The state’s proposed operating budget for Fiscal Year 2012 was introduced in the House of Representatives earlier this week – delivered several days before the Delaware Economic and Financial Advisory Council provided its final revenue forecast before lawmakers adjourn June 30th.
DEFAC Thursday projected that about $20-million less is available to allocate than originally expected. That is not likely to change the proposed operating budget bill, but could affect work on the Bond Bill. It may also stall an effort by the House Republican minority caucus to accelerate tax cuts.
The Bond Bill directs state funding toward school construction projects, flood plain protection initiatives, transportation improvements and other capital projects not included in the general operating budget. The Delaware State Housing Authority is among many state agencies that have a stake in the final outcome of Bond Bill committee hearings.
Bond Bill committee member State Representative Deborah Hudson (R-Fairthorne) said the panel has already entertained requests from various state and municipal agencies. It begins its review to develop final recommendations June 20th.
“I think it was good that we (delivered the operating) budget early because in case there was money, there wouldn’t be a flurry of new ideas, new ways to spend money,” Hudson said. “Seeing the volatility, there’s a reason to save.”
Compared to its May projection, DEFAC’s June revenue estimate sees an additional $18 million for the current fiscal year ending June 30th, but cut its revenue forecast by $38.1-million for Fiscal Year 2012. Lower collections through the corporate income tax and personal income taxes contributed to the less “rosy” forecast.
Bond Bill Committee Chairman, State Senator Robert Venables (D-Laurel), said school construction funding is set, but “maybe discretionary funding, raising the community transportation fund we get, and some other small things we probably would have done may have to get cut.”
“I have a big concern for next year,” Venables added.
Reaction to final DEFAC revenue estimates.
State Senator Robert Venables (D-Laurel) says it may get tougher for the Bond bill committee he chairs to make everyone happy.
State Representative Deborah Hudson (R-Fairthorne), a member of the Bond bill committee, believes disappointing revenue projections will have an impact on next week’s Bond bill discussions.
State Representative Deborah Hudson (R-Fairthorne) says legislators may end up disappointing some state agencies, cities and towns based on final revenue projections.
According to Venables, the Bond Bill Committee has a similar process by which the Joint Finance Committee developed a state operating budget, which totaled about $3.5-billion for FY ’12.
Hudson sees the disappointing numbers as a sign of “softening of the economy.”
“I think the fact that the DEFAC numbers came out more negative than we expected, I think that puts an end to discussion of further tax cuts,” Hudson added. She had been hopeful of rolling back tax increases enacted in 2009 this coming January 1st, which would have been 18 months ahead of their original “sunset” date.
These latest numbers may end up shortening the Bond Bill committee’s work in late June, with less money to allocate than expected.
“When there’s a lot of money, a lot of the groups in Delaware, the non-profits, think that everyone gets a huge cut. That’s not always true,” Hudson said. “When there’s not a lot of money, everyone knows it’s flat, you don’t get any more than you got the year before.”
On the same day that DEFAC numbers were updated, another legislative committee was hearing Grant-in-Aid requests.
The Bond Bill Committee meets Monday June 20th at 12:30 p.m. at Legislative Hall.
