A Constitutional Mistake: Why HB 234 Is Bad for Delaware Taxpayers

When state employees collectively bargain for wages and working conditions, elected lawmakers still hold the “purse strings” and have the final say.

Major expenses like healthcare and pensions are set by the legislature. Under House Bill 234 (HB 234), this vital taxpayer safeguard could be wiped out.

By making collective bargaining a broad constitutional right, the bill threatens to shift ultimate authority from the legislature (that is, voters) toward union arbitration, This would leave unions and unelected negotiators with unchecked power to dictate how much Delaware taxpayers pay for government workers' healthcare and pensions. Once that change is written into the state's constitution, it cannot be undone.

As confirmed by the state's controller general (Delaware’s independent fiscal watchdog), items like healthcare, pension benefits and job classifications—which are currently set through the legislative process—would suddenly become subject to collective bargaining. That is where the cost question gets serious.

What It Could Cost Taxpayers

When state and local governments lose control over employment decisions via government worker union collective bargaining, they are not able to adjust their expenditures to maintain services (e.g. police, traffic, schools) when tax revenues fall. Moreover, state and local government credit ratings fall because lenders perceive there is less control over employee costs, thus increasing state and municipal bond financing costs.

A 2024 study in the Global Finance Journal found exactly that pattern in states with stronger public-sector union protections:

• Higher borrowing costs:  States where more government workers are unionized pay more interest when they borrow for roads, schools and public projects. The study found that a meaningful increase in union coverage drove bond yields (the interest rate a state pays when it borrows money) up by 233 basis points, or about 2.33 percentage points.

  
  

• More debt after a budget shortfall:  The same states saw a 17% increase in borrowing following a budget crunch, because rigid labor agreements left fewer options to cut costs elsewhere.

  
  

• Less flexibility in a downturn:  Stronger union mandates were associated with a measurable drop in the government’s ability to adjust spending when revenues fell, leaving borrowing as the only option.

The fiscal pressure does not stop at the state’s balance sheet. It also shapes Delaware’s ability to compete for the kind of jobs that grow the economy in the first place.

 

What It Could Mean for Jobs

Delaware competes with neighboring states for large manufacturers, and this is where the constitutional question becomes a jobs question. Delaware does not currently have right-to-work protections. Writing stronger union rights into the constitution would make it significantly harder to ever adopt them.

Area Development, a trade publication that tracks corporate location decisions, has documented for years that “right-to-work” status, meaning laws that give workers a choice about whether to pay union fees as a condition of employment, is among the first things site-selection consultants check. Many treat its absence as a “make or break” issue, a term for a criterion that removes a state from consideration before anything else is evaluated.

Research from Duke University economist Matthew Lilley, published through the Manhattan Institute, found that states with right-to-work protections saw a 28% increase in manufacturing jobs and a 2.29 percentage point drop in childhood poverty compared to neighboring states. Children from lower-income families in those states also had a better chance of moving up the income scale as adults.

For a state looking to attract good-paying jobs and broaden economic opportunity, locking in a constitutional disadvantage is not a risk worth taking.

The Bottom Line

Delaware's constitution is not a place for guesswork. Once something is written into it, it cannot be undone: not in a recession, not in a budget crisis, not ever. The House Administration Committee voted to move this bill forward without being able to say what it would cost or how far it would reach.

That puts a permanent, open-ended financial commitment beyond the reach of the voters and lawmakers who would have to pay for it. Delaware cannot afford that kind of gamble. HB 234 should not advance.