Bills to Allow Remote Voting, Make Tax Law Changes

The Measures will be the Subject of Next Thursday's Extraordinary Session of the General Assembly

Two measures under consideration in House committee hearings tomorrow could have a significant impact on future state spending and how lawmakers vote on bills.

The House Rules and House Administration committees, both of which are comprised entirely of the five members of the House leadership, will take up House Bill 255 and House Resolution 19.

House Bill 255 deals with the impact on Delaware from the federal One Big Beautiful Bill Act (OBBBA), which was signed into law in early July. Delaware, like other states, links portions of its tax laws to the federal code, so tax cuts and incentives included in the OBBBA can have an impact on Delaware tax collections.

At issue are two provisions of the complex law that pertain to tax breaks for large businesses, specifically those related to research and development expenses and equipment investments. The new provisions gave business owners greater flexibility in claiming deductions for these expenses and made these favorable terms retroactive to 2022.

According to the Delaware Division of Revenue, if no action is taken, Delaware would lose a total of $410 million in revenue over the current and next two fiscal years. HB 255 would "decouple" Delaware's tax code from these aspects of the federal law, reportedly reducing the state’s three-year total revenue loss to $73.8 million.

In calling the General Assembly into an extraordinary session to address this issue, Governor Matt Meyer stated that the shortfall was because: "Washington keeps handing out tax breaks to the wealthy while working people get left behind."

Not everyone agrees with that perspective.

The Delaware BioScience Association (Delaware Bio), a group dedicated to advancing bioscience innovation in Delaware, noted in a recent post that the OBBBA “once again allows companies to deduct their domestic R&D costs upfront instead of stretching it out over five years.” Proponents of the change maintain that it provides both predictability and a boost to advanced manufacturing and rising start-ups in the biotech sector, enterprises that many Delaware officials believe will be key to delivering future quality jobs and new sources of state and local revenue.

Delaware State Chamber of Commerce tax expert Marie Holliday was quoted in the same piece saying that the legislation was an investment in the long-term growth of critical emerging industries. “I believe this is a win for our state,” she said.

State Rep. Danny Short, R-Seaford, a member of the budget-writing Joint Finance Committee, questioned the governor's skewed sense of urgency.

"Early this year, the Meyer administration presented the JFC with projections showing slowing state revenue growth and significantly higher outlays outpacing that growth," he said. "In fact, it predicted that spending would increase by 5% in each of the next two fiscal years, that we would entirely burn through our $469 million reserve budget smoothing fund, and would face a budget deficit of nearly $408 million by FY 2028. That's an amount nearly identical to what the governor cited in calling us back into session! Somehow, that wasn't a priority, but this is?"

Rep. Short also noted the lack of accountability by House and Senate Democrats, who control the annual state budgeting process, as well as the former Carney administration, for the dramatic increase in state spending over the last five years. Comparing FY 2021 to FY 2025, actual General Fund appropriations jumped by $2.4063 billion, or more than 53.2%. "That does not even include the expected 7% increase in the current fiscal year," he said.

The second measure to be considered tomorrow is House Resolution 19, which would amend the internal rules governing the House of Representatives to allow members to vote remotely whenever the House meets outside its regular session, which begins on the second Tuesday in January and concludes at 5 p.m. on June 30.

The new rule requires that at least 21 of the 41 House members be present in the House Chamber, and that members wishing to vote remotely must ask for and receive permission from the Speaker of the House to participate.

If approved when the House meets next Thursday, the rule change would permit up to 20 members to participate in the voting from anywhere in the world.

Rep. Short noted that House Bill 255 is a three-fifths supermajority bill, requiring a minimum of 25 of the chamber's 41 members to approve. The House Democratic Caucus has 27 members, so the absence of just three of its members would eliminate the possibility of passing the measure solely on Democratic votes.

"While it's not explicitly stated, I believe there is an expectation for lawmakers to meet in person at Legislative Hall, debate bills face-to-face, allow the press and the public to witness, and be available for questioning afterwards," Rep. Short said. "The only time we should be casting votes remotely is under the most dire of circumstances. I view this rule change as not only a political convenience for the upcoming session, but also as the camel's nose under the tent. If we pass this, I predict it will not be long before this rule is again modified, further expanding the use of remote voting."

Tomorrow's committee action on both HR 19 and HB 255 will start at 11 a.m. in the Joint Finance Chamber of Legislative Hall in Dover. The proceedings are open to the public and will be streamed. To watch the meeting virtually, or offer comments to the committee, visit the General Assembly home page and access the appropriate links under the "What's Happening" box.