CRI News

If I Were a Rich Man
by John Toedtman, CRI Executive Director
September 14, 2021 
"Governor Carney is a rich man with over $1 billion in the bank!
See below our recommendations on how the state can spend this money wisely."
The commercial electric rates for manufacturers in Delaware are high, so businesses don't locate here if they use a lot of electricity and why some companies (like the steel mill in Claymont) have moved away.
The state can lower electric rates by (a) negotiating a buy-out for the high-priced long-term Bloom Energy contract for $125-$150 million (there is about $400 million in remaining payments); (b) and by eliminating the "Gross Receipts Tax" on electric utility revenues that collect less than $50 million.
Both cost less than $200 million and would result in Delaware having more competitive electric rates to compete with other states (a win-win for businesses and Delmarva Power customers).
Reduce Delaware's Real Estate Transfer Tax...
At 4%, the "Real Estate Transfer Tax" is grossly out of line and is the #1 highest in the country. It's a sales tax on one of Delaware's largest industries!
The state should reduce the "Real Estate Transfer Tax" to be more reasonable, like .25%.
This will cost less than $100 million and will result in Delaware having "common-sense" real estate closing fees (which helps first-time homebuyers) and eliminates the hypocrisy of "not having a sales tax."
Renovate Delaware's Abandon Sites/Buildings...
Because it can take a year or more to get necessary approvals, potential companies looking to locate in Delaware don't want to go through the hassle of moving here.
The state should renovate six abandoned sites/buildings throughout Delaware (upgrade parking, electric, lighting, etc.); when these renovations are completed, they can be sold or leased. These buildings were built there in the first place because of the terrific location; Advertise them in the Factory Relocation magazines, "Ready to move in factories with no waiting."
This will cost under $75 million and result in good-paying factory jobs and erase some industrial blight.
Adjust Delaware's Personal Income Tax Rate Structure for filers $25k-$60k...
According to the 2019 IRS data, Delaware filers with incomes between $25,000 and $60,000 account for 12.2% of the state's income but are paying 25.1% of the state's total income tax collected- grossly not fair.
To be fair, the state should direct the Delaware Division of Revenue to adjust the rates for this group (Delaware filers $25K - $60K) to eliminate this disparity. Also, note that nearly 65% of all Delawareans pay the top income tax rate of 6.7%.
This will cost under $200 million and will yield higher economic growth for Delaware.
Save the Indian River Power Plant in Millsboro...
The Indian River Power Plant in Millsboro, DE, is scheduled to close in 2022 due to low income earned as a standby facility. The plant employs about 70 union workers at an average annual salary of $75,000. Delaware buys more than 50% of its energy from out of state.
"Carbon Capture" is a new technology that strips the CO2 out of the emission stream and has been shown to work effectively in large demonstration projects like the "Petra Nova" project. The 'captured' CO2 is compressed and sold for different applications at prices ranging from $30 per ton to $90 per ton.
The Indian River plant produces 322,000 tons of CO2 per year. Total costs to implement the carbon capture process are estimated at $80-$100 million.
The state should put $40 million on the table to start negotiations. As Chairman of the Senate Environment Committee, Senator Carper can play a key role in getting the DE Department of Energy to help with funding.
This will cost under $50 million and Delaware can get a nice slice of the CO2 sales for many years.


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