IN THIS ISSUE

• Governor Criticized for Actions Involving State Revenue Forecasting Group
• High Court Ruling Could Impact Delaware Sexual Orientation Counseling Law
• NEWS BRIEF: People Intentionally Damaging Emergency Vehicles Could Face Stiffer Repercussions Under Bill
• NEWS BRIEF: Court Sides with State, Allowing it to Override County Decision Impacting Offshore Wind Farm

Governor Criticized for Actions Involving State Revenue Forecasting Group

-- Dismissal of DEFAC Chairman Draws Sharp, Diverse Response –

In an era when disagreements involving elected officials often quickly spiral into political tribalism, it's rare to find a situation in which people across the political spectrum share a common perspective. Yet that is exactly what has happened in reaction to Gov. Matt Meyer’s recent removal of a top official from a committee whose work impacts every Delawarean.

Gov. Meyer recently removed Mike Houghton from the Delaware Economic and Financial Advisory Council (DEFAC). While many state residents may never have heard of the group, its work is key to determining how much the state spends each year.

The group of business officials, financial analysts, state legislators, and state agency staffers meets five or six times annually, issuing periodic forecasts of how much revenue the state can expect to receive. Its prognostications are essential. Unlike the federal government, Delaware’s government is required to appropriate no more than 98% of what it expects to receive in any given fiscal year.

At the most recent DEFAC meeting last month near New Castle, Mr. Houghton, a nine-year group member and past chairman, sought clarity on Delaware’s expected proceeds from corporate franchise taxes and fees. It is the state’s second-largest revenue stream.

Over the last two years, Delaware’s standing as the nation’s preeminent corporate home has taken some hits. Over 2.2 million corporations are registered here, and that has reaped huge benefits for the state, providing more than a third of all state revenue through the collection of taxes, fees, and escheat (abandoned) property.

But headline-grabbing corporate disputes, the perceived unpredictability of Delaware’s Chancery Court decisions, and tax measures passed by the General Assembly have led some major corporations, including Tesla, Meta, Simon Property Group, and Dropbox, to flee the state and incorporate elsewhere in what has been called “DExit.” That is notable because a disproportionately large amount of Delaware’s corporate revenue comes from a comparatively few corporate whales.

The Meyer administration has publicly and repeatedly dismissed DExit concerns, citing an overall increase in the number of total incorporations filed in Delaware. 

At the March DEFAC meeting, Mr. Houghton, noting the absence of new corporate revenue data in the state’s calculations, asked for an update. The difference between the corporate revenue projection for March and the one preceding it in December often does not differ much. But that expectation is not inevitable. For instance, in March 2022, the estimate for this category jumped by $155 million.

Not only did state officials not provide the requested data, but the governor dismissed Mr. Houghton from the group soon afterward.

Criticism of the action was swift and diverse.

John D. Flaherty, Director of the Delaware Coalition for Open Government, organized a letter of protest to the governor, signed by dozens of community leaders, including two mayors and members of New Castle County Council and Wilmington City Council. 

“The recent removal of Mike Houghton from the Delaware Economic and Financial

Advisory Council (DEFAC) is a deeply troubling signal to the citizens of this state,” the letter stated. “DEFAC is not a rubber-stamp committee for the executive branch; it is a vital safeguard designed to provide the General Assembly and the public with an unvarnished look at our fiscal health. When Mr. Houghton questioned why ‘unprecedented’ corporate formations weren't translating into tangible revenue projections, he was doing exactly what a responsible council member must do: he was asking the difficult questions.”

The letter urged the governor to reinstate Mike Houghton and release the full March corporate franchise revenue data before the next DEFAC meeting.

A prepared statement released by Senate President Pro Tempore Dave Sokola, D-Newark, Pike Creek, also expressed displeasure with the governor’s action. “As a former member of DEFAC, I believe it's not only a member’s right to ask questions, but our responsibility to do so…Governor Meyer promised Delawareans that he would be a collaborative leader whose administration prioritizes transparency, but this maneuver stands in contrast to those values. I am hopeful cooler heads can prevail, reconciliation can occur, [and] Mike Houghton is reinstated.”

State Rep. Charles Postles, R-Milford North, Frederica, a member of DEFAC and the budget-writing Joint Finance Committee, echoed a similar note in a letter to the editor:

“Much like the Federal Reserve at the national level, DEFAC is designed to function as an independent, data-driven body whose work must remain insulated from political pressure,” he wrote. “Its credibility depends entirely on the willingness of its members to ask hard questions, challenge assumptions, and ensure that the numbers guiding our budget are as accurate and transparent as possible. If members of DEFAC cannot raise such questions without fear of consequence, then the reliability of our revenue estimates is placed at risk. And if those estimates are compromised, so too is the foundation of Delaware’s entire budget process.”

DEFAC will meet two more times before the start of the new fiscal year. Its next gathering is set for May 18. Lawmakers will largely fashion the state’s spending plans based on the numbers released then, adjusting them slightly in June to align with the final revenue projections of FY 2026.

NEWS:

High Court Ruling Could Impact Delaware Sexual Orientation Counseling Law

A decision handed down by the U.S. Supreme Court (SCOTUS) this week could spell trouble for a controversial law enacted in Delaware eight years ago.

The case of Chiles v. Salazar dealt with a Colorado law banning so-called “conversion therapy” for anyone under the age of 18. Sometimes called “reparative therapy,” conversion therapy applies to a broad range of practices, treatments, and counseling that aim to change an individual’s sexual orientation, gender identity, or gender expression. Those found to have violated the mandate would have faced professional disciplinary action.     

Several major professional organizations have rejected conversion therapy as ineffective and potentially harmful. They maintain that ethical therapeutic practices addressing sexual orientation and gender identity should instead focus on promoting self-acceptance and developing coping skills.

Under the Colorado law, licensed or registered psychologists and therapists could not take any action that attempted to change the sexual orientation or gender identity of a minor. The 2019 statute specifically excluded practices or treatments providing “acceptance, support…and identity exploration and development.”

Licensed therapist Kaley Chiles filed a lawsuit in 2022, alleging that Colorado’s law violated her First Amendment rights by restricting speech during therapy sessions.

In an 8-to-1 decision handed down on Tuesday, the Supreme Court ruled in favor of the plaintiff. In the majority opinion, Associate Justice Neil Gorsuch wrote: “The law distinguishes between two opposed sets of ideas—the one resisting, the other reflecting, the state’s own view of how to speak with minors about sexual orientation and gender identity…[It] draws a line based on the speaker’s opinion or perspective, and thus enables speech on only one side—the state’s preferred side—of an ideologically charged issue.”

Delaware’s conversion therapy law, enacted in 2018, passed the General Assembly on a vote split, largely along party lines, with Democrats overwhelmingly supporting the measure. Senate Bill 65 was signed into law a year before the Colorado measure, which mirrors its forerunner.

State Rep. Rich Collins, R-Millsboro, who was one of 14 House members voting “no” on the bill, applauded the High Court’s decision.

The majority got it right,” Rep. Collins said. “For counseling to truly help people, therapists and clients need to speak openly and honestly. That’s how individuals can fully explore who they are and what they want. When minors are involved, which is the case with both of these laws, the stakes are even higher.”

Rep. Collins stressed that the Court’s decision properly focuses on speech, not on abusive practices.

“The term conversion therapy is broad and includes some discredited methods that were physically coercive and abusive,” he said. “No one who opposed Delaware’s law supported those practices. But the legislation threw out the baby with the bathwater, preventing therapists from expressing views not aligned with those of the bill’s sponsors. Counselors, parents, and clients should be able to work together openly and thoughtfully, guided by compassion and professionalism, not ideology.”

Delaware is one of more than 20 states that have enacted laws banning conversion therapy, and the SCOTUS ruling now casts the future of these mandates into doubt.

While Delaware’s law remains valid for now, it is on shaky legal ground and is vulnerable to a challenge modeled on the Chiles v. Salazar decision.

NEWS BRIEFS

People Intentionally Damaging

Emergency Vehicles Could Face Stiffer Repercussions Under Bill

People who intentionally damage vehicles used by Delaware's first-responders could be charged with a class F felony under legislation recently passed by the State Senate.

Senate Bill 232, sponsored by State Sen. Dave Wilson, R-Cedar Creek Hundred, raises the significance of criminal mischief when the crime results in damage to an emergency vehicle exceeding $5,000 or the vehicle is temporarily knocked out of service.

The legislation was inspired by an incident that took place in late 2023. On the night of November 13, firefighters from six Delaware and Maryland municipalities responded to a blaze at New Process Fibre Company in Greenwood. Two fire trucks from the Ellendale Fire Company and three vehicles from other companies were damaged by individuals throwing rocks near the fire scene.

The legislation defines “emergency vehicles” broadly to include police vehicles, ambulances, fire trucks, rescue boats, and unmanned aerial drones.

Under Delaware’s judicial guidelines, someone found guilty of a class F non-violent felony could receive a maximum of three years in prison, but first-time offenders would likely receive supervised probation for up to a year. Judges also have the latitude to impose fines and order restitution as they deem appropriate.

The measure passed the Senate 17 to 3 and now heads to a House committee for consideration. Its future is not certain in the lower chamber. 

State Rep. Jesse Vanderwende, R-Greenwood, Bridgeville, sponsored a similar bill in 2024 (House Bill 323). Although it was released from the House Judiciary Committee, the House Democratic leadership never allowed the proposal to reach the House floor for a vote.

Among the House Republicans supporting the most recent measure as sponsors or co-sponsors are: State Reps. Danny Short (Seaford), Ron Gray (Selbyville), Shannon Morris (Harrington, Felton), Bryan Shupe (Milford South, Ellendale), and Lyndon Yearick (Camden, Woodside).

Court Sides with State, Allowing it to Override County Land Use Decision Impacting Wind Farm

The Delaware Court of Chancery has ruled in favor of the State of Delaware, allowing it to overturn a Sussex County Council decision on a project critical to a planned offshore wind farm.

In December 2024, Sussex County Council voted 4-1 to deny a conditional use permit for an electrical substation proposed by Renewable Redevelopment, LLC on land zoned for Heavy Industrial use next to the Indian River Power Plant. The substation would connect power generated by offshore wind turbines to the regional electric grid.

In making the decision, council members expressed doubts about the proposal's benefit to Sussex County residents, noting that the electricity it will handle is designated for use by Maryland consumers. In response, the General Assembly passed Senate Bill 159 along party lines last June to override Sussex County's decision. Democratic legislators backed the bill, while Republicans generally opposed it in support of local jurisdiction.

Sussex County and the Town of Fenwick Island filed a lawsuit against the statute, claiming it violated separation of powers, was improperly titled, constituted illegal “spot zoning,” and conflicted with existing state law.

In a recent bench ruling, the Court of Chancery rejected these arguments and granted summary judgment to the state.

US Wind's Marwin offshore wind farm will include more than 120 turbines that could generate up to 1.7 gigawatts of electricity at peak production. However, because wind power production depends on variable weather conditions, it cannot be relied upon to deliver a predictable, constant baseload. 

Despite the court win apparently removing a hurdle to the substation's construction, the wind farm's future remains murky due to uncertain market conditions and a lack of federal support.