WASHINGTON -- Delaware has canceled its plans to sell about $20 million of tax-exempt land and water revenue bonds this fall because the state expects to have a $66 million revenue surplus this fiscal year.
Instead, Delaware will use available cash to purchase open space throughout the state under a previously authorized $50 million program aimed at protecting the environment and controlling development, said Debra Chambliss yon Koch, Delaware's director of bond finance. The state already has sold $30 million of revenue bonds for the program.
The surplus grew out of increased personal and corporate income tax revenue and "escheatment" payments made by New York State and financial institutions for unclaimed dividends and interest on bonds and other securities, said a spokesman for Delaware's finance department.
New York made a $35 million payment this year under a settlement calling for the state to pay Delaware $200 million over the next five years. The settlement resulted from a March 1993 U.S. Supreme Court ruling that changed the way such assets "escheat," or are returned, to states. Bond brokerage firms and other institutions also made payments that had been held in escrow prior to the court ruling.
A panel of the House Banking Committee is scheduled today to mark up a bill opposed by Delaware that would overturn the court ruling.
Because passage of the legislation is uncertain, Delaware does not want to count on future revenue from escheatment claims or include the current surplus in its budget base, the spokesman said. For that reason, the legislature recently adopted a resolution to spend the surplus without going through the normal budget appropriations process, he said.
Delaware's eagerness to reduce its bonded indebtedness is a major factor in the transfer of the land purchase program to a cash basis, yon Koch said. The sale of the revenue bonds would cost more and would be backed by a realty tax that is unpopular, she said.