Pay hike, no new taxes in Gov. Carney’s $4.43 billion budget plan

Gov. John Carney unveils his budget plan at the Delaware Public Archives on Thursday. Delaware State News/Marc Clery

DOVER — Gov. John Carney’s proposed operating budget marks a 3.8 percent increase over the current fiscal year and includes another pay raise for state employees.

Combined, the spending plan totals $5.2 billion — $4.43 billion for operating expenses, $679 million for capital projects, $48 million for nonprofits and $39 million in one-time money.

The operating budget for the current fiscal year, which started July 1, comes to $4.27 billion, an increase of 3.99 percent over the prior year.

Perhaps most notable is what’s not in the proposal. The recommended plan contains no tax increases and takes a rather conservative approach toward budget growth, setting aside for the second consecutive year more than $40 million for future years when revenue dips.

Released every January, the governor’s budget proposal serves as a base for the Joint Finance Committee, which begins meeting Tuesday and will spend most of February hearing from state agencies, nonprofits and individual Delawareans. The committee will convene again in the spring to actually craft a spending plan, which the General Assembly typically votes on at the end of June.

Gov. Carney’s recommendations include few new big commitments, instead focusing on what Office of Management and Budget Director Mike Jackson described as “continued investments.”

His budget includes a $1,000 pay increase for most state workers, with teachers getting a 2 percent pay raise. Employees who negotiate salaries through collective bargaining, such as correctional officers, would not receive the pay bumps.

State workers received an identical increase last year, although they were also earmarked a one-time $500 bonus.

It also has funding for previously agreed-upon or announced initiatives, such as 12 weeks of paid parental leave for state employees (passed by lawmakers in 2018) and $60 million over three years for students who live in poverty or do not speak English as their native language.

Office of Management and Budget director Mike Jackson speaks during budget recommendations.

The governor has stressed the funding would give districts some flexibility to use as they see best and “is not an effort in just throwing money at a problem.”

A special “one-time supplemental bill” totaling $39 million would provide $30 million for needy students, with the remainder going to miscellaneous areas like legal fees and technology.

The governor spent part of his presentation highlighting fiscal sustainability, an issue near and dear to the former secretary of finance’s heart. Instead of expending all available revenue in a given year, he’s advocated for limiting budget growth by putting some money in a special fund.

That fund could then be accessed when revenue collections dip, enabling lawmakers to avoid raising taxes or cutting services. However, an effort to amend the constitution to that end failed last year, prompting the governor to sign an executive order limiting budget growth to 3.8 percent even though it is nonbinding on legislators.

The Joint Finance Committee set aside $47 million last year, and Gov. Carney wants to add about $45 million to that, giving the General Assembly $92 million that can be used in the near future if, as projected, expenses surpass revenue growth.

“Because of the rules that were established back when Pete du Pont was governor (in the late 1970s and early 1980s), we tend to appropriate into a bubble and then cut our way out when the economy softens and those revenues go away,” the governor said.

While memories of a $400 million budget gap lawmakers were forced to confront just two years ago remain in the forefront for many, 15 of the legislature’s 62 members were newly elected last year. Whether they are more resistant to setting aside money for future years is yet to be determined, but Gov. Carney is hopeful they agree there is a need to limit budget growth.

House Minority Leader Danny Short, a Seaford Republican, applauded Gov. Carney’s budget, praising his commitment to restraining the growth of state spending. He sees the governor’s sustainability proposal not as a partisan one but as a common-sense idea that will reduce pain in the future.

Asked if there was anything he felt was missing, Rep. Short said he has already received calls from pensioners requesting an increase. They were given a $400 bonus in the current budget.

Rep. Danny Short and other legislators listen to Gov. John Carney.

Rep. Quinn Johnson, a Middletown Democrat who co-chairs the Joint Finance Committee, said he approves of the governor’s decision to limit budget growth to the 3.8 percent set by the executive order.

“I am also an understander that while I don’t want to predict when because I can’t, a recession is coming,” he said.

“That’s just cyclical … and we did not fix our revenue problem, so it’s going to be a time that we’re going to have to deal, and as long as we continue to have and try to work toward saving some of those monies, especially that form of one-time, then we’ll be in a better position to not have to make several of the deep cuts like we’ve had in the past. It’s a good philosophy to deal with.”

The governor’s recommendations would add 34 caseworkers for the Division of Family Services and nine employees in the Division of Industrial Affairs to help large caseloads and issues stemming from understaffing. His budget proposes raising the rates for caregivers for adults with disabilities and for daycares that oversee impoverished children, providing an additional $1.8 million to combat the opioid epidemic and giving millions for investments in the much-maligned Department of Correction.

Areas of growth include Medicaid expenses, school enrollment and contractually mandated pay raises for some professions.

While the capital bond bill total represents a big drop from the $816 million expended in the current fiscal year, it’s likely the $679 million sum will grow if revenue projections rise in the upcoming months. As part of his push for fiscal sustainability, Gov. Carney has expressed a desire to focus on one-time projects, which do not carry expenses over in perpetuity like most new programs do.

“Probably one of the biggest challenges that we will face in working together on this budget is making sure that we’re measured and smart and responsible about what we do with revenue over the targeted operating budget increase,” he said. “Lots of areas we can make investments in important infrastructure and quality of life things across our state.”

In addition to $7 million for maintenance and construction for each of the University of Delaware, Delaware State University and Delaware Technical Community College, the proposed bond bill includes $15 million for a fund created last year that provides money to the three institutions for projects relating to economic development. It also contains $12.5 million for the fund used to incentivize companies to settle or stay in Delaware, $2 million for a public-private partnership that focuses on creating jobs, $10 million for clean water and $10 million for farmland preservation.

New this year is a proposal for a $10 million fund for select road projects.

“The target for that is economic development projects that would be very attractive but would require transportation upgrades that aren’t in the capital program,” Gov. Carney said.

The Delaware State Chamber of Commerce in a statement called the governor’s proposal “smart fiscal planning” and said it hopes lawmakers adhere to the executive order limiting spending growth.

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