Carney’s budget plan funds schools, family court construction, state raises

Gov. John Carney explains a graphic during his presentation on the proposed 2021 fiscal year budget at the Delaware Public Archives on Thursday. Delaware State News/Marc Clery

DOVER — Gov. John Carney’s budget proposal includes what would be both the largest operating and capital sums in state history. It contains a 2 percent pay raise for state employees and directs much of the state’s expected excess revenue to one-time projects like construction, building maintenance and water treatment.

The governor’s recommended operating budget unveiled Thursday totals $4.63 billion in recurring expenses and $9.9 million in a separate one-time spending bill, while the capital bond bill comes to $893 million. The general spending plan for the fiscal year started July 1 is $4.45 billion, along with $62 million in a one-time supplement.

The current bond bill is $863 million. Both the operating and capital budgets for this fiscal year are the largest in Delaware history.

Influential lawmakers of both parties spoke approvingly of the plan: House Minority Leader Danny Short, a Seaford Republican, called it “prudent,” while Joint Finance Committee co-chair Sen. Harris McDowell, a Wilmington Democrat, said it has “reason and logic” behind it.

The budget is just one step in a long process that won’t conclude for another five months. The Joint Finance Committee and Joint Committee on Capital Improvement will meet over the next five weeks to parse through the budget and hear directly from agency heads and members of the public.

JFC will begin making actual changes to the budget in May, and lawmakers hope to have the spending plan complete before June 30, the final regularly scheduled day of the legislative session.

Budget officials on Thursday half-jokingly set a target date for June 23 to pass the budget this year. Because the state’s revenue projections have been rosy, fights over spending in the upcoming months figure to center not on what should be cut or what taxes should be hiked but on limiting budget growth.

It’s a vastly different story from 2017, Gov. Carney’s first year, when legislators faced an impasse in resolving a $400 million gap between projected expenses and available funding.

“When you have a strong, growing economy it makes it easier to put together a budget,” Gov. Carney said.

Of the $178 million recurring operating increase, $82 million would go to education, including $36.5 million for school enrollment growth, much of which is driven by a sharp rise in special education students. A total of $25 million, part two of a three-year commitment for added support for needy students and for mental health counselors, is included as well.

Most of the state’s tens of thousands of employees would see a pay raise, although collectively bargained workers like police and correctional officers would not be covered.

Gov. John Carney, left, talks with director of Office of Management and Budget Mike Jackson before Thursday’s budget address.

Teachers received 2 percent hikes in each of the past two years, with most other state employees pocketing an extra $1,000 each year. The proposed 2 percent increase for all means employees who earn less than $50,000 will see a smaller bump, while those at the upper end of the pay scale will benefit from an amount several times larger than the one handed out last year.

“This is almost a perpetual dilemma, and at some point we have done ($1,000 hikes). But maybe now we need to look, at least for one year, maybe it’s a good idea to make it across the board because we actually have neglected some of the people at the middle and the upper end,” Sen. McDowell said.

The $9.9 million for one-time items will cover the costs of running elections this year, as well as some technology needs from state agencies.

Contained in the capital proposal is $184 million for school construction and renovations, including $20.7 million for Capital School District, $16.2 million for Indian River School District pending the results of a February referendum and $50 million to build the first new school in Wilmington in decades.

The state is taking the unprecedented step of fully funding the Wilmington school, whereas school construction normally requires a local match. That change, Gov. Carney said, is because potential redistricting means it is unclear exactly what district the new school would fall under.

Some downstate lawmakers have questioned the funding commitment, noting other districts have serious needs. Indian River, for instance, had two failed referendums last year and officials there have warned redistricting might follow if next month’s referendum also is unsuccessful.

The physical state of Wilmington’s schools is “completely unacceptable,” the governor said in response to questions about the focus on the state’s largest city.

Despite that, Rep. Short, for one, has some concerns about possible geographic inequities.

“I think that’s going to create an interesting conversation. … Here we have Christina School District getting a nice gift, congratulations, but the schools in Sussex are saying how about us. That’s not a fair playing field,” he said. “So, we’ll see how that conversation plays out.”

Gov. Carney has made “sustainable” budgeting a priority by putting extra funds into capital needs, which do not add recurring costs like new programs and services. Among those capital expenses in his proposal are $17.5 million for new Family Court facilities in Kent and Sussex counties, $50 million for water projects, $10 million for each of the University of Delaware, Delaware State University and Delaware Technical Community College, $20 million for higher education projects that could create or retain jobs and $20 million for the fund used to incentivize companies to settle or stay in Delaware.

Gov. John Carney during Thursday’s State of Delaware Budget address for the 2021 fiscal year at the Delaware Public Archives.

The water funding, which the governor announced last week, would particularly benefit downstate Delaware, according to the state. Exactly what that money could be spent on will be determined in the future, but projects could include planting more cover crops to prevent erosion and subsequent runoff, treating pollutants or upgrading storm drains.

To avoid growing the budget, Gov. Carney signed an executive order in 2018 setting a “benchmark” for any increase. This year, as determined by the panel that sets the state’s revenue projections, that limit is 4.1 percent.

The sum of recurring expenses marks a 4 percent increase over the current fiscal year, meaning basically any addition by lawmakers would cause the bump to exceed the target. Gov. Carney initially attempted to set the limit in state law, but after legislation faced pushback from some Democrats, he settled for an executive order, which is nonbinding on the General Assembly.

“It’ll be a challenge, for sure,” he said of convincing lawmakers to spend conservatively.

His approach has been praised by both Democrats and Republicans, as well as influential organizations like the Chamber of Commerce, but some left-leaning legislators and advocates reject that viewpoint as a form of austerity. Those individuals, many of whom have grown disillusioned with the governor and his policies, would rather see more money poured into social programs and services.

“There’s not going to be a shortage of requests,” said JFC co-chair Rep. Quinn Johnson, a Middletown Democrat who is of a like mind as Gov. Carney in regard to spending.

Since the executive order was signed, legislators have set aside about $126 million in an informal reserve account. Once expenses surpass revenues, as is likely to happen in the next few years, lawmakers can tap that source, thus avoiding raising taxes or cutting services, especially during an economic downturn.

Gov. Carney’s budget proposes adding another $35 million to that sum.

“We think this is a more sustainable one in the long term,” he said. “It’s our job to work with the legislature to meet some of their priorities and objectives, whether it’s in education or whether it’s in social services or whatever it is, because you don’t want to have to, two or three years from now, go back in and cut out funding that you just made available to the schools or to the providers or whatever it might be. But there are certainly pressures out there.”

His budget proposal last year came to $4.43 billion for recurring operating, with a $39.1 million supplement, and $679 million for capital expenses.