Revenue projections increase as new budget year approaches
DOVER, Del. (AP) — Delaware lawmakers will have a little more money to work with as they finalize a budget for the fiscal year that starts in two weeks.
The panel that sets Delaware’s official revenue forecast voted Wednesday to increase the revenue estimates for both the current and new fiscal years.
The Delaware Economic and Financial Advisory Council increased its revenue estimate for the current fiscal year by about $79 million compared to its May projections. Revenue estimates for fiscal 2021 were bumped up by slightly more than $11 million.
Improved projections for personal income tax revenue contributed significantly to the increased estimates for both years. Higher estimates for corporate income tax revenue and for corporate franchise taxes and business entity fees also led substantially to this year’s improved outlook.
Nevertheless, the amount of estimated revenue available for next year, $4.56 billion, is still $203 million less than predicted last September, and off by $403 million compared to January, when Democratic Gov. John Carney unveiled his fiscal 2021 budget proposal. Next year’s revenue estimate includes about $118 million being carried over from the current year. In April, before coronavirus restrictions on businesses were lifted and the revenue forecast began to improve, officials were looking at a deficit this year of $150 million.
But in order to balance next year’s budget, members of the General Assembly’s budget-writing committee agreed earlier this month to draw $76 million from a new $126 million reserve fund that was established two years ago. The amount of that draw may now be reduced given the improved revenue forecast.
Budget writers and administration officials also dropped a proposal to contribute $233 million in general fund cash to the capital budget for construction and transportation projects. They also withdrew proposed pay increases for state employees that would have cost $55 million.
Meanwhile, state agencies have returned more than $137 million that had been appropriated for this year to the general fund, making more revenue available for next year. Much of that unspent money had been appropriated for the state’s Medicaid program but wasn’t needed because the federal government, as part of its coronavirus response, agreed to increase its share of Medicaid program costs, retroactive to January.
While Delaware’s fiscal outlook has improved in recent weeks, state Finance Secretary Rick Geisenberger warned that caution was still in order, given the high degree of economic uncertainty.
“When you’re at an economic inflection point, as we certainly have been, it’s not uncommon to have a bit of a roller coaster in the forecast,” he said.
“We should be cautious, but things are definitely better than what we were looking at in March and April,” Geisenberger added.
Before the coronavirus outbreak hit, Carney in January proposed increasing Delaware’s operating budget by almost 4% next fiscal year, boosting spending to more than $4.6 billion. He also proposed a record capital budget of $892.8 million for construction, maintenance, technology, equipment, economic development and environmental projects.
The legislature’s capital budget committee will meet Thursday. The Joint Finance Committee, which is in charge of the operating budget, is scheduled to Monday to discuss a separate $55 million grants package for nonprofit groups, community organizations and volunteer fire companies.
The full House and Senate must then vote on each of the three spending bills.