Governor’s budget includes employee raise, benefit changes

DOVER — Gov. Jack Markell’s proposed $4.11 billion budget includes a raise for state employees and changes to their health care plan. Under the recommended budget, Delaware workers would receive a pay increase of $500 or 1 percent — whichever is greater.

All state workers would have higher health care premiums, and new employees also would be locked into one health care plan rather than having six to choose from, part of a change to benefits made to ensure fiscal solvency.

Unveiled Thursday, the budget marks a 5.24 percent increase over the current fiscal year’s $3.91 billion total. It also includes $487 million for the capital budget, up from $456 million this year.

Other proposed highlights of the overall budget include making changes to employee health care, raising teachers’ starting salaries and providing funding for police to purchase body cameras.

In addition to millions for work on roads, bridges and state buildings, the capital allocation covers other areas, such as $10 million for the fund used to incentivize companies to invest in Delaware, $8.5 million for downtown development and $75.7 million for school projects.

Gov. Jack Markell gives his recommended operating budget for Fiscal Year 2017 during a press conference held inside the Tatnall Building in Dover Thursday afternoon. (Delaware State News/Dave Chambers)

Gov. Jack Markell gives his recommended operating budget for Fiscal Year 2017 during a press conference held inside the Tatnall Building in Dover Thursday afternoon. (Delaware State News/Dave Chambers)

The state budget “is really about a reflection of our values,” Gov. Markell, a Democrat, said.

“The most important of those is making economic opportunity available to all Delawareans, ensuring that everybody has a fair chance to thrive,” he said. “We can’t avoid the fact that we live in a world that is changing rapidly. A new economy is certainly transforming the types of skills that are required for good jobs. We live in a world where businesses have more choices than ever before about where to hire and expand.”

On Thursday, a group of lawmakers, administration officials, reporters and others crowded into a room to hear the initial budget overview. Afterward, the bill officially was filed, and Office of Management and Budget Director Ann Visalli spent the afternoon meeting with legislators to detail the proposal.

The recommended budget, presented every January by the governor, now goes to lawmakers, who will spend the next five months refining it, with additions and subtractions as they see fit. The Joint Finance Committee meets for 14 days next month, starting Tuesday.

Minority Leader Danny Short, R-Seaford, said he approved of many of the initiatives covered in the proposal but cautioned that several bills making their way through the General Assembly carry costs that could impact programs elsewhere.

Delaware budget growth chart“The budget, to begin with, the governor puts together is speculative always because of some of the assumptions that he makes, so we’ll see how that actually plays out,” he said.

Legislation filed earlier this month would expand after-school programs, at a cost of $10 million. If that passes and revenue projections do not increase, lawmakers would have to make cuts or bring in more money elsewhere.

Joint Finance Committee Chairman Sen. Harris McDowell, D-Wilmington, called the proposal “a good starting point” that follows through on comments made in last week’s State of the State, although he has some concerns funding levels might decline over the next five months.

Rep. Short said some of the funding earmarked for specific targets, such as $3 million for bike trails and paths, would go to noble goals but lawmakers may think that money could be best used elsewhere.

Employee pay and benefits

The proposed pay raise would be the fourth under Gov. Markell. Employees saw their pay decrease by 2.5 percent in fiscal year 2010 due to an $850 million budget gap. The cut was restored the next year.

In 2012, workers received a 2 percent bump, and one year later, they got a 1 percent increase. Fiscal year 2015 featured a flat $500 raise.

Gov. Markell praised state employees as deserving a raise, although that proposed increase also could serve to make benefit changes more agreeable.

“Well, first of all, our state employees do an awesome job, and I am pleased we’re able to do something this year but we’d like to do more and I think in particular for the lower-paid employees, 500 or 1 percent, whichever is greater, and so, look, they’re working really hard. They’re working harder than ever and at a time frankly when there are fewer of them, 680 fewer, and a time when demand for services is high,” Gov. Markell said.

Office of Management and Budget director Ann Visalli reviews Gov. Markell’s 2017 budget. (Delaware State News/Dave Chambers)

Office of Management and Budget director Ann Visalli reviews Gov. Markell’s 2017 budget. (Delaware State News/Dave Chambers)

His proposal calls for a new Health Savings Account to be used as the sole plan option for state employees who start Jan. 1, 2017, or later, the most dramatic of several changes made to combat skyrocketing health care costs.

“Making employees better consumers is not just about how much health care they consume but also the type of health care they consume and consuming health care that’s at the lowest cost but highest quality. One of the ways to do that is a Health Savings Account,” Ms. Visalli said.

“So a Health Savings Account is a mechanism where the state contributes money and the employee can contribute money on a tax-free basis and that can help pay for their health care and they can take it with them. It’s portable, they can leave to another employer, they can use it when they retire. It can be invested and it can earn interest.”

The budget features higher monthly premiums for current workers as well. The cheapest plan would increase from $25.86 to $27.84, while the most expensive would see a bump from $253.38 to $272.86.

The double state share, which allows couples who began working for the state before fiscal year 2013 to pay only $25 for coverage for both people, also would be eliminated unless the legislature opts to keep it. A report from a health care task force recommended earlier this month the practice end.

Senate Minority Whip Greg Lavelle, R-Sharpley, listens to the governor give his recommended budget Thursday afternoon inside the Tatnall Building on Legislative Mall. (Delaware State News/Dave Chambers)

Senate Minority Whip Greg Lavelle, R-Sharpley, listens to the governor give his recommended budget Thursday afternoon inside the Tatnall Building on Legislative Mall. (Delaware State News/Dave Chambers)

With no changes and no increases in spending, Delaware would be in a projected $383 million health care shortfall in five years, budget officials stressed Thursday.

Despite the planned changes, a $14 million gap still remains, placing the burden on the State Employee Benefits Committee to approve further moves. Those could include raising emergency room co-pays and negotiating costs with health care providers, according to Ms. Visalli.

Rep. Short said he understood the administration’s focus on reducing health care costs but added he preferred not to take money away from employees.

“It’s tough,” he said. “You know, I do it for a living, but that’s what’s going on in the other world, that’s what’s going on in the private sector. I mean, the private sector is nowhere close to the contribution side that we are. The private sector is maybe paying for all of the employee, maybe paying for just part of the employee and none of the dependents.”

Every agency would see additional funding from last year, according to the preliminary budget.

After $5.7 million of state funding for Downtown Development Districts resulted in $115 million in private investments, Gov. Markell recommended $8.5 million for the program next year. Downtown Development Districts encourages construction and growth in Dover, Seaford and Wilmington.

“In every budget there are choices made, but I generally approve of most of the choices the governor’s made,” Sen. McDowell said.

One aspect of the budget is sure to irk some lawmakers. Gov. Markell recommended $3 million for the Agricultural Lands Preservation Foundation, down from the $10 million that legislation suggests be allocated to it. In his previous seven budgets, the program has received the full $10 million twice.

A bill to make the $10 million sum binding has been filed, but the legislation has just one Democratic co-sponsor, making passage quite a hurdle.

Over the ensuing months, legislators will begin to hammer out the fine details, changing some funding proposals as the calendar works toward the end of the fiscal year on June 30.

“We got a long way to go to June, so that’s how this process works.” Rep. Short said.

State spending plan

Gov. Jack A. Markell’s recommendations for Fiscal Year 2017:

• Operating budget: $4.113 billion — increase of 5.24 percent

• Bond, capital improvements: $486.9 million

• Transportation Trust Fund: $337.5 million

• Grants-in-aid: $43 million

Because Gov. Markell’s recommended budget contains much related to education, three school district superintendents were invited to Thursday’s budget meeting. From left are Dr. Mark Holodick of Brandywine, Dr. Kevin Fitzgerald of Caesar Rodney and Dr. Victoria Gehrt of New Castle County Vocational. (Delaware State News/Dave Chambers)

Because Gov. Markell’s recommended budget contains much related to education, three school district superintendents were invited to Thursday’s budget meeting. From left are Dr. Mark Holodick of Brandywine, Dr. Kevin Fitzgerald of Caesar Rodney and Dr. Victoria Gehrt of New Castle County Vocational. (Delaware State News/Dave Chambers)

Reach staff writer Matt Bittle at mbittle@newszap.com

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