In the midst of unprecedented challenges, JFC begins unusual budget markup

DOVER — The General Assembly’s budget-writing committee began diving into the COVID-ravaged spending plan on Tuesday, reviewing hundreds of millions of dollars’ worth of potential cuts.

While the Joint Finance Committee would normally convene in May to make significant changes to the governor’s January recommendations, this is not exactly a typical year. The 12 members on the committee gathered Tuesday for the first time since February, meeting in the House chamber instead of the normal basement room to allow social distancing.

Legislative Hall remains closed to the public, with the committee members, a few staffers and budget officials and a smattering of reporters being the only people allowed in the building. Audio for the hearing was broadcast online on YouTube (https://bit.ly/2XY5ob7), though it’s not entirely clear whether it will be posted for rewatching.

Gov. John Carney’s proposed spending plan would allocate $4.64 billion in operating expenses and $893 million for the capital bond bill. Both totals would be the largest in Delaware history. But the revenue drop the state has seen as a result of the coronavirus crisis means lawmakers have a problem on their hands.

Members of the Joint Finance Committee meet in a socially distance meeting that was open to the public via YouTube. (Submitted photo/Drew Volturo)

Collections for the state are down $619 million over two years, according to the council that provides the official Delaware revenue forecasts.

The state must pass a budget by the start of the new fiscal year on July 1.

Officials emphasized Tuesday that although the spread of the virus appears to be slowing, much uncertainty remains. Finances are far from settled, meaning legislators must prepare for a shortfall, the committee co-chair noted.

“This is definitely a time where I hope I’m wrong, but we have to plan for that,” Rep. Quinn Johnson, a Middletown Democrat, said of possible future dips in revenue.

Although Delaware received $1.25 billion in federal funding due to COVID-19 ($323 million of that went to New Castle County rather than the state government), that money can’t be used to make up budget gaps caused by the virus. Delaware is talking to New Castle officials in an effort to better coordinate the distribution, though the state has to be careful it does not use any money on ineligible expenses lest it have to repay Washington.

Office of Management and Budget Director Mike Jackson detailed a plan Tuesday to “build a bridge” between the current fiscal year and the one starting July 1, 2021. OMB has been able to cobble together some funding to reduce the impact of the revenue drop, but lawmakers will still have to take some tough votes.

One option, Mr. Jackson explained, is to continue with the governor’s proposal with about $456 million in cuts to balance the budget. That would see a temporary halt to farmland preservation and contractually driven salary “step” increases for various employees, as well as a reduction of $233 million in cash to the bond bill. A proposed 2 percent pay raise would also be halted under this path forward, although legislators could opt not do that.

“We still don’t know what we don’t know,” Mr. Jackson said, speaking in favor of a more conservative spending approach.

The committee is scheduled to meet again Wednesday, Thursday, Monday and Tuesday.