GHADA Candidate Forum, September 2nd, 2014
Hockessin Memorial Hall
Joe Miro, Mike Smith, John Mackenzie and Steve Newton

John Mackenzie: Written Intro and Responses
(not delivered verbatim)


Thank you all for coming tonight, and a big thank-you to Mark Blake and the other GHADA leaders for including Steve and me in the program tonight.

I have been a professor in the Department of Applied Economics and Statistics at the University of Delaware since 1985, but my most important jobs for the last 32 years have been father and husband. I am married to Gail Humphreys-Mackenzie, a school principal in Red Clay School District, at the Richardson Park Learning Center, serving special needs kids. I have four children of my own, plus four step-sons with Gail, plus a daughter-in-law, a son-in-law, and our first grandson.

After 30 fulfilling years at UD, turning 60 and becoming a grandfather, I decided to "take it to the street" and dedicate the rest of my career to giving something back to the community that has been so good to me and my family.

The issues in this campaign fall into three categories: EDUCATION, ECONOMY and ENVIRONMENT.

EDUCATION: I have been an educator my entire professional life: I have taught physical education in a sheltered workshop program, and middle school social studies, as well as being a college professor.

I served on the Christina School Board for 7 years while my children were at Newark Charter School and Newark High School:
- we ended the mandatory busing of Newark kids to Wilmington school
- we had a superintendent overspend the budget by $14 million and leave for Florida, and we fixed that financial crisis
- we got the Oberle Elementary School built to serve new communities along Rt. 40.

At UD, I researched the links between school governance, finance and school performance. Here's the basic conclusion from multiple studies: What really drives school performance is local governance and local accountability. Unfortunately Delaware's public schools are largely micromanaged from Dover, and have very little local accountability.

The infamous "unit count" system, by which the state funds about 2/3 of all school operations, was created in 1949, and has only been tweaked since. The state uses the "September 30th count" of students to dictate the staffing of each individual school building, from the principal to the front-office secretary. The Secretary of Education and the State Board of Education, all appointed, have almost entirely co-opted our elected local school boards. That's why hardly anybody bothers to vote in our school board elections. Delaware's public school governance and finance systems are long overdue for reform, but the General Assembly has avoided this for decades. It's going to be a long, technical, often boring process, but it's time somebody committed to do it. It's the first critical step in reconnecting our schools to the communities they are supposed to serve. It doesn't mean spending more; it just means spending smarter.

ECONOMY: I earned my PhD in Resource Economics from the University of Rhode Island, and taught economics at Bryant College and Providence College before joining the University of Delaware faculty. As an economist, I am well aware of the friction and inefficiency that government can create in a market economy. 30 years ago, we smiled about "the Delaware Way," because it meant we were small and energetic and adaptable, and we got things done. That's not what it means anymore. Now "the Delaware Way" means a $10 million gift to the casinos with no strings attached (which Mr. Miro voted for); giving marijuana dispensary franchises to our political favorites; giving Bloom Energy bogus Renewable Energy credits while they stick customer households with a surcharge every month, etc. The Delaware Way is a bankrupt economic development strategy. We can do a lot better. We have to do better!

ENVIRONMENT: I served on the Board of Trustees for the Delaware Chapter of The Nature Conservancy for 18 years, and served as Governor Minner's appointee on the Delaware Open Space Council for 5 years. During those years the Open Space Council had a dedicated stream of funds from the Realty Transfer Tax with which it bought and protected large, environmentally-sensitive tracts of land around the state. Locally, we added the Judge Morris tract and some other parcels to White Clay Creek State Park, and we expanded other state parks, state forests and state wildlife areas around the state.

The long recession has been an excuse to back away from many of our environmental commitments, and as our economy recovers, it's time to re-commit to public land conservation, cleaning up our waterways, protecting our groundwater resources, promoting better energy efficiency, and working toward environmentally smarter growth.


Transportation & DELDOT:

1) Would you support making the all transportation related revenue that the State receives, (such as vehicle registration and sales tax, tags and licenses, tolls, gas tax, etc.) only for use on DELDOT and transportation related projects, such as repair/maintenance of roads and bridges? Why or why not?

I can't believe Rep. Miro is trying to blame DELDOT for raiding the Transportation Trust Fund! The General Assembly is responsible for DELDOT's budget. Rep. Miro and his colleagues are the ones who have been raiding the trust fund for years.

Yes, I will fight to dedicate transportation revenues to DELDOT needs. But making this stick will be difficult. The General Assembly might well include this kind of provision in the Budget Bill next year, then omit it the following year.

2) If Governor Markell's 10 cent per gallon gas tax were to be passed, what can our legislature do to guarantee the taxpayers that all the increased revenue from that tax is spent only on roads and bridges and isn't used to balance the General Fund at year's end?

This is basically the same problem; all the best intentions at the start of the year get forgotten in the budget and bond quagmire at the end of June. Now Mr. Miro says he's against the 10-cent gas tax increase, after voting to raid the Transportation Trust Fund year after year. We are stuck in deferred-maintenance mode; this is no way to run a state. We are going to have to face up to our basic infrastructure needs.

3) As a State Representative, you are allocated about $225,000 to 250,000 each year to repave and repair neighborhood streets and roads in the district you represent. Why isn't this amount larger given the vast issues that communities have with damaged streets and curbs needing repair/replacement, considering that those same neighborhoods in New Castle County have to plow their own streets and roads instead of DELDOT doing them?

In New Jersey, the politicians call this "walking-around money." It's one of the big advantages of incumbency: you get to spread your Community Transportation Fund money around your district any way you like and take personal credit for the projects you fund. DELDOT has a long list of prioritized road projects that need to be completed. The CTF diverts money from these high-priority projects to individual legislators' pet projects (not necessarily transportation projects!), and we all suffer through more congestion, more deferred maintenance on critical infrastructure.

Will the GA ever get rid of CTF? No. The best any candidate for the GA can do is be open about the whole process and include district constituents in prioritizing the local projects people really need. Rep. Miro has been in office 16 years, and he's not shy about pointing out all the local projects he has funded. But please remember: it's our money. When a legislator starts talking about our tax dollars as his money, it's time for him to retire.

Schools & Education

1) Delaware spends a substantial amount of money on education per student in our public school system (somewhere in the top 8 of all US States) and we have 19 different School Districts in a state of under a million people. Would you support school district consolidation to reduce the cost of all those duplicate Administration Staffing levels and the operating costs associated with having 19 separate districts and all those school buildings? Why or why not?

The conventional wisdom is that DE has too many school districts, and we could eliminate some administrative jobs by consolidating districts. Ironically, the loudest calls for consolidation come from dissatisfied voters in the big northern school districts. Downstate voters in the smaller districts are more positive about their schools.

I believe consolidation would actually increase the administrative bloat. We already have plenty of that at the state Dept. of Education. When DE won $120 million of Federal money in the first round of "Race to the Top," over half of that money stayed right in Dover: it was wasted on more admin salaries, consultants, developing another statewide student testing program (first DSTP, then DCAS, and now "Smarter Balanced"), a teacher appraisal system (DPAS) that still doesn't work, etc. Less than half of the money found its way to the school districts, and even less found its way to actual schools. Our public schools already suffer from too much micromanagement from Dover.

One of my research programs at UD was researching the links between public school governance and finance, and school performance. The National Assessment of Education Progress (NAEP) is the gold standard comparison of public school system performances of large urban districts and states. I combined this with annual state-level data compiled by the US Census Bureau on revenues and expenditures of public school systems. Year after year, my state-level analyses of these data showed the same things: (1) across the US, each dollar of local funding boosts NAEP scores twice as much as each dollar of state funding; and (2) states with fewer pupils per school district score significantly higher on the NAEP than states with more pupils per school district. The implications are pretty clear: Local governance and accountability creates high-performing schools.

The 50 states use diverse school funding and governance models. Dollar for dollar, New Hampshire gets excellent performance from its small-town public schools. At the other extreme, Hawaii is the only state to consolidate all its public schools into a single statewide school district. It spends about as much per pupil as Delaware, but scores about 50 points lower on the NAEP.

Bottom line: I will fight to strengthen local governance and make our schools primarily accountable to the communities they serve.

Possible Follow up: What would you suggest we do to rein in the cost of public school education while increasing the quality of education our children receive?

Reform Delaware's archaic public school funding system! Delaware's "unit count" system was established in 1949, and has only been tweaked since then. It allocates state funding to cover about 2/3 of the cost of every "earned" position in each school, from principal to custodian, based on each school's September 30th student count. With this formula, the state basically micromanages the staffing of every individual school; if a district tries to shift a "unit" (bureaucrat-speak for "teacher") to any other building, it loses 2/3 of that salary. When new kids enroll after September 30, the state provides no additional funding for the teaching resources they need.

I served on the Christina School Board for seven years, and learned a lot more about Delaware's dysfunctional school finance system than I ever wanted. Reforming this obsolete system will be a long, tedious task, but it's a critical part of improving our public schools and giving our kids a path out of poverty. I am confident we can achieve major efficiency gains by giving local districts more autonomy in allocating their resources; by spending smarter instead of spending more.

2) We have seen several new Charter Schools being formed over the past several years; what impact have they had on the remaining, regular public schools and the quality of education that non-Charter students are receiving?

Charter schools tend to get students with more involved parents, and students with involved parents are much likelier to succeed in school, so the charters generally out-perform regular public schools in standardized testing. Both charters and vo-techs can also expel problematic students back to regular public schools. So charters are sometimes accused of "cherry-picking" higher-performing students.

The growth of charters has destabilized enrollments in the Red Clay and Christina school districts. The entire year of state funding for both charters and regular public schools is based on each school's student enrollments as of September 30th. In the past, some charters held onto students past this deadline in order to capture that funding, and returned the students to regular public schools without the funding that should go with them. When a charter school fails (Milburn, Georgetown, Marion T., Moyer and Pencader) it dumps large numbers of students back into regular public schools. Georgetown Charter's mid-year closure swamped the Indian River School District and threw them into financial chaos. The state funding system needs to be reformed to prevent problems like this.

The special provision that allows charters to keep unspent transportation monies gives them an incentive to cut corners on busing. When schools try to squeeze too much out of their transportation allocations, they get busing fiascoes like those making recently headlines. Some charter parents are switching their kids back to regular public schools--hopefully before the September 30th count! The whole system--charters, vo-techs and regular public schools--needs to be rationalized.

3) Why don't we just turn all the remaining regular public schools into Charter Schools? Please explain your reasons for or against this.

Converting all regular public schools to charters would make them independent of the school districts but not the state. It wouldn't be much different than merging all the districts into a single statewide district. As charters, schools would still be stuck with the same micromanagement from Dover: unit-count staffing, DCAS, DPAS, etc.

Jobs and the Economy

1) Delaware is trailing the rest of the Country in new job creation. What can a legislator do to help create jobs for Delaware citizens and grow our State's economy?

The Markell administration has tried to recruit companies to Delaware with the usual bribes: tax breaks, start-up grants, etc. Most states use the same tactics, which incentivizes companies to shop around for the sweetest deals, and make job-creation promises they can't fulfill (Fisker, Bloom, etc.). We often spend more tax dollars to create a job than the job pays! This waste has to stop.

This year the General Assembly simply gave the casinos $10 million, ostensibly to save casino jobs. Rep. Miro is one of the top five recipients of campaign contributions from the casinos, and he voted in favor of this giveaway. And the casinos didn't even make any commitments to avoid layoffs.

This kind of politics is toxic to economic growth. It subverts market competition. It signals a culture of insider dealing. It may attract corporate welfare queens, but it tells legitimate businesses to locate somewhere else. This is the path to failure.

Politicians love to take credit for "creating jobs," but in truth, the best they can really do is help build a solid foundation for business creation and growth, and provide a level playing field on which new businesses can compete. This means investing in public infrastructure (e.g., efficient transportation systems; a low-cost, reliable electricity grid; high-speed communications networks; restoration of brownfields, etc.), investing in public education to provide a high-quality labor force, and creating an efficient, transparent regulatory environment.

2) What ideas do you have to bring new companies and jobs to Delaware?

We are strong in banking, and should look for ways to expand in related financial industries. I think Delaware could become a globally prominent center for financial risk management. That's a big part of the credit-card business: managing the default risk in portfolios of credit-card debt. Sallie Mae manages the default risk in student loan debt. AIG pioneered the development of credit default insurance instruments (until they were bankrupted by incompetent management and bailed out by the government). Delaware could be home to virtual trading floors for all sorts of innovative risk-management instruments.

3) We've seen how the Gambling Industry has faltered in neighboring New Jersey with two (2) very casinos closing in the next few weeks. If Delaware's casinos went out of business, how would that impact the Tax revenue for the State of DE and just how reliant is the State of DE on casino tax revenue?

Last year Delaware's "Gaming Industry" (to use the polite term) generated $235 million in revenues for the state, representing about 8% of all General Fund revenues. Over two-thirds comes from "video lottery" (slot machines); about one-fifth comes from conventional lottery tickets; about one tenth comes from casino table games. The "sports lottery" only generates about 1% of Delaware's net gaming revenue.

Years ago, our three casinos could see regional competition from Maryland and Pennsylvania on the horizon, but they never adapted their business models to survive. This is typical of monopolistic enterprises: they fail to innovate and simply exploit their monopolies until they become obsolete. Rep. Miro was one of the top five recipients of campaign contributions from Delaware's casinos in the last election, and he voted to reward this monopolistic behavior with a $10 million give-away of our tax dollars, no strings attached. Here's the truth: the casinos are over-privileged corporate welfare queens. They claim they can't survive with the current revenue-sharing model, but won't open all their books to prove this.

So what are we really paying for with this second-annual "one-time" $10 million bailout? Dover Downs is starting a new Herschel Walker-theme restaurant chain in Georgia. The Rickman family (longtime owners of Delaware Park) is focused on its new Ocean Downs casino in Maryland. Where did our tax dollars really go?

Our entire gaming industry is due for reform. The Harrington casino is stuck in an unprofitable location; this casino license should probably be put up for auction, and the new casino located near the beach in Sussex County where it could attract enough business to be profitable. These casinos were supposed to sustain the horse-racing industry, but they have cut purses and race cards, so the racetracks are dying. They can't even get internet gambling right!

The casinos are still paying excessive vendor fees to offer the same tired old games your grandmother used to play. Delaware is one of only three states authorized by Congress to have sports wagering, but when the NFL threatened to sue, the Governor blinked, so our "sports lottery" is just a lame parlay game (you bet on the outcomes of three games) that hardly anybody plays. It's time to demand that our casinos get competitive, or else surrender their licenses to new firms that can compete in the new regional market environment. We need innovative games, preferably developed in-state. We should exploit our sports-wagering privilege, challenge the NFL. Billions of dollars are wagered on fantasy football via illegal websites; we could dominate the market for legal wagering on fantasy football via the internet, and the NFL can't challenge fantasy football!

The casinos will be back next year for another big "one-time" emergency handout. If you re-elect Casino Joe for a ninth term, he will simply give these corporate welfare queens more of our money, diverting our tax dollars from child health, schools, etc. If you elect me, I will vote to stop these irresponsible giveaways to our corporate welfare-queen casinos. I will work to reform, expand, and restore profitability to our gaming industry, and the state revenues we derive from it!


1. Do you support increasing any existing taxes or creating any new taxes to get the State more revenues?

The State of Delaware needs a new revenue strategy, but it needs to rebuild voter trust first! That means cutting our losses on failed job-creation schemes and education reforms, eliminating the casino giveaways.

I will address two tax issues here:

First, my opponent has consistently voted to raid the Transportation Trust Fund, year after year, so now we have a serious backlog of infrastructure needs, and lack the money to address them. Now he won't support the proposed 10-cent increase in DE's gasoline tax that could replenish the TTF. He's simply kicking the can down the road...into a pothole.

The real question is: will the GA dedicate 100% of gasoline tax revenues to the TTF? I will fight to commit 100% of all gasoline tax revenues to rebuild the TTF, and then I will support a 10-cent/gallon increase, bringing us back into line with gasoline taxes in Maryland and Pennsylvania. The GA could split the tax into two parts: a 5-cent/gallon tax paid by consumers at the pump, plus a 5-cent tax/gallon paid by gasoline wholesalers. I think Delaware drivers will be more willing to pay about $20/year more for gasoline if the petroleum industry matches what they pay.

Delaware's deteriorating infrastructure is a threat to our economic recovery. The choice is clear: invest or stagnate. My opponent would rather see our roads crumble than support a gasoline tax. I'm saying we can't buy the infrastructure we need at the Dollar Store.

Second, the Markell administration has proposed a property tax surcharge to fund major water quality initiatives. While I support these initiatives, I am opposed to funding them with a property tax surcharge. Property taxes have always been the purview of local governments and school districts--the state should not intrude on their revenue source. Furthermore, our property assessments are decades old and riddled with inequities. We only tolerate these inequities because our property taxes are so much lower than in neighboring states. Protecting our water quality is essential, but we need to find a smarter way to do it, focusing more on "polluter pays."

2. Do you think the State of Delaware makes the best use of taxpayer monies and tell us about some examples of where it does a good job and where it doesn't?

I was appointed by Governor Minner to a 5-year term on Delaware's Open Space Council. We were allocated $9 million from the state's Realty Transfer Tax revenues each year to spend on protecting critical open space and habitat areas in Delaware. We were the ones to buy up large parcels for the State of Delaware, expanding our state parks, state forests and wildlife management areas, and protecting other parcels from development. Public land investments like these maintain a diverse landscape, control congestion, reduce runoff, improve water recharge, create outdoor recreation opportunities, promote tourism, and enhance local property values. Those were smart investments.

The most flagrant waste of public dollars this year was the casino bailout that Mr. Miro voted for: an outright gift of $10 million of our money to three over-privileged, inefficient monopolies. We got absolutely nothing for this: no job-retention guarantees, no assurances they won't be back next year for yet another "one-time" bailout.

3. Delaware is one of only a few States that doesn't have a State Sales Tax -- Do you think that gives Delaware a competitive advantage over our neighboring States in attracting residents or employers to move here?

It certainly attracts shoppers, many of whom pay DE highway or bridge tolls to get here. I don't know if it's much of a factor in attracting new residents or businesses. Our gross receipts tax functions as a hidden sales tax, so shopping in Delaware isn't necessarily as "tax-free" as people think.

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