management and Budget, 16 percent of the state's work force is eligible to retire today. "We have an aging work force," she said.

Markell's budget calls for $3.2 million to be pared from employee health and pension costs, a proposal he said will save at least $100 million over five years. However, he did not detail how those savings would be realized.

Jack Hassman, president of the Delaware Retired School Personnel Association, doesn't want those savings to come at the expense of the 2,000 retirees his group represents. Not only does Hassman's group want the retirees' current health benefits maintained at their current level, its members want a 3 percent pension increase as well. Retirees have not seen a boost in pension benefits for 5 1/2 years.

"With the increases in the prices of food, gasoline, electricity and home heating oil and just about everything else, retirees are quickly losing their financial footing," Hassman said. Some pensioners receive less than $600 per month in benefits, while almost 5,000 receive benefits of less than $1,000 a month, Hassman said. Even those who worked 30 years receive an average of just $23,000 a year, he said."Living on a fixed income isn't an easy task," Hassman said.

Markell also wants to cut Medicaid costs, which are consuming an ever-increasing portion of the budget, and eliminate $3 million in cash assistance for adults who are unemployable, destitute and often homeless.

Those cuts could face resistance, at least from some legislators. Rep. John Kowalko, D-Newark South, isn't a JFC member but he used Monday's opening session to voice his opposition to eliminating the $94 monthly cash payments to the poor.

"They use that money for the most part to get back and forth to the soup kitchen or to wherever they happen to be putting up their tent that night," Kowalko said."I find it questionable that we're abandoning the most destitute among us," he said.

Rep. Dennis P. Williams, D-Wilmington North and the JFC chairman, shot back: "Remember, the governor propose[s] and we dispose.

"Weather permitting, the JFC will hear budget requests today from the Auditor's Office, the Public Defender's Office and the Insurance Department.Contact J.L. Miller at 678-4271 or http://ezurl.co/5095e1