Budget review process begins: Legislators spar over nonprofits’ funding

Office of Management and Budget director Mike Jackson speaks before the Budget Markup Committee at Legislative Hall on Tuesday. Delaware State News/Marc Clery

DOVER — Budget-writing legislators began their review of Gov. John Carney’s proposed budget Tuesday, spending much of the time discussing nonprofit funding.

The Joint Finance Committee will spend the ensuing month analyzing the governor’s $4.25 billion operating budget recommendations with agency heads appearing before the committee to detail their spending requests.

It’s the next step in a process that continues on and off for five months, ending with the close of the fiscal year on June 30.

The spending proposal released by the governor last week marks an increase of 3.49 percent over the current year. Much of that involves areas the state is required to fund, such as school enrollment growth.

About $167 million in unanticipated revenue and carryover funds is split between the operating budget and the bond bill.

JFC members spent several hours receiving an overview of the budget from Office of Management and Budget Director Mike Jackson on Tuesday. Legislators then began making pitches for new or increased spending in a variety of areas, and several members urged their colleagues to restore cuts made to nonprofits last year.

To balance the budget last year legislators cut the grant-in-aid bill, which provides funding to dozens of nonprofits throughout the state. Gov. Carney’s budget would increase the total funding level from $37.2 million to $41.7 million but still leave it short of the $45.9 million earmarked last year.

Every nonprofit, from senior centers to museums, would receive the same increase.

These discussions are possible because budget projections are far rosier than last year’s forecast, which saw legislators and the executive branch grappling with a gap of nearly $400 million between projected spending and revenue.

Spectators watch the Budget Markup Committee on TV in the dining area at Legislative Hall on Tuesday. Delaware State News/Marc Clery

While having money is certainly preferable to the alternative, it brings a new problem to the table.

“We’re in a little bit of a sweet spot, and then we’re going to be out of that again, and we want to be careful that we don’t build into the base things that we have to maybe cut in the future or can’t maintain,” said JFC Co-Chairman Sen. Harris McDowell, D-Wilmington, referencing projections that show expenses passing growth next year.

A few JFC members advocated for restoring funding cuts to nonprofits, and while many, if not all, legislators support more funding for not-for-profit agencies, some differ on which ones should see additional money.

Rep. Mike Ramone, R-Pike Creek Valley, said “E]verybody getting the same bump this year is as much of a disservice as everybody getting the same cut last year,” and Sen. Brian Bushweller, D-Dover, referred to some nonprofits as “far more valuable to communities than others.”

Determining which ones are most worthy is harder, especially as legislators tend to be more supportive of entities in their districts, for obvious reasons.

Gov. Carney said last week lawmakers “need to make better decisions” when it comes to grant-in-aid and urged JFC to consider how successful the nonprofits are in meeting their goals.

Sen. McDowell noted Tuesday the committee has worked with the University of Delaware to determine success rates for senior centers and could expand that to other not-for-profit agencies.

“I personally have shut down three senior centers in my district because they were not performing to the metrics we expected,” he said.

But measuring success isn’t as simple as one might think, according to JFC Co-Chairwoman Rep. Melanie George Smith, D-Bear. Judging whether contributions to a museum are worth it is drastically different from assessing funds given to a job-training program, she noted.

JFC hopes to have more time to review nonprofits, in contrast to last year, when nearly all energy was spent trying to balance the budget in a way that both parties could agree on.

Different proposals have been suggested recently to allow for closer analysis for grant-in-aid funding. Rep. Ramone advised JFC to break up into subgroups to allow members to review specific entities, and a bipartisan bill currently in a Senate committee would create a new committee focused solely on reviewing grant-in-aid allocation.

While the proposal passed the House unanimously, Sen. McDowell sees the idea as an unnecessary separation of the budget-crafting process.

A resolution introduced last week and listing 17 of the General Assembly’s 26 Republican legislators as sponsors urges lawmakers to provide the same amount of funding to nonprofits as in the fiscal year ended June 30, 2017.

Tuesday, legislators also advocated for increased spending in other areas, including contributions to retirees and pay raises for school bus drivers.
“It’s not too much what’s in the budget, it’s what’s not in the budget,” Sen. Bruce Ennis, D-Smyrna, said.

Gov. Carney’s proposal includes a $1,000 pay raise for around 12,300 state workers and a 2 percent increase for 12,300 educators. It also provides for a study to determine if state employees are being compensated fairly, sets aside $10 million in case changes by Congress cut the state’s revenue and includes $5 million to exempt first-time homebuyers from an increase in the realty transfer tax enacted last year.

Praising it as the “best (governor’s recommended budget) I’ve ever seen,” Sen. McDowell, a 42-year veteran of the General Assembly, pledged not to “rip it apart too badly.”

“The devil’s in the details, so we’ll be looking for that rascal,” he said after the meeting.

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