The deadline for having a state budget in place is now about a month-and-a-half away. The numbers Delaware lawmakers and budget-writers will use to develop a final spending plan are starting to come into focus.
Monday, the Delaware Economic and Financial Advisory Council approved projections of additional revenues totaling $23.5 million for fiscal year ’11, and $24.1 million for fiscal year ’12, which begins July 1st.
Personal income taxes were figured into the projections for the first time since the May 2nd filing deadline, and account for the bulk of the increase. The gross receipts tax is also running ahead of original projections by $2.5 million.
Revenue subcommittee chairman Ken Lewis, an economics professor at the University of Delaware, is encouraged overall, particularly with the gross receipts tax trend.
“There’s a lot going on in this economy, and some bright spots,” Lewis said.
“All in all, it’s relatively good news for the state,” added Delaware Secretary of Finance Tom Cook.
The May figures followed even more encouraging growth projections in April that brought Delaware an additional $320 million of projected revenue. Governor Jack Markell (D) in the past two weeks has outlined proposals for investing that money into job-creation efforts, housing, education and other programs. Republicans in the House of Representatives outlined their priorities, which included an earlier rollback of several tax increases, first enacted in 2009 and due to expire in 2012.
“This is something we’ll definitely negotiate in the next five weeks,” State Representative Deborah Hudson (R-Fairthorne) said. Hudson also expects replenishing the state Transportation Trust Fund to be a major focus of discussion.
Reaction to latest state revenue estimates from DEFAC
State Representative Deborah Hudson (R-Fairthorne) says although revenue projections are encouraging, the surplus should not all be spent.
State Representative Deborah Hudson (R-Fairthorne) is not surprised that Joint FinanceCommittee members approved a salary increase of 2% for state employees.
State Secretary of Finance Tom Cook explains what has helped drive up state
revenue projections in recent weeks.
State Secretary of Finance Tom Cook says more payments are coming in before the start
of the next fiscal year July 1st .
Lawmakers are going back over the Governor’s Fiscal year 2012 budget proposal released in late January, before these revenues were on the table. At that time, Governor Markell outlined a series of austerity measures, including a revised public employee pension and health care formula and suspension of farmland-and-open-space preservation effort.
The Governor and House Republicans are in agreement that open space and farmland preservation funding be restored.
Hudson recommends a cautious approach.
“We still have unemployment problems, and we need jobs,” Hudson said. “I think we just need to be careful not to spend all of the money, keep our rainy day funds solid… and, negotiate.”
The negotiating is underway this week in Dover, where members of the Joint Finance Committee have begun the two-week process of writing the state budget and reviewing previous spending proposals from Governor Markell and various state agencies. The JFC decided Monday to approve a 2% increase in salaries for state workers.
“The Governor actually seemed to obligate himself to that when he brought it up two months ago,” said Hudson said. “So, I’m not surprised by that.”
Hudson is not on the JFC, but serves on the Bond Bill committee.
Retirees will receive a one percent increase in their state pensions, under the vote taken Monday by the JFC.
In the next few weeks, Cook says more revenue payments will factor into the equation: the corporate franchise tax, LLC annual tax, the bank franchise tax and corporate income tax.
“That will really help us determine where we’re at for the end of the fiscal year, and where we expect to be in fiscal year ’12,” Cook said.
DEFAC will hold one more meeting Thursday June 16th, two weeks before a balanced budget for the next fiscal year is required to be finished and signed into law.
