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DOVER, Del. (AP) — Leaders of the legislature's budget-writing committee failed to get quick approval from their panel colleagues Tuesday on proposals to spend $29 million in mortgage settlement money.
Lawmakers have spent months trying to determine 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.
Attorney General Matt Denn has offered a variety of proposals to use the money to help low-income communities in Delaware, not all of them related to housing. They include funding substance-abuse treatment, crime prevention and prison re-entry programs, and summer and after-school programs for at-risk youth.
"These funds are supposed to be used to help build up communities that were impacted," Denn noted Tuesday.
After considering Denn's most recent proposal, the co-chairs of the Joint Finance Committee drew up their own list of spending ideas, which Denn said he supports. But some committee members questioned those recommendations Tuesday, while others said they wanted more information before voting on them.
"So much of the things on this list have nothing to do with housing," said Sen. Karen Peterson, D-Stanton, noting proposals to spend $200,000 to distribute smoke detectors in low-income neighborhoods and a similar amount to expand broadband networks in Kent and Sussex counties.
Similarly, Sen. Brian Bushweller, D-Dover, questioned the wisdom of giving $70,000 to the Delaware Alliance for Community Advancement to go door-to-door to try to find residents who might be at risk of foreclosure and enroll them in a foreclosure mediation program.
"That doesn't make a lot of sense to me," he said.
Peterson suggested that before deciding how to spend the money, lawmakers should partner with the New Castle County sheriff to try to track down people whose properties were sold at sheriff's sales, find out why they lost their homes, and determine whether they deserve financial assistance.
"That's what this money is supposed to be for," she said.
The spending plan proposed by finance committee co-chairs Rep. Melanie Smith and Sen. Harris McDowell III would provide millions of dollars for housing assistance programs, including $7.2 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, the same amount that Denn recommended.
But the plan also includes millions of dollars 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.
Smith, D-Bear, said the financial crisis affected more than just individuals who wound up losing their homes to foreclosure.
"It really did decimate entire communities. ... You no longer have safe places for kids to go after school," she said.
But Rep. Joe Miro, R-Newark, said lawmakers should be wary of approving $8 million in one-time funds for after-school and school-readiness programs that would then be built into the base budget. He noted that the proposal comes even as lawmakers are still trying to figure out how to pay for increasing health care costs for state employees.
"We cannot be foolish about this," he said.
The committee is scheduled to resume discussions next week.
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