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FY18 Budget Breakdown

7/13/2017

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by James DeChene

As widely reported, the FY2018 budget passed with a mix of new revenue and a number of expenditure cuts and other reductions. The ratio was about 48% new revenue ($182.7 million) and 52% cuts ($195.1 million), roughly meeting Governor Carney’s goal of a 50-50 split to fill a budget gap of $377.8 million.

The new revenues are fairly easy to account for: increasing the corporate franchise tax ($116.1 million), raising the alcohol excise tax ($5.2 million), raising the tax on tobacco products ($11.9 million), and raising the realty transfer tax ($45.6 million), changes to insurance policy charges ($4.6 million) and one-time special funds ($3 million).

Tax cuts, and reductions of proposed increases, came from, among other things:
  • Funding grants-in-aid at 80% of FY2017 levels ($8 million)
  • Cuts to flexible education spending ($26 million)
  • Increases in employee cost share for healthcare ($2 million)
  • Reducing the senior citizen property tax credit ($5 million)
  • Overall non-personnel state agency cuts ($3 million)
  • Pension adjustments ($12 million)
  • Eliminating WEIC funding ($7.5 million)
  • Cutting 200 positions within state government ($5 million)

Among the questions that remain are what happens next year, and more importantly, did this year’s mix of increases and cuts put Delaware on a path to not face a substantial budget crunch next year?  Many think the answer is, “No”.

Simply put, nothing contained in the revenue package is designed to be a fix for Delaware’s structural issues, and the list of funding issues the state faced this year only increase next year, including:
  • The cost of public employee health care
  • The rising cost of Medicaid spending
  • Increases in overall public school enrollment, including steady increases of children with special needs
  • Revenue growth projections that are flat (DEFAC forecasts that FY2019 revenue will be .5% higher than FY2018)

The Delaware State Chamber of Commerce believes in the time available between now and the end of 2017 should be focused on discussions and planning on how to address these issues in the next part of legislative session. Waiting to solve budget crises with a complicated series of steps, such as the removal of itemized deductions, or looking for new, last minute, sources of revenue makes for ill-formed policy. The ability to have in-depth discussions regarding the impacts of tax increases and spending cuts will go a long way to helping set Delaware on a path to prosperity.
​
click for itemized list of jfc reductions
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PO Box 671 | Wilmington DE 19899
Phone: (302) 655-7221 | dscc@dscc.com | sitemap
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  • Visit
    • New Castle County
    • Kent County
    • Sussex County
    • Relocate to Delaware
    • First State Kids
  • Advocacy
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    • District Maps
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  • About Us
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    • Affiliates >
      • Delaware Manufacturing Association
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      • The Partnership, Inc. >
        • Delaware Principal for a Day
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          • JHTAward
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        • Intern Delaware
        • Delaware Young Professionals Network
    • Committees >
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    • News & Media >
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