Delaware Public Media

Report: First State financial health ranks 31st in U.S.

Jul 11, 2017

Delaware has improved its financial health according to a new study, though it’s still among the lower half of all states nationwide.

The report from the right-leaning think tank Mercatus Center at George Mason University found the First State can cover its bills and weather an average recession, but it may have trouble in the future after analyzing its finances from 2015.

But the authors noted that Delaware’s taxes are higher than the average state when compared to average incomes.

“It is a state that’s, yes, bringing those tax revenues, it’s bringing in revenue, it’s spending at a relatively high level relative to the population in the state so that could mean how much further can they go,” said Eileen Norcross, one of the authors of the study.

Over the past few decades, state government has increasingly paid for more services across Delaware – bills that would typically be paid for by counties or cities.

Legislators have been looking at shifting more of those costs to the counties, which has been met with pushback.

Republicans pushed for a task force this year to study tying state spending to inflation and population growth, which will get underway soon.

Norcross says that could help Delaware sock away some savings, but only if rules aren’t written in stone.

“If your rule is too rigid and you can’t change it then you’re not helping anyone. So these rules you have to have the ability for it to be overwritten. If the population may change the voters may change their minds and say, ‘Hey, we want you to do more spending…’”

In the future, Norcross says state officials should keep an eye on how much they might owe to fully fund future pensions and keep healthcare costs down.   

 

A spokesman for Gov. John Carney (D) didn’t immediately return a request for comment.

Delaware ranks 31st nationwide in financial health in the report. Florida, North Dakota and South Dakota make up the top three, while New Jersey, Illinois and Massachusetts round out the bottom.