A bill that will generate more than $140 million annually for the state by hiking numerous business fees cleared the House of Representatives on Thursday and heads to the Senate for consideration.
Sponsored by House Democratic Leader Kerri Evelyn Harris (D-Dover East) and Senate Democratic Leader Bryan Townsend (D-Newark, Bear), House Bill 400 would raise annual fees paid by Limited Liability Corporations (LLCs) and other “Alternative Entities,” as well as the fees associated with various services provided by the Division of Corporations.
The measure’s debate and passage illustrated stark, differing perspectives between House Democrats and Republicans.
Speaking on the House floor, State House Majority Whip Jeff Spiegelman (R-Clayton) said the LLC fees set by the bill would be among the highest in the nation. “It makes us less competitive, and the problem with that is we have states that are now gunning for us. We’re facing real strong challenges from other states that are looking to take our LLC business and our corporate franchise business.”
Many small entities inside and outside the state, such as restaurants, retail stores, and farms, organize as LLCs.
Rep. Harris countered, saying many of the fees have not been adjusted in years and that the new amounts are lower than they would have been if the fees had been automatically adjusted to keep pace with inflation. “We were definitely mindful of Delaware’s small businesses when we set this bill,” she told the chamber.
Rep. Haris also maintained that “small businesses benefit from a strong economy and the services this bill helps us sustain,” adding that “we have benefits that are plentiful for businesses. Our Court of Chancery, our case law is key, which is why more than two million businesses incorporate here,” she said.
However, Delaware’s standing as a premier venue for business law has taken a hit in recent years. Two years ago, Tesla left Delaware to reincorporate in Texas over a disputed Court of Chancery decision. Earlier this month, FirstCash Holdings, a $9 billion market cap company, filed plans to also reincorporate in Texas. Company officials said the move was driven by a desire for “more clarity and predictability” in legal matters, along with efforts to reduce “opportunistic and frivolous litigation.”
State Rep. Bryan Shupe (R-Milford South, Ellendale) disputed Rep. Harris’s claim that Delaware’s small business community was benefiting from the state’s financial management. “I’ve been a small business owner for 15 years, and I own multiple small businesses. I think I speak for quite a few small businesses when I say that year after year we get more regulations, more fees, and more pressure from the State of Delaware.”
Rep. Shupe said everyone, including small business owners, is picking up the tab for the state’s “reckless spending over the last five years.“ He noted that state spending growth has far outpaced revenue growth over that period, leading to the state’s current fiscal challenges.
“I know that increased spending is a regular talking point with you,” Rep. Harris responded. “I’d like to note that [spending] increase is on par with what every state, red and blue, has had over the last five years.”
According to the Delaware Fiscal Notebook, the state’s total General Fund expenditures were $4.516 billion in Fiscal Year 2021, rising to $6.925 billion in Fiscal Year 2025 — an increase of more than 53% over the period.
House Bill 400 cleared the House of Representatives, 25 to 11. It now heads to the Senate, where it is expected to win approval in the Democratic-controlled upper chamber.
IN PHOTO: State House Majority Whip Jeff Spiegelman debates HB 400 with the bill’s sponsor, House Democratic Leader Kerri Evelyn Harris.
