Delaware Budget Deficit

Presidents & President Elects, Incoming and Outgoing Public Policy & DelPAC Chairs, CEOs and AEs:
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​Please note that DEFAC met today and they are setting the state budget deficit for 2017 at $350 million.  This number can change several times between now and June 30th but there seems to be no miraculous windfall expected on the horizon.  From the News Journal:

Delaware leaders may need to find enough tax increases and budget cuts to fix a $350 million budget gap for next year.

The Delaware Economic and Financial Advisory Council, a panel of state officials and economists, projected Monday that state government revenues for the 2017-2018 fiscal year will about $200 million less than the current 2016-2017 fiscal year.

On top of that, the cost of government is set to grow by about $150 million, bringing the total gap to about $350 million.
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"The state of Delaware is really at a crossroads right now, where we have to look at how we restructure our revenue portfolio," said Finance Secretary Thomas Cook. "When you look at the upcoming fiscal years, there's basically zero growth."

MORE: Governor-elect John Carney talks about the budget challenges

All told, DEFAC projects state government will have about $3.9 billion to spend from its general fund. That's about five percent less than the $4.1 billion it is set to spend this fiscal year. The biggest declining revenue source is the corporate income tax.

Meanwhile, Medicaid costs are increasing, school enrollment is growing, and health care for state employees is getting more expensive, to name just a few items.

Gov. Jack Markell will use these numbers to create the last recommended budget of his tenure. The General Assembly uses the governor's budget as a starting point to creating a final spending plan.

DEFAC will meet several times next year, so the numbers will likely change before the budget is finalized.

While Markell will propose the recommended budget, governor-elect John Carney's administration will have a key role in figuring out the best way to close the budget gap. He takes over next month.

"The latest projections only confirm that Delaware faces a challenging financial situation, and there will be tough decisions ahead," Carney said in a statement. "We are planning to work closely with the General Assembly to take a fresh look at state spending and how we’re paying for government services. Ultimately, we'll remain focused on making investments that help create good jobs and give all Delawareans a chance to succeed."

MORE: A look at last year's tight budget process
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Delaware has faced a gloomy fiscal picture for the past several years, but state leaders have managed to assemble balanced budgets without sweeping changes. Several officials at Monday's meeting said this year's gap could require more drastic action.

The budget deficit is bad news for any group that is seeking new money from the state, from the Wilmington Education Improvement Commission's plan for city schools to state workers seeking pay raises.
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Contact Matthew Albright at malbright@delawareonline.com, (302) 324-2428 or on Twitter @TNJ_malbright. ​