State lawmakers got the fiscal equivalent of coal in their stockings Monday. The Delaware Economic and Financial Advisory Council (DEFAC) dropped its revenue estimate for next year.
DEFAC’s projection for the current year is down just over $26 million from the September estimate – and the panel trimmed about $8 million from its estimate for next year.
That combined loss of $33.7 million dollars means that even if next year’s spending plan was exactly the same as this year – lawmakers would be short.
“If you took this year’s budget and matched it up with the available resources for next fiscal year, you’re 201 million dollars short before you get into such door openers as STEP increases, and health cares costs and so forth," said Finance Secretary Tom Cook following Monday's DEFAC meeting.
Cook and state Budget Director Brian Maxwell say those added costs associated with Medicaid, automatic teacher pay increases and increased classroom sizes push the budget hole closer to $350 million.
When you factor in unavoidable cost increases that come with Medicaid, automatic teacher pay increases and increased classroom sizes – you can add another $150 million to that hole, pushing to around $350 million.
“It’s going to make for some difficult decisions that have to be made. But we’re looking for a balanced approach," said Maxwell. "I don’t believe we can totally cut our way out of the problem, but we also can’t totally raise revenue to solve the problem either.
The lost revenue largely came from lower projected corporate income tax revenue this year and next. It was down $44 million.
That is not tied to Delaware’s economy. It’s actually the national profits [of companies]," said Cook. " So, that’s just one of the revenue sources that is very volatile. And I think its imperative that the next General Assembly and the next administration look at our revenue sources and restructure them so they grow as the economy grows.
This is the final revenue estimate before the Markell administration offers its final budget proposal before leaving office. The General Assembly and governor-elect John Carney will take it from there.
