Why Should Delaware Care?
Delaware’s annual Bond Bill funds large capital projects, such as road improvements, new schools and upgraded state facilities. It also often features a parade of more eyebrow-raising expenditures. But part of its surprise this year comes from where it receives money, rather than where it directs it.
Delaware’s capital budget, unveiled last week with a string of pricey construction projects, relies heavily on a pot of money derived from unused gift cards, forgotten stock dividends, and other types of abandoned property previously held by companies across the globe.
While it is a uniquely Delaware way to pay for public construction projects — including an expansion of the Port of Wilmington — it comes as the unclaimed property program faces mounting legal scrutiny. In March, a federal judge remarked that the only thing clear about the Delaware fund was its lack of clarity.
Lawmakers publicly released the $1.26 billion Bond Bill on Thursday evening, giving the public only a few days to review the spending plan before an expected vote Tuesday — the final day of the legislative session.
If passed, the legislation would draw more than one-quarter of its funding from Delaware’s practice of scooping up unclaimed assets held by companies that maintain their legal home in the state.
The remainder would come from the state’s General Fund, bond sales and a transportation trust fund.
The 103-page bill includes scores of spending items, including traditional appropriations for roads, parks and school buildings.
There are also several one-time outlays, including $110 million for cost overruns at the Port of Wilmington expansion; $35 million for a Legislative Hall renovation; $30 million for the state’s purchase of a marina and a parking garage; and $17 million to cover unforeseen renovation costs at a downtown Wilmington office building.
The bill also includes a $1 million appropriation for renovations at The Queen, a Wilmington music venue.
Asked why lawmakers are earmarking money for the private venue, Senate Democratic spokeswoman Sarah Fulton said the facility draws people into downtown Wilmington, benefiting nearby restaurants and hotels. She described it as a venue that “puts Delaware on the map.”
Beyond construction spending, the Bond Bill also makes several policy directives. Among them is an authorization for the Delaware Department of Correction to demolish a shuttered work-release facility and transfer it to the Wilmington Housing Authority for $1.
Corrections officials closed the facility earlier this year despite objections from former inmates, Wilmington-area politicians, and prisoner advocates, who said the closure would force inmates to live farther from their jobs and families as they transition back to society.
Escheat now, escheat later?
Notable in this year’s Bond Bill is the state’s reliance on a one-time appropriation of $328 million derived from Delaware’s practice of collecting unclaimed or abandoned property.
The process, known as escheatment, is based on a legal precedent that stretches back to medieval England and allows government officials to collect dollars or other assets that they deem to be unclaimed by their rightful owners.
Because of Delaware’s unique role as the legal home to more than 1 million companies, the state’s collection of this money funds an outsized portion of government business. In recent years, it has amounted to more than $400 million.
But some of that money also flows to a separate fund the state holds in reserve to resolve what it calls extraordinary claims on its unclaimed property operations. That fund is known as the escheat special fund.
“We had unusual revenues in the escheat special fund and, in kind, we were able to allocate those to the port and to schools,” Fulton said.
Delaware’s Controller General Ruth Ann Miller also noted during a legislative committee hearing last week that a “significant balance” of unclaimed property money would allow the state to pay for public school construction projects that had been delayed in recent years.
“We’ve been hearing a lot from districts that they have been getting turned down for (construction),” she said.
While state officials pointed to the surge in escheat revenue, the long-term viability of relying on those dollars may be in jeopardy.
Attorneys for Delaware faced a deadline on Thursday to file a response to demands that they reveal details about the escheat pot of money that is funding the Bond Bill. Thursday’s deadline is part of a lawsuit filed in 2024 that seeks to upend the way Delaware brings in unclaimed property revenue.
The lawsuit, filed as a class action, explicitly challenges the “constitutionality of Delaware’s escheatment scheme set forth in its Unclaimed Property Law.”
The suit follows a separate legal challenge to Delaware’s collection of unclaimed Moneygram checks that resolved in 2024.
As part of that settlement, Delaware paid out $102 million to several other states that had argued its aggressive collection of those checks was unlawful.
A troubled port expansion
Around the time of Moneygram settlement, Delaware officials under the Carney administration were preparing to transfer $195 million from the unclaimed property pot of money to kickstart an expansion of the Port of Wilmington by building a new container terminal along the Delaware River in Edgemoor.
For a decade, the port expansion has been a goal of state officials who said a new container facility could bring in thousands of new jobs to the Wilmington area.
But plans for the development had been beset by obstacles and blunders committed by port officials in the past. They also faced opposition from regional ports in Pennsylvania and New Jersey and from Edgemoor residents concerned about environmental impacts.
Most recently, port officials announced in April that the state must pay an extra $110 million to cover its share of the updated projected costs for the new port terminal.
At the time, Delaware Secretary of State Charuni Patibanda-Sanchez declined to disclose where the state would draw the money from — even after officials signed a contract to commit the new dollars to the project. It is not immediately clear if her reticence was a result of the lawsuit challenging the state’s unclaimed property program.
Nevertheless, Patibanda-Sanchez finally disclosed the source of funds last week to lawmakers during a committee hearing. In her remarks, she defended Delaware’s decision to expand the port, stating its current facility on the Christina River would become obsolete amid expansions by competing regional ports.
“If we don’t compete in order to allow for containers, then our port is going to be unfortunately just left to oblivion,” she said.
