SPONSOR:

Sen. Bunting ;

Sens. Marshall, Connor, Still; Reps. Spence, Buckworth, B. Ennis, Keeley, Oberle, Price

DELAWARE STATE SENATE

141st GENERAL ASSEMBLY

SENATE BILL NO. 270

AN ACT TO AMEND TITLES 20 AND 30 OF THE DELAWARE CODE RELATING TO SUPPLEMENTAL INCOME GRANTS AND BENEFITS FOR DELAWAREANS CALLED TO EXTENDED ACTIVE DUTY IN THE DELAWARE NATIONAL GUARD OR UNITED STATES MILITARY RESERVE AND ASSOCIATED TAX CREDITS AND LICENSE FEE REDUCTIONS.

WHEREAS, in the wake of the events of September 11, 2001, many Delawareans who are members of the United States Military Reserve and the Delaware National Guard have been called to serve in active duty; and

WHEREAS, although they receive additional pay from their respective branch of the military while on active duty, in many cases this service pay falls far short of the income these brave men and women forego when they set their non-military jobs aside and respond to their call to service; and

WHEREAS, in doing so these proud members of our military risk not only their lives but the financial security of their families and dependents here in Delaware; and

WHEREAS, such a sudden and unexpected reduction in income can have a dramatic effect not only on their household budgets, but also on the economy of our State and our nation; and

WHEREAS, the potential negative impacts of these circumstances is exacerbated by the recent economic downturn our country has faced;

NOW THEREFORE:

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:

Section 1. Amend Chapter 9, Title 20 of the Delaware Code, by adding thereto the following:

"§ 906. Military Services Supplemental Income Grants.

  1. For the purposes of this section:

    1. 'Extended active military service' means having served on active duty in the United States Military Reserve or Delaware National Guard for a period of not less than 30 consecutive days as the result of, and pursuant to, an order of the President of the United States.

    2. 'Department' means the Delaware Department of Finance.

    3. 'Net non-military monthly income' means income derived from all non-military sources in the form of wages and salary during any given calendar month less all applicable federal, state, and local taxes.

    4. 'Resident member' means a member of the Delaware National Guard or United States Military Reserve whose domicile and permanent place of residence is within the State of Delaware.

    5. 'Secretary' means the Secretary of Finance.

  1. In addition to any other benefits provided by law and to the extent permitted by federal law, any time any resident of this State, who is a member of the Delaware National Guard or of the United States Military Reserve, is called into extended active military service, said resident member shall be eligible to apply to the Department of Finance for a Military Services Supplemental Income Grant pursuant to this section.

  2. The Department shall, upon written application by a resident member, award a grant payable in continuous monthly installments equal to 50% of the resident member's net non-military monthly income. Each installment of said grant shall be made payable to the resident member or to the resident member's designee, and monthly installments thereof shall continue to be made until such time as the resident member ceases to be on active duty in the Delaware National Guard or United States Military Reserve. Said grant shall be known as a Military Services Supplemental Income Grant.

  3. The Secretary of Finance shall promulgate regulations defining the application, award, and payment process and providing for a manner to terminate Military Services Supplemental Income Grant payments issued pursuant to this section. Regulations promulgated pursuant to this section shall:

    1. Set forth the form and manner of application for a Military Services Supplemental Income Grant;

    2. Require that the resident member submit proof of his or her net non-military monthly income for the 2 months prior to being called into extended active military service, such as copies of pay stubs, direct deposit receipts, or such other verifiable proof deemed appropriate by the Secretary;

    3. Require that the resident member submit a letter, or other comparable written proof deemed appropriate by the Secretary, from each of the resident member's non-military employers showing that each employer's compensation policy does not provide continuing income to the resident member in an amount greater than 50% of the resident member's non-military salary and wage income earned prior to the call to extended active military service;

    4. Require that the resident member designate an individual to receive any Military Services Supplemental Income Grant awarded pursuant to this section, provided that if the resident member designates an individual other than the resident member, the resident member must also provide an address at which said designee resides;

    5. Require that the resident member notify the Department of any change in duty status that may disqualify the resident member from eligibility for a Military Services Supplemental Income Grant issued pursuant to this section and that the resident member refund to the Department any Military Services Supplemental Income Grant money that the resident member, or his or her designee, received in error; and

    6. In the Secretary's discretion, allow a spouse or dependant of a resident member to apply for and receive a Military Services Supplemental Income Grant pursuant to this section on behalf of the resident member, provided that the resident member has not already submitted an application pursuant to this section and provided further that any Military Services Supplemental Income Grant awarded pursuant to this section shall be awarded in accordance with any application thereafter submitted by the resident member.

  1. Grants awarded pursuant to this section shall be issued from a special 'Military Services Supplemental Income Trust Fund Project Account' established and funded by the General Assembly.

  2. Grants awarded pursuant to this section may only be issued to the first 120 resident members who are called into active duty after the date of the Presidential order pursuant to which such activation takes place.

§ 907. Military Services Supplemental Income Trust Fund.

(a) There is created and established under the jurisdiction and control of the Department of Finance a trust fund to be known as the Military Services Supplemental Income Trust Fund to implement the Military Services Supplemental Income Grant program described in § 906 of this Chapter. Within the Military Services Supplemental Income Trust Fund there is established an 'Endowment Account' and a 'Project Account.' Funds in the Military Services Supplemental Income Trust Fund shall be applied for the purposes of § 906 of this Chapter as hereinafter provided.

  1. Beginning at the close of fiscal year 2002, and at the close of each fiscal year thereafter, the State shall transfer Two Million Dollars ($2,000,000) from monies collected through the realty transfer tax pursuant to 30 Del. C. Chapter 54 to the Endowment Account. All earnings on the funds in the Endowment Account shall be deposited in the Project Account. Additional deposits shall be made to the Endowment Account from realty transfer taxes pursuant to this section, from other state funds as the General Assembly may from time to time determine, and from any other public and private sources which may from time to time be made available. The Endowment Account is intended to provide a permanent endowment to accomplish the purposes of § 906 of this Chapter, however, it remains subject to periodic reductions in its corpus following a review thereof by the Joint Finance Committee of the General Assembly.

  2. Beginning January 2005, the Joint Finance Committee shall review the Endowment Account once every five years and shall determine how much, if any, of the corpus of the Endowment Account will be returned to the General Fund. Such return must be made by way of the Annual Appropriations Act for the fiscal year in which the Endowment Account is being reviewed.

(d)(1) Funds in the Project Account, and the earnings thereon to be retained therein, shall be applied by the Department of Finance to achieve the purposes of § 906 of this Chapter. The Project Account shall be funded by all earnings on the funds in the Endowment Account, which shall be deposited in the Project Account at the end of the fiscal year, and from other state funds as the General Assembly may from time to time determine, and from any other public and private sources which may from time to time be made available.

  1. The Project Account is intended to provide funds only for current expenditure of Military Services Supplemental Income Grants pursuant to § 906 of this Chapter."

Section 2. Upon the enactment of this Act into law, the Budget Director and the Controller General shall transfer the sum of Two Million Dollars ($2,000,000) from Contingency Funds in the Office of the Budget to the Military Services Supplemental Income Trust Fund Project Account.

Section 3. Amend Chapter 20, Title 30 of the Delaware Code, by inserting therein a new subchapter VII as follows:

"Subchapter VII. Tax Credit and License Fee Reduction

for the Provision of Military Services Supplemental Income Benefits.

§ 2061. Short Title.

This subchapter shall be known and may be cited as 'The Military Services Supplemental Income Benefits Act.'

§ 2062. Declaration of purpose.

The purpose of this subchapter shall be to provide an incentive and benefit to employers who provide continuing compensation, which is at or above a certain level, to their employees who make Delaware their home and who are members of the Delaware National Guard or the United States Military Reserve during times when those employees are called into extended active military service.

§ 2063. Definitions.

For the purposes of this subchapter:

    1. 'Extended active military service' means having served on active duty in the United States Military Reserve or Delaware National Guard for a period of not less than 30 consecutive days as the result of, and pursuant to, an order of the President of the United States.

    2. 'Military Services Supplemental Income Benefits' means a compensation policy implemented by a qualified employer that guarantees continuing income to any qualified employee in an amount greater than 50% of the salary and wage income that the qualified employee earned prior to the call to extended active military service.

    3. 'Qualified employer' means any employer who employs 150 or more employees and is subject to taxation pursuant to Chapter 19 of this title and/or to any license fee imposed upon the taxpayer's gross receipts by any provision of Chapter 27 or by § 2301(d), § 2902, § 2903, § 2904 or, in the case of an activity described in § 2010(3)j., § 2905 of this title.

    4. 'Qualified employee' means any employee who is a member of the United States Military Reserve or Delaware National Guard, whose domicile and permanent place of residence is within the State of Delaware, and who is one of the first 120 of such members to be called into active duty after the date of the Presidential order pursuant to which such activation takes place.

§ 2064. Reduction in business taxes and/or license fees for supplemental income benefits.

(a) Any qualified employer that provides Military Services Supplemental Income Benefits to a qualified employee, shall be allowed a reduction in any or all of the tax imposed pursuant to Chapter 19 of this title and/or in any or all license fees imposed upon the taxpayer's gross receipts pursuant to any provision of Chapter 27 of this title or by § 2301(d), § 2902, § 2903, § 2904 or, in the case of an activity described in § 2010(3)j., § 2905 of this title.

(b) A reduction allowed pursuant to this section shall be allowed for the taxable period used in computing the amount of such tax or license fees that ends within or with such taxable year of the taxpayer and for each such taxable period that ends within or with any of the 7 following taxable years; provided, however, that in no single taxable period shall any reduction be allowed in an amount that exceeds the amount of the tax or license fee owed for that taxable period.

(c) The amount of each reduction allowed pursuant to this section shall be equal to the amount of Military Services Supplemental Income Benefits provided by the qualified employer to the qualified employee for the duration of the qualified employee's extended active military service; provided, however, that no reduction allowed pursuant to this section may be taken by a qualified employer on any filing made prior to July 1, 2002.

§ 2065. Rules and regulations.

The Secretary shall promulgate such rules and regulations as the Secretary may deem necessary to carry out the purposes of this subchapter."

Section 4. In order to ensure that the provisions of this Act may be implemented as early as possible, the Secretary of Finance shall promulgate regulations to implement this Act by way of emergency regulatory procedures provided, however, that said emergency regulations shall not be effective for more than 120 days from the date of promulgation and provided further that, during the time the emergency regulations are in place, the Secretary shall undertake the promulgation of permanent regulations pursuant to the Administrative Procedures Act, 29 Del. C. Chapter 101.

Section 5. If any provision of this Act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the Act which can be given effect without the invalid provision or application, and to that end the provisions of the Act are declared to be severable.

Section 6. The provisions of this Act shall be effective as of September 11, 2001.

SYNOPSIS

This Act creates a program to provide and encourage income assistance for members of the Delaware National Guard and the United States Military Reserve who are domiciled in the State of Delaware. This Act seeks to provide immediate assistance to Delawareans who have been called into extended active military service by creating a program that combines direct State intervention with a component to mobilize the State's private sector to achieve the same ends. This is accomplished by the Act through a grant program and through a tax credit and license fee reduction program. The tax credit and license fee reduction program is geared specifically to benefit larger employers who are better able to take advantage of them.

The first section of this Act creates the Military Services Supplemental Income Grant program. These grants provide regular monthly supplements to such members who have been called to active duty for what is referred to in the Act as "extended active military service." To qualify for a Military Services Supplemental Income Grant, the member simply must be domiciled in Delaware, must have been called to active duty for at least 30 consecutive days, and must be one of the first 120 members called into active duty. Once qualified, the member must only provide sufficient information to determine the amount of his or her monthly installments through the Grant, that his or her non-military employer is not continuing to pay their regular salary while they are on active duty, and to whom the monthly Grant installments should be made payable. The Grant will be paid in monthly installments equal to 50% of the member's non-military monthly income and will be paid to whomever the member designates.

To provide funding for the Military Services Supplemental Income Grant program, this Act creates a Military Services Supplemental Income Trust Fund. Each year, two million dollars ($2,000,000) will be transferred from the annual realty transfer tax revenues to an endowment account to act as the corpus for the Trust Fund. The annual earnings from the endowment account will be transferred to a project account from which the Military Services Supplemental Income Grants will be paid. This system is very similar to the Conservation Trust Fund, and its series of accounts, that were established in 30 Del. C. Chapter 54.

To ensure that the funds in the endowment account remain active and available when necessary, the Joint Finance Committee will review the account in five year intervals and will determine how much, if any, of the corpus of that account should be transferred back to the General Fund.

Next, this Act implements a tax credit combined with a reduction in licensing fees to encourage and support employers who implement a program similar to the Military Services Supplemental Income Grant program described above. In this section, the Act allows a tax credit and/or the reduction of licensing fees to businesses who employ 150 or more employees in an amount equal to the amount they provide as a Military Services Supplemental Income Benefit to their employees who are one of the first 120 called to active duty, who are domiciled in Delaware, and who remain in extended active military service as the result of, and pursuant to, an order of the President of the United States.

By using this combination of programs, this Act defers the budgetary impact of the assistance it provides over more than one year, making their cost more affordable in these tight economic times. To be more specific, the Grant program created in the Act will have a more immediate effect on our State's budget, while the tax credit and fee reduction program will not fully affect our State budgeting process for at least a year. Likewise, this Act limits the budgetary impact of the assistance it provides by providing grants and tax/license fee reductions for the first 120 members activated.

To ensure that the provisions of this Act may be implemented as early as possible, the Secretary of Finance is directed to promulgate regulations to implement this Act by way of emergency regulatory procedures which will be effective for 120 days and, during that 120 days, to undertake the promulgation of permanent regulations pursuant to the Administrative Procedures Act, 29 Del. C. Chapter 101

Finally, this Act is made effective as of September 11, 2001.

Author: Senator Bunting