Monday, March 30, 2009

Balancing the Delaware budget without driving State employees to Food Stamps or costing them their health care...

... is not simple, but it's doable.

Governor Jack Markell gets about $93 million of his budget savings from cutting the salary and benefits of State employees across the board.

Here's how you avoid that trap:

1) Instead of cutting salaries, put all State employees making under $100 K on two weeks furlough. That's roughly a 3.8% pay cut, but it is better than simply reducing salaries for two reasons. One: it meets the temporary requirement far better than a pay cut does; it's a hell of a lot easier to eliminate the furlough next year or the year after than it is to raise salaries 4-8%. Two: it gives the employees back the time to use as they prefer, rather than working them for the full year at lower wages. If it inconveniences some customers or causes some problems with service--well, shared pain is what it's all about, anyway.

By my back of the envelope calculations, this would reduce the $80 million in savings from those workers to $34 million, leaving a deficit of $46 million to recover.

2) Put in a two-year, sunseted additional .75% raise in the gross receipts tax above that which Governor Markell has already requested. This, in and of itself, should raise at least $25 million.

3) According to the US Census Bureau there ar 298,000 households in Delaware, of whom just above 9% gross over $100 K. A one-time surcharge on top of existing State income taxes of $500 per family would net $13.4 million. Again, I prefer the surcharge with an appropriate sunset provision to a permanent change in the tax tables. It amounts to, at most, a .5% tax on six-figure incomes.

4) If we were to move toward the decriminalization of marijuana in this State, one of the side-effects would be reducing the prison population. A best guesstimate is that nearly 1,400 of the incarcerated in Delaware are non-violent drug offenders, most of whom were busted for marijuana possession. Let's assume that I am off by a factor of four and there are only 350 non-violent pot smokers cooling their heels in our jails. If we went to decriminalization on the order of Colorado or Massachusetts, and then commuted the sentences of those 350 inmates, what would we save?

On 2004 it cost $21 k annually to keep somebody behind bars in the First State. Release 350 potheads and you save the State something on the order of $7.35 million--or enough to maintain the health benefits for all State employees at the status quo without busting the budget.

Ask yourself: is the State and Federal war against people who toke up worth your health insurance?

So: to recapitulate: we need about $94 million in savings here. We give back $46 million by reducing the pay cut for most workers to a two-week furlough.

We raise the following: $25 million more from the gross receipts tax; $13.4 million from a one-time surcharge of $500/household on six-figure incomes; and $7.35 million by releasing 350 non-violent drug offenders, for a total of $45.75 million, or--as they say--close enough for government work.

This could all be done, in the now-infamous words of a certain progressive gubernatorial candidate--with a scalpel and not an axe--but it does require some thinking outside the box.

My dissatisfaction, of course, is that it is a much less Libertarian solution than I would like, but I took off that hat tonight just to show you what could be accomplished with some imagination.


Anonymous said...

Interesting take Steve. At work the other day I had mentioned just give me (or a group of like-minded employees) the access to the numbers and we'd come up with the 91 million figure :) I've always been agreeable to the furloughs, because even if it means lost money, I at least have something for my lost money. It's borderline ludicrous to expect the same productivity while slashing employees pay.
As far as your decriminalization point. I think that what may soon happen is the we as get further into debt, decriminalization options, once thought unthinkable, will see the light of day. Not because everyone agrees with the notion, but because it's just too damn expensive to continue going as we are.

MArk H

Brian Shields said...

I just wrote a post, the state of New York is changing their crime laws because it meant less people in prison for non-violent drug crimes.

Anonymous said...

We all know the calculation for the per prisoner cost. I do not think that is the same calculation for savings.

There are fixed cost. There is the same level of personnel to man the prison. Unless you also propose a job loss there. I see a savings in food. I do not see a savings in medical, or education.

I do see a negative cost on the street, as these 350, return to doing what they did before, petty crimes, property destruction et al, to support their habit. Cost of monitoring 350 more on the street?

"On 2004 it cost $21 k annually to keep somebody behind bars in the First State. Release 350 potheads and you save the State something on the order of $7.35 million--or enough to maintain the health benefits for all State employees at the status quo without busting the budget."

Anonymous said...

Tax and spend is not imaginative.

Anonymous said...

Sounds like a reasonable approach to me, Steve. I would think this would be more appealing to state employees.

With drug decriminalization, the police would be freed up to focus more on more important crimes, an additional benefit.

I know this would cost money, I would like to see treatment coupled with decriminalization, a wise investment that should have a payback.

Perry Hood

Steven H. Newton said...

Anon (3)
As for the supposed negative cost of putting those folks on the street: if we put non-violent pot smokers back on the street where what they do has been decriminalized, then their behavior is no longer criminal, is it?

Moreover, if we decriminalize pot, study after study has shown, crime does not rise, it falls, because police can actually concentrate on violent crime.

As for the costs, there are fewer fixed costs involved than you seem to believe.

And it's only one option: we could also make similar savings by eliminating the position of Secretary of Safety and Homeland Security, folding it into the Commander of the State Police. It is not a necessary position.

We could take $1 million above the 3% cut from UD, DSU, and Del Tech each (since all three institutions are recouping hundreds of thousands if not millions in stimulus funds).

Another Mike said...

Agree with Mark H. My wife the state employee said she'd much rather a furlough since she could use her days off for other purposes, such as cleaning the house or doing something else to make money. We also save on the gas she's not using to drive to work, lunch eaten at home, etc.

Anonymous said...

Actually it costs $33,000 to house a person in Delaware prisons. 80% in prison are non violent or drug related crimes. A new piece of legislation coming soon, sponsored by Senator Margaret Rose Henry, the Delaware Crime and Rehabilitation Act.

This legislation authored by Dr. Floyd McDowell is based on the most successful Calfornia model. In California they have closed 2 prisons and took others off the books. Recidivism rates are way down. Drug courts are the answer. In lieu of legalization of some drugs like pot....anyone caught with drugs will go to drug court and sentenced to Drug Treatment centers. Offendors will be labeled felons when they complete the treatment program. Its time to view addiction as a medical problem and stop punishing it by horrific jail terms. These treatment centers will be staffed with certified counselors (not what we have today ...the faith based sinister ministers only interested in the bucks). It will cost $3400 for a rehab program, you get your drivers license and voting rights back in one year if you stay clean.

All those who want to build another prison at the cost of $900 million, keeping the prison industrial complex going, will be opposed to this good citizen bill.

The Hope Commission, NAACP,
Catholic Diocese and other good government citizens groups will be supporting this legislation.

The bill in its totality can be found at There is much more to this great legislation...too much to detail here...check it out.

Anonymous said...

mistake in my last statement:

Offendors will not be labeled "felons"...when they get out of rehab they will not be a felon, keeping them from getting a job and/or getting on with their lives.

ChrisNC said...

The problem is having state employees to begin with. Departments tend to grow under the economic principle of rent-seeking. Rather than treating a statist problem with ham-fisted statist solutions, the real solution is to get the state out of the employment business. Abolish non-law enforcement departments, then contract with private providers on an as-needed basis through bidding. Then the staff sizes and compensation will reflect the market, rather than political pull. Certainly a tax increase isn't the right solution, nor is treating employees as somehow sainted servants, above the constraints that private-sector employees face.

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Anonymous said...

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Anonymous said...

Regarding #3 above...I assume you are wanting me to chip in another 500 dollars or so into the pot given the fact I am one of those 9% that make over 100k?

Thank you. I do appreciate reading about yet another opportunity for me to give even more money to the state.

Could we consider perhaps a more "graduated" form of extra taxation?

After all, from my perspective, "fair is fair"....I'd like to see everyone be given the non-option of paying more taxes and not just me.

Obama and his ilk in DC are already pissing me off...

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