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Delaware Facing Budget and Corporate-Friendly Image Problems

Delaware has struggled to maintain a balance between revenues and expenditures in its annual budgets. The Delaware Business Roundtable commissioned Capitol Matrix Consulting to provide an independent look at Delaware’s fiscal sustainability, taking into consideration economic, revenue and expenditure factors that have led to recent budget deficits. The study concluded that, in addition to its continued growth in expenditures, especially for K-12 Education and Medicare, the issue has been compounded by diminishing revenues from the state’s aggressive abandoned property program.

Delaware used a sharp increase in abandoned property revenues to help maintain its spending levels. Revenues from this source jumped from $126 million in FY 2000 to $567 million in FY 2013 before falling back modestly in the subsequent two years. The study estimated that the extraordinary growth in revenues from this source from 2007 onward enabled the state to avoid roughly $100 million per year in program reductions or tax increases between 2009 and 2014. While the expansion in abandoned property collections temporarily helped the state avoid deeper cuts during the recession, it appears that this revenue source has peaked, and is at risk of declining in years ahead. Click here to read more about Delaware’s budget problems, http://www.delawareonline.com/story/opinion/contributors/2015/09/19/delawares-structural-budget-problem/72424412/

Delaware’s billion-dollar corporate brand has also faced some pressure in recent months. The U.S. Chamber of Commerce and the Delaware State Bar Association publicly argued over a new law that bans Delaware corporations from transferring legal costs onto shareholders. Delaware law gives executives broad discretion in managing corporate spending, but also affords rights to shareholders who want to challenge the price of mergers and acquisitions. Delaware is the legal home of two-thirds of Fortune 500 and more than 50 percent of all American publicly-traded companies. To read the full article visit, http://www.delawareonline.com/story/news/local/2015/08/28/discord-tests-delawares-corporate-friendly-image/71319508/

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