When I sat down and started to research this post, I thought it was going to be just another, “what ails Jack Markell?”, post. But in digging a little deeper, I see that the problem with Delaware goes a lot deeper than one governor, or even one party. The problem with Delaware has become a systemic problem, it has become a way of doing “BUSINESS”, that goes against the principles of a free market, that has forsaken the normal checks and balances of a capitalistic ideology for the market place, and the checks and balances of good governance.
What first caught my eye was the story of Dole Fresh Fruit Co. possibly leaving the Port of Wilmington, where it has been a large part of the Port’s trade for nearly thirty years. It seems that a brand new port in New Jersey was attempting to lure Dole away, with of all things, favorable tax-incentive credits.
So, how has Delaware chosen to convince Dole to remain in the Port of Wilmington? By matching the tax credits offered by New Jersey? No of course not. By working to lower energy cost? No never. Delaware has chosen to do what Delaware always seems to do now to attract and keep large corporations here, they throw tax payer dollars at them. In this case the state of Delaware will spend anywhere from thirty-one million to thirty-four million dollars to make capital improvements at the port, including new cranes and road improvements.
Okay, so some may say, why shouldn’t the state spend this money to keep jobs here?
To understand my issue with this tactic, one has to know a little history of The Port of Wilmington. The port was officially opened in 1923, and was owned and run by the City of Wilmington. The Port of Wilmington was owned and operated by Wilmington until 1995 when the state of Delaware bought The Port of Wilmington from the City of Wilmington, and created the “Diamond State Port Corporation”, or DSPC, to operate the port.
Don’t let the name fool you, the DSPC is a state created, state owned, and state run entity. Here is the legislation that created the DSPC, http://delcode.delaware.gov/title29/c087/sc02/index.shtml .
If we look at this legislation we can see that it is intended to make it seem as if the state has some sort of hands off arrangement with DSPC, and that the state of Delaware, or more accurately, the Delaware General Assembly, holds the purse strings. But is there really any separation of the two?
I can’t see any daylight between the DSPC and the state in my view. Start by looking at who is mandated to be on the board. This board is populated by appointees of the sitting governor, and or other political cronies and elected officials.
The current board has as its chairman Alan Levin, you know, the same Alan Levin who is the Director of Delaware’s Economic Development Office (DEDO). The same Alan Levin who was instrumental in the Fisker deal that wasted over twenty million dollars of tax payer’s money. The same Alan Levin who in 2010, along with Gov. Markell, announced that DSPC and the state of Delaware had come to an agreement with Dole to keep them here until 2025, here is the press release.
The same Alan Levin who on August 13th, 2013, said once again in a press release, “We are pleased that Dole has agreed to stay in Delaware and remain an important part of the Port of Wilmington,” said Alan Levin, Chairperson of the Diamond State Port Corporation.”
The co-chair of the board is Secretary of State, Jeffrey Bullock.
Some of the other board members include the Secretary of the Department of Transportation, Shailen Bhatt.
Michael L. Morton who is the Delaware State Controller General. The office of Controller General is the fiscal oversight arm of the General Assembly.
Then there is Lewis D. Schiliro, who is the Secretary of Delaware’s Department of Safety and Homeland Security.
Rep. S. Quinton Johnson of the 8th Dist. and Senator Robert L. Venables. Sen. Venables is co-chair of Delaware’s Bond Bill Committee, and in the past eight years the BBC has appropriated more than $161 million dollars towards capital improvements at the port.
Then of course we have the organized labor representatives on the board, one being Marrietta Whalen, who is a UAW Corporate Communications Coordinator at the Wilmington GM plant since 1992.
Ah, but the best may be the last, Michael Bigatto, Executive Director of Council 81 of the AFSME-AFL-CIO in Delaware. Mr. Bigatto is considered one of the most influential lobbyist in Delaware for the working men and women of the state. Under his leadership of the AFL-CIO, he has tripled the amount of money available for serving its members.
So I am sure many of you are still scratching your heads and asking, so what?
Well let us look at the little we know about the arrangement of DSPC, the state of Delaware and the deal reached with Dole Fresh Fruits Co.
The deal centers around $34 million dollars, tax payer dollars by the way, being appropriated by the General Assembly to make capital improvement at the port. It also includes concessions by two labor unions. One has agreed to pay cuts and freezes already, and a second is being lobbied to take the same deal. The deal also includes improvements to roads surrounding the port. And during all of this we here the word negotiations. Really, well who are they negotiating with? Themselves?
Let’s break it down. Dole is going to leave the Port of Wilmington for a new port in New Jersey, where they will also receive tax credits. The so called Diamond State Port Corporation “negotiates” a deal with Dole to make $34 million dollars of capital improvements. But wait! DSPC has no money, it has to get its money from the state of Delaware, through the General Assembly. So the board of the DSPC goes to the General Assembly, but wait! They don’t have to, because they have Sen. Bob Venables on their board, who just happens to co-chair the Bond Bill Committee. I am sure he must have some small influence on that committee.
But what if this is not a fiscally sound investment that the board of DSPC is proposing? Well then the Delaware State Controller General will look it over and point out the flaws. But wait! No need, because the Controller General is also on the board of DSPC.
What about getting the unions to go along with this idea of pay cuts and freezes? Well how hard can that be? After all you have the most influential lobbyist for the working men and women of Delaware sitting on the board of DSPC. And you can bet your aunt Betty’s brazier that those capital improvements will be done by union workers.
Should be no problem getting those road improvements, considering the Secretary of the Department of Transportation is also on the board of DSPC.
Look it’s great to be keeping well paying jobs in Delaware. But this whole arrangement is incestuous, and stinks of back scratching. Can anyone say, “conflict of interest”?
The very people asking for the money are the very people who are charged with overseeing how the money is spent. Where is the checks and balances of good governance? While I am not crazy about the state owning the port, there should at least be a larger degree of separation between those spending the money, and those lending the money.
On a side note, it was rumored that Delaware was seeking a private entity to take over the port, but it fell through because of the fear of lost jobs. Translate that into, fewer union jobs and cutting the inherent waste that goes along with any government run entity.
The problem with Delaware is that the government has taken on far too large a role in the private sector, and even in the areas that government should be playing a role, Delaware’s government has no sense of proportion and appropriateness of its role. As with all things that grow without check, Delaware’s government is at risk, if not already at the point, of toppling over from the top heavy weight of a government grown wild!
And here I thought Delaware was becoming another blue state like New Jersey. We may have surpassed NJ in stupidity.
Tuxamus Maximus has read all Mr. Knotts provided and understands the line of thought. Described as an “economic engine” the port, and state, deemed the capital improvements worthy to keep the tenant Dole. Mr. Knotts did his homework and the state entities did theirs and keeping the tenant seemed a worthy investment to one and not the other. As for the “principles of a free market” it might not really be a a free market at play in this instance in that it seems to be a specialized dock and warehousing system that may not be very interesting to other types of business.
Tuxamus Maximus looks at it as it would any landlord and tenant issue. Dole apparently has been a good tenant being considered an “economic engine” so keeping it seems to be worthy of the “capital improvements” (which by the way could well be tax write offs as they are when private entities make capital improvements) for the DSPC to make to keep the “economic engine” in the state of Delaware rather than letting the state of NJ get the economic engine.
Tuxamus Maximus thinks that the people that keep JOBS may well be the ones that pay property taxes on homes in DE and that could trickle down to the guy that makes pallets that the fruit is loaded on to the trucks that a DE resident may drive to a warehouse for shipping to points far and wide. There may well be a lot more jobs at stake than the union construction and dock workers that the GOP Governor of NJ would be willing to take off the hands of the people (and taxpayers) of Delaware.
Tuxamus Maximus thinks it’s all about JOBS. Maybe the DEGOP isn’t as interested in keeping JOBS in Delaware as we are led to believe? Let’s not let the money be spent on capital improvements to keep the JOBS in DE and let NJ have those JOBS…and tax revenue those JOBS generate. It also goes to the thinking that if another corporate giant would be considering (or being recruited) moving to the port it can see that Delaware does what it takes to get and keep your company in Delaware…where taxes are a lot lower and regulations may well be a bit easier to deal with as well.
Tuxamus Maximus thinks that the Gov of NJ built a port that’s sitting there empty…much like a plant that isn’t being used to build Fisker cars. Both white elephants only one was an existing building and the other a brand new port that cost a lot of MONEY. The big winner? DOLE !! They played this well and got what they wanted. At least DE didn’t built a new port.
Tuxamus Maximus thinks that had the port let the Dole company go to NJ it would be criticized just as badly unless it had another corporate entity lined up that could use the port…with NO capital improvements.
Tuxamus Maximus goes back to the bottom line being the Dole company is a good tenant and economic engine. A good landlord wants to keep a good tenant be it a house of Tuxamus Maximus or a Port of Wilmington. Conversely a good tenant wants to stay with a good landlord. Does it matter if it’s corrupt up and down the line irregardless of political parties? Not really…it’s going to happen anyhow so why not let the little people keep those Delaware JOBS.
Better public money be spent on publicly owned infrastructure than on a corporate give away like Astra Zeneca or Fisker.
Tuxamus Maximus wants to know just how much money in capital improvements is too much money to keep Delaware JOBS in Delaware?
Tuxamus Maximus wonders if the Sussex County Commission had offered DuPont tax incentives to keep, or retrofit to make anything of viable interest, the Seaford plant operational (wasn’t that an economic engine to Sussex?) would that plant still be providing JOBS in Sussex? How many small businesses went belly up when that plant closed. That was a lot of JOBS that didn’t have DuPont on the checks.
Tuxamus Maximus agrees with delacrat but asks “what if” that Fisker thing had worked out? Wouldn’t all involved looked like economic development wunderkinds? You can’t make something happen if you don’t make an effort. OK…it was a mistake. Let’s move on from it, hope it doesn’t happen again and hope one day that facility is made to be a productive JOB producing entity that pays property taxes somewhere down the line.
Frank you must be mistaken. A few years ago we were told that all Delaware needed to do was allow the Delaware River to be dredged and the Port would be booming with business.
You may want to check in to how much money was sunk into the dredging by Delaware and by federal tax dollars.
TaxiMaxi, there can be no tax right-offs for DSPC since the legislation that created it also states that it pays no tax.
My problem is not with keeping a good tenant like Dole, it is with the fact that there is no real oversight of the DSPC, since the same positions that would oversee the spending are the same ones deciding to spend the money. Checks and balances! There are none in this case.
Delcrat, while we agree on the Fisker and Astra Zeneca, do you not feel that there should be a bit more separation in the process?
I mean if a Republican governor spearheaded a move to buy the Indian River Inlet, created some phony corporation and used it for oil drilling and wrote into the creation of the corporation that the board would be filled with political appointees and cronies and could basically spend any amount of tax dollars with little or no real oversight, all in the name of the public good, would that be okay?
Anon, the total for the dredging is somewhere around $300 million, with the Feds paying 65% and Pennsylvania paying 35%, can’ t find any number for Delaware paying any part of it, makes since I guess since if Pennsylvania wants their part deeper it has to have the whole thing dredged, Delaware can just sit back and watch. In June of this year the project was 60% complete and projected for completion in 2017.
“Tuxamus Maximus agrees with delacrat but asks “what if” that Fisker thing had worked out?”
TuxMax,
Experience indicates it’s very big “if” , that corporate subsidies ever “work out” in the long run.
See…
Megadeals: The Largest Economic Development Subsidy Packages Ever Awarded by State and Local Governments in the United States.
According to this report, Michigan leads the nation in corporate tax breaks …. and consider where Michigan is today.
http://www.goodjobsfirst.org/sites/default/files/docs/pdf/megadeals_report.pdf
Closer to home, the $40 million in in grants and tax credits to Astra Zeneca appeared successful, ….until AZ laid off 550 workers in 2011, with still more to come.
I’m simple I know- but isn’t it wiser to invest in infrastructure than to give tax credits to a corporation
If dole pulled out of DE- the money we invested in our port infrastructure MIGHT be able to
1 create those infrastructure jobs
2 the infrastructure could attract anothe business in
3 the people of DE – he tot keep their money invested in their state with a tangible product – not a corporate give away
Bit I’m no economist
Tuxamus Maximus concedes the no tax paid by the DSPC and if it keeps Delaware JOBS in DE has no problem with being the case. Tuxamus Maximus takes for granted Mr. Knotts is up to speed on that legislation.
Tuxamus Maximus got the drift of your checks and balances issue as well and agrees with Mr. Knotts on that but also hopes that there might be just one person that would keep the hanky panky with the money, grift and corruption to a minimum. If not…Tuxamus Maximus can deal with it as part of life and living in a have and have not world. There are few that given the opportunity would pass on having more at the expense of others and it’s a point of contention in the house of Tuxamus Maximus. Grab the brass ring kind of thing?
Tuxamus Maximus also agrees with your comment to delacrat in that separation would be nice to see and in a perfect world Mrs. King and Mr. Pettyjohn, among others, would do something toward that end. Tuxamus Maximus is NOT going to take a deep breathe and holding on that one happening. You’re asking for ‘transparency’ and we all know how well that happens with either party running any political show.
Tuxamus Maximus is thinking that “For Sale” signs should go up on either side of that nice new bridge at the inlet with certain phone numbers on each. Tuxamus Maximus likes the analogy Mr. Knotts offers!
Tuxamus Maximus thinks DE, assuming Mr. Knotts is correct, got a real deal on the dredging payment thing and hopes that NJ hangs out signs when the job is done stating “Half off dock fees if you unload in our nice new PORT with no waiting and new cranes”. NJ grabs the brass ring by taking PA jobs not Delaware JOBS.
Tuxamus Maximus is off to the all night sign store now to get the ball rolling on selling that Inlet Bridge.
Tuxamus Maximus understands delacrat big IF and just wants to say as long as it keeps jobs from moving to other states take the jobs as long as they are available. As for the Astra Zeneca screwing well at least some of the JOBS are still in DE and those “more to come” may not happen in the future. Who knows…they may hire more in the future.
Tuxamus Maximus doesn’t want to be beaten up by delacrat! Just making a comment. It’s not over till the fat lady sings and the plant is still open…for now.
Tuxamus Maximus wants laffter to know that any money spent on infrastructure is good money so long as there are checks and balances to make Mr. Knotts happy! There is a lot of corruption in the building of things isn’t there? Sadly, or GLADLY, Tuxamus Maximus in the infrastructure business.
Laffyer says, “I’m simple I know- but isn’t it wiser to invest in infrastructure than to give tax credits to a corporation
If dole pulled out of DE- the money we invested in our port infrastructure MIGHT be able to
1 create those infrastructure jobs
2 the infrastructure could attract anothe business in
3 the people of DE – he tot keep their money invested in their state with a tangible product – not a corporate give away
Bit I’m no economist”
Neither am I an economist, but in my view tax credits benefit everyone, in that they attract many corporations rather than only one who receives a pay-out like Fisker, which by the way was basically an infrastructure investment on the Boxwood Plant, which will now set vacant again.
I believe that we must invest in infrastructure, but is that what this is? Or simply a way to pay back the unions for political support. Why was there not more effort put into finding a private operator? Why is the board populated with appointees and political “friends” of the sitting governor.
As I said this goes beyond party, it’s systemic.
Tuxamus Maximus needs to provide an OPPS! It was late when it was written but Tuxamus Maximus is NOT in the infrastructure business and wouldn’t want to be for any reason.
Delaware is a sad place because the pseudo elites and political class have decided how to divide up the pie and spread around the tax dollars we work so hard for.
Markell is like every other D Governor, all talk and no execution. Fools and crooks like Orlando George rape education dollars and legislators kiss his ring so they can all get a job through Del Tech. DEDO, DELDOT and DOE are cesspools of incompetence where policy is always trumped by favors.
Sadly, the D’s patronize the same people who do indeed government services and leave them empty handed while handing out good deals to their pals. The GOP is complicit in this charade and offer ZERO difference, they simply ant to have their cut also.
Nice post but it only brushes the surface of a once great state which is not in a state of decline.