WILMINGTON – The state of Delaware has about $320 million unanticipated revenue to spend in next year’s budget—and Governor Jack Markell (D) is getting very specific about how it should be allocated.
Wednesday, Markell laid out the first part of his three part plan for spending the windfall. The “Building Delaware’s Future Now” proposal seeks to limit use of the additional revenue mainly to one time investments that the Markell administration hopes will spur job growth. Markell argues that since much of the additional revenue comes from one-time or unpredictable sources, it is best to use them in a way that does not create ongoing budget commitments.
“It’s not really money we can count on coming back year after year after year,” said Markell Wednesday morning to a group of business leaders at the Delaware State Chamber of Commerce offices in downtown Wilmington. “This means we have to be very focused. If it’s one-time revenue source, we want to use it on a one-time expense.”
The last two revenue estimates by the Delaware Economic and Financial Advisory Council (DEFAC) have shown the state with more money than originally anticipated. In March, DEFAC projected $155.7 million in additional revenue. DEFAC’s April estimate projects another $168.5 million in revenue.
Governor Markell and Cabinet members roll out plan to spend additional state revenue
Governor Markell outlines his “Building Delaware’s Future Now” spending plan.
Governor Markell explains the rationale for spending the additional revenue on one time expenses.
DEDO Director Alan Levin discusses how New Jobs Infrastructure Fund will work alongside the Strategic Fund.
Secretary of Finance Tom Cook Makes the case that the Governor’s plan is the best use of abandon property revenue.
The first part of Markell’s plan calls for taking $135 million – or about one-third of the additional $320 million – and creating what he calls the “Building Delaware’s Future Fund”. The goal, according to Markell, is “put us in a better position to bring jobs to Delaware or help existing businesses expand.”
The two biggest beneficiaries of the $135 million dollars would be a newly created New Jobs Infrastructure Fund and the Transportation Trust Fund. Each would receive $40 million under the governor’s proposal. The New Jobs Infrastructure Fund will also have $20 million in bonding authority set aside.
Markell believes the New Jobs Infrastructure Fund is needed to keep Delaware competitive in a landscape where the state is “never gong to win the battle of the big check.” He says the state’s responsiveness, coupled with financial incentives, has been successful in attracting new businesses and helping existing ones expand when they don’t have significant infrastructure needs. This fund would target those that do have infrastructure needs, like AAA did when it made the decision to move to Delaware in 2004.
“[Right now] we really don’t have a dedicated way of making those large employment opportunities a reality,” said Markell.
Delaware Economic Development Office Director Alan Levin agrees. He says this fund can be used in conjunction with Delaware’s Strategic Fund, which is a jobs-related fund.
“The Strategic Fund is a limited fund. Its mission is not for infrastructure,” said Levin. “[The New Jobs Infrastructure Fund] is another pot of money that is specifically there for infrastructure—roads, sewers, things like that—that may be needed to bring new companies to the state.”
Markell says the $40 million to supplement the Transportation Trust Fund would “help ease a little bit the erosion of the transportation fund”, helping create and maintain a transportation system vital to attracting business. It will also put some people to work immediately on transportation related projects. The Transportation Fund has been the subject of scrutiny since a report was released in by the Transportation Fund Task Force in March indicating the potential of a $1 billion shortfall in that fund within five years. That’s brought a series of suggestions as to how to replenish the fund from lawmakers. Markell spokesman Brian Selander says the $40 million proposed for the fund will help shore it up and give some breathing room while the larger discussion of the fund’s long-term sustainability continues. The state is currently searching for a new DelDOT secretary following the resignation of Carolann Wicks, who left the post last month.
Markell’s Building Delaware’s Future Fund would also send $35 million to a Delaware Asset Preservation Fund designed to repair and maintain historic properties, parks and other state buildings and properties. “We’re talking about investments in things like parks and some our historical and cultural institutions because that stuff makes a difference [in attracting employers],” said Markell. “The kind of jobs we want to have created in the state, the people who want to work in these jobs care about those things.”
The remaining $20 million would be split equally between a Housing Preservation fund which would help maintain and expand the state’s low income housing capacity, and the restoration of funds for open space preservation.
Secretary of Finance Tom Cook says the majority of the funds for this first part of Markell’s proposal will come from escheat or abandoned property. Cook says that revenue, which makes up 30 to 40 percent of the additional revenue projected, is volatile and so spending on these type of projects is “common sense.”
“By taking this money and investing it back into state’s infrastructure, we will put people to work and that creates a more steady revenue stream,” said Cook.
Markell will roll out the second and third part of his plans Thursday and Friday. Thursday, Markell says he will be “detailing some of the responsible reductions the plan makes in terms of taxes, and our efforts to reduce some of the state’s debt.” Friday, Markell promises initiatives “creating opportunities for our state’s kids and graduates.”
