Delaware State News

DOVER — State employees were reeling Thursday after Gov. Jack A. Markell proposed a plan to cut pay across the board by 8 percent and to reduce the state share of health care premiums, essentially reducing the take-home pay of these employees by 10 percent.

The proposal has now been sent to the General Assembly for revision. A balanced budget must be approved by the end of the fiscal year on June 30.

"They hit me on salary and health care," said Michael A. Begatto, executive director of the Delaware branch of the American Federation of State, County and Municipal Employees (AFSCME). "I feel like I’m in a ring in the 10th round with my hands tied behind my back."

State employees said they believed they were unfairly targeted to bear the brunt of the problem, that the equal percentage did not actually result in equity and that furloughs should have been utilized before resorting to a pay cut.

"I know this is very tough for state employees," said Ann Visalli, the state budget director. "We did everything we could to avoid layoffs."

Mr. Begatto did not agree.

He and other AFSCME members staged a rally outside Legislative Hall during the gloomy weather, which they fittingly named "It’s Raining — Use our Rainy Day Fund." There are unrestricted reserves, such as the rainy day fund, that state lawmakers could use to cover the budget deficit, he said.

The plan suggested by Gov. Markell did not represent shared sacrifice, Mr. Begatto said.

"We have people who are working for the state, who are the working poor. This is a major blow to them," he said. "Cutting the salary of someone who makes $17,000 a year, pay grade one, would hurt them much more dramatically than others. This is not equal."

The statement was reiterated by many state employees.

"Most of us (state employees) are living paycheck to paycheck," said Jim Kwasnieski, of Dover, president of the local AFSCME chapter and a DelDOT employee. "There are state employees on the lower end of the pay scale. It’s going to hit them hard."

Gov. Markell said he thought the proposal was fair. One of the guiding principles in devising the plan was that "no one person or group will bear a disproportionate burden from this challenge alone," he said.

Gov. Markell took a 10-percent pay cut when he took office in January. He has not yet said whether he will reduce his pay more with all other state employees on July 1 if his proposal is to go through as suggested.

Mr. Begatto was not alone in his feelings.

"Look, we realize we’re facing some really tough challenges and a very deep hole," said House Minority Leader Rep. Richard Cathcart, R-Middletown. "Having said that, some of these proposals worry me. For instance, I think the salary cut of state employees is too large. If we do make a cut, I’d like to see it weighed according to salary, reducing the impact on low-wage earners."

State employees, especially teachers, have been asked to do more and more, with fewer resources, time and time again, said Diane Donohue, president of the Delaware State Education Association. Gov. Markell’s proposal seemed like too much, she said.

"Every education initiative asks for our educators to do more and be held more accountable. Now, educators are being asked to do that with an 8-percent cut," said Diane Donohue, president of the Delaware State Education Association.

Ms. Donohue said she was most concerned about married couples who are both employed by the state. Those households will see an income decrease of about 10 percent.

Some state employees also questioned why the governor proposed pay cuts instead of furlough days.

According to the governor’s staff, though, instituting furloughs would not have generated enough money.

Furloughs would mean that the employees would have a certain amount of days off and not get paid. Gov. Markell’s proposal suggests that they work for less compensation.

"This is probably the worst time to cut employees’ salaries, but it’s something we have to consider at this stage," said House Majority Leader Rep. Peter C. Schwartzkopf, D-Rehoboth Beach. "This proposal impacts all of us at some level — my wife is a state employee and, as a legislator, so am I, so my household would be doubly affected if this proposed temporary salary cut goes through.

"Any decisions we make will be made with careful consideration of how each decision affects Delaware families."

New Cost Savings

$130.8 million from replacing state Medicaid expenditures with enhanced federal Medicaid funds from the federal stimulus package.

$91.7 million from an 8-percent pay cut for state employees.

$11.2 million from using federal stimulus money to pay for reading and math specialists in public schools.

$10.3 million from suspending salary step increases.

$9 million from limiting property tax rebates for senior citizens to those under a certain income threshold.

$7.7 million from cutting professional development days for teachers from six days to three days, using the other three days as unpaid time off.

$7.5 million from reducing spending for contractors, consultants and employment services by 10 percent.

$3.7 million from eliminating double state share health insurance benefits to couples who are state employees.

$3.5 million from eliminating vacant positions and reducing the use of casual and seasonal employees.

$97.4 million from increasing the maximum corporate franchise tax from $165,000 to $185,000, and increasing the formula multiplier for other franchise tax payers from $250 per $1 million of par stock value to $350 per $1 million.

$40 million from increasing the state share of slot machine revenue by 8 percentage points.

$55 million from reauthorizing a sports betting lottery.

$30 million from increasing the personal income tax rate on income above $60,000 from 5.95 percent to 6.95 percent.

$16 million from increasing the state cigarette tax from $1.15 to $1.60 per pack.

$7 million from increasing the gross receipts tax on businesses.