- Associated Press - Thursday, March 17, 2016

DOVER, Del. (AP) - Democrats on the Legislature’s budget-writing committee voted Thursday to approve spending more than $28 million in mortgage settlement money on variety of housing and non-housing programs, overriding objections from Republicans on the panel.

The vote by the Joint Finance Committee follows months of discussions on how to spend Delaware’s remaining share of money from nationwide settlements involving Bank of America and Citigroup to resolve allegations that market misconduct by banks contributed to the financial crisis and housing market implosion in 2008 that resulted in many people losing their homes to foreclosure.

The co-chairs of committee failed last week to get quick approval from their panel colleagues on a spending plan, but fellow Democrats signed off Thursday after receiving more details on the proposal.

Sen. Karen Peterson, D-Stanton, said that after receiving more information, she was satisfied that individual homeowners have been compensated, and that the remaining settlement funds could be used for communities as a whole.

Senate Republicans, meanwhile, argued that the budget committee cannot distribute the funds without a vote of the full General Assembly, which they said had been promised.

“This is clearly unconstitutional,” said Senate Minority Leader Gary Simpson, R-Milford, noting that the state constitution says money can be drawn from the treasury only pursuant to an appropriation made by an act of the General Assembly.

Senate Republicans said they will introduce a resolution requesting an advisory opinion from the Delaware Supreme Court.

The spending plan was developed as a counterproposal to Democratic Attorney General Matt Denn’s ideas to spend the money on a variety of programs to help low-income communities.

The plan provides millions of dollars for housing assistance programs, including $5.7 million for a state program to acquire, renovate and sell abandoned or blighted properties in low-income communities. It also includes $1.5 million for Delaware’s mortgage assistance program, and $2.5 million for a project to turn a vacant church complex in a blighted area of Wilmington into housing for moderate- and low-income seniors.

But the plan also includes about $11 million for non-housing programs, including $4 million for after-school programs in schools with high concentrations of low-income students, and another $4 million for a pilot program to increase the school-readiness of low-income children.

Republicans expressed concern about the school-related spending, saying supporters were using one-time funds for new programs that would be built into the state budget.

“We are troubled that some of the things chosen by the JFC to benefit from this one-time money will create millions of dollars in new obligations that will have to be accounted for in future budgets,” said Rep. Joe Miro, R-Newark, speaking on behalf of the House minority caucus.

Committee co-chair Sen. Harris McDowell III, D-Wilmington, dismissed those concerns, saying that both school programs would require passage of separate legislation. He also said the sponsors of both bills have agreed that the programs would be pilot programs, with future funding dependent on evaluations of their effectiveness.

Sen. David Lawson, R-Marydel, was not persuaded.

“The problem is that when we put the pilot programs in, they never crash …. Very few of them ever get unfunded,” he said.

Other non-housing earmarks include $200,000 to distribute smoke detectors in low-income neighborhoods, and $200,000 to expand broadband networks in Kent and Sussex counties.

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