Carney’s budget proposal totals $4.25 billion

Delaware Gov. John Carney proposes a pay raises for teachers and other state employees in Fiscal Year 2019. (Delaware State News/Marc Clery)

DOVER — Gov. John Carney’s $4.25 billion operating budget proposal marks a 3.49 percent increase over the current year’s budget and includes a $1,000 pay bump for state employees. Also recommended by the governor is $6 million for 43 needy schools, $10.1 million to implement part two of a previously agreed-upon raise for correctional officers and $2 million to restore a program that helped seniors afford prescription drugs.

Released Thursday, the budget recommendations are the product of months of deliberations by the governor and other officials from the executive branch. The proposal will be considered by lawmakers over the next five months, with the Joint Finance Committee meeting Tuesday to begin examining the state spending plan in detail.

Gov. Carney’s plan would spend $144 million more on the operating side, with $112 million of that coming from door-openers — areas the state is obligated to fund, such as school enrollment growth, state employee pensions and the 2018 elections.

The outline includes $678 million for the bond bill, up from $590 million in the current 2018 fiscal year. It also earmarks $41.7 million for nonprofits through grant-in-aid, $4.5 million more than was allocated this year but still $4.2 million less than last year.

No tax increases are proposed as part of the plan.

Budget growth from fiscal year 2017 to 2018 was just $22 million, the result of a shortfall that led to legislators cutting some spending and raising some taxes last year. This year’s financial projection is much rosier, although officials are quick to caution five months remain between now and the end of the fiscal year.

“The goal is to make investment scenarios that make us stronger, that address issues in our economy and communities and schools and to do it in a sustainable way,” Gov. Carney said. “So our biggest challenge, I think, as we move into interactions with the Legislature is to maintain an operating budget growth number that makes sense and that’s reasonable.”

While Gov. Carney has professed a commitment to reforming state budgeting, his proposal calls for a sizable increase in spending while bringing in no new revenue. Expenses are on pace to surpass revenues next year and continue soaring upward.

Given that, the $144 million increase left Senate Minority Whip Greg Lavelle, R-Sharpley, surprised.

“It’s kind of an election-year budget,” he said. “The governor’s pursuing his programs and that’s all good.

“It’s hard to argue with a lot in it but … I know the governor and the whole building is talking about sustainability, so I’m kind of concerned about that, and wondering, given Delaware’s still-paltry economic performance on a relative basis and stagnant wages and things like that, I just can’t figure out where the money’s coming from.”

Although some tax increases were enacted last year, the governor’s push to hike income tax rates failed, with Republicans refusing to budge in their opposition. Gov. Carney said he is not urging legislators this year to raise taxes because the effort was unsuccessful even when facing a gap of hundreds of millions of dollars in 2017.

It is generally harder to pass a tax increase in an election year as well, although the governor made no mention of the elections coming in September and November.

“Again, if we had adopted that full revenue package, we’d be in much better shape,” Gov. Carney said. “We’re still in much better shape than we were last year. We’re not here asking taxpayers for an increase.

“There are those out there already talking about, well, we’ve got all this money, we ought to spend it on this program, that program or that program. You don’t see those proposals up here.”

Both Gov. Carney and Sen. Lavelle said they are concerned lawmakers will seize on the lack of a deficit and attempt to add new programs, essentially committing the state to potentially costly initiatives in future years.

Details

The state employee pay hike would impact around 12,300 people, giving each an extra $1,000. Another 12,300 educators would not receive that but would be earmarked a 2 percent pay raise.

The budget proposal includes money set aside in the event several bills the governor backs are successful. Legislation granting state workers 12 weeks of paid leave upon the birth of a child would cost $2.48 million annually, while a measure expanding the Inspire Scholarship for Delaware State University students carries a price tag of $789,000 over the next two years.

The governor is also in support of excluding first-time homebuyers from a 1 percent increase in the realty transfer tax enacted by lawmakers last year to close the budget gap.

Under the governor’s recommendations, $6 million would go to 43 schools that have high levels of poverty or non-native English speakers, and $1 million would be allocated to hire math tutors for middle school students. The STARS early learning program would be expanded, with the governor calling for an investment of $3.8 million.

The Office of Management and Budget did not name the 43 eligible schools when asked.

“Today, Gov. Carney presented a budget that recognizes and values state and public school employees in a way that is sustainable for the state moving forward,” Delaware State Education Association President Mike Matthews said in a statement. “We are pleased to see a proposal that invests money in salaries and benefits, particularly through pay raises, and family leave.

“Additionally, I commend Gov. Carney for making a critical change to the Opportunity Grant program. Under this new proposal, schools with high concentrations of low-income students and English Language Learners do not have to compete for funds to meet their students’ needs, a change DSEA has advocated for since the grant program’s inception.”

As part of a plan to make state government a better place to work, the governor is planning a study by the Department of Human Resources addressing disparities in pay. He also wants to spend $7.8 million to upgrade facilities, including Carvel State Office Building in Wilmington.

Much attention has been focused on the Department of Correction since a Feb. 1 inmate uprising at the James T. Vaughn Correctional Center left one correctional officer dead. The state last year reached an agreement with the correctional officers’ union to raise starting salaries from about $35,200 (including hazard pay) to $43,000 over two years.

July 1 would mark the start of the second year of that agreement, with salaries climbing to $43,000. The average wage for correctional officers nationwide is $45,320, according to the U.S. Bureau of Labor Statistics.

A career ladder mimicking that used by Delaware State Police would be implemented for COs, giving them a clear path to promotions.

The governor’s strategy would provide more security equipment, cameras and training as well.

“We’re going to move forward and work on it as we move forward,” Correctional Officers Association of Delaware President Geoff Klopp said. “There are some things we’re talking about doing, with a signing bonus and trying to get a little jump-start here, but the governor’s office has been very attentive and we’re working very hard together to make sure we’re getting things going in the right direction.”

There’s only one way House Speaker Pete Schwartzkopf, D-Rehoboth Beach, knows of for lawmakers to fill the 250-plus vacant correctional officer positions: “throw more money at it.” Gov. Carney’s recommendations in that area represent a good start, Rep. Schwartzkopf said.

A state-commissioned report released in September by a former judge and U.S. attorney on the inmate rebellion termed Vaughn “critically understaffed.” Only about one in 10 recruits ends up sticking around, according to officials.

In other areas, the budget plan calls for $4.6 million for the Department of Services for Children, Youth and their Families to hire 49 new employees, including 30 caseworkers. Other money would go to fighting drug addiction and restoring a program cut last year that helped senior citizens afford prescriptions.

The bond bill includes $100 million in one-time money, the result of unanticipated revenue from the fiscal year ended June 30, 2017. Among the recommendations for that funding is $12.5 million for the account the state uses to offer incentives to companies to settle in Delaware, $2 million for the public-private partnership focused on business development and $20 million for preserving farmland and open spaces.

Although state law recommends allocating $10 million for farmland preservation, that amount has not been earmarked in any of the past five budgets.

Other capital funding would be earmarked for school construction ($136 million), Downtown Development Districts ($8.5 million) and library construction ($6.7 million).

The Department of Transportation would get $321 million.

If enacted as is, the governor’s recommended bond total of $678 million would be the most money going to capital projects in 13 years.

Against the wishes of many lawmakers, the governor did not recommend restoring the entire cut to nonprofits in his grant-in-aid outline.

“We need to make better decisions, frankly, in that grant-in-aid,” Gov. Carney said. “Some of those agencies that are funded, I think the Legislature needs to take a hard look at the work they’re doing and how effective it is.”

His budget sets aside $10 million in the event Congress takes actions that impact Delaware’s financial picture. The tax cut bill signed into law in December could lead to less money coming into Delaware’s coffers, and the state could also be jolted by potential federal changes to Medicaid.

The 12 members of JFC will meet over the next month to poke and prod the budget and speak with agency heads about their needs.

“I keep in mind one thing … the bottom line is it’s a process,” Rep. Schwartzkopf said.

Reach staff writer Matt Bittle at mbittle@newszap.com

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