Carney proposes operating budget increase of more than 7%

DOVER, Del. (AP) — Democratic Gov. John Carney is proposing to boost Delaware’s government operating budget by more than 7% over the current year’s budget, with hundreds of millions of dollars in new spending for state employee pay raises, health care and affordable housing.

The spending plan Carney announced Thursday calls for an operating budget of $5.48 billion, up from this year’s $5.1 billion budget, which included pay increases for state employees ranging from 2% to 9%, as well as a $500 one-time bonus.

Carney’s proposal follows December a forecast from the Delaware Economic and Financial Advisory Council showing an estimated surplus at the end of the current fiscal year of $662 million. That cushion is one reason that Carney is proposing to direct about $665 million in cash to a capital budget of almost $1.3 billion for construction and transportation projects. The capital budget reflects a slight decrease from the current year’s $1.46 billion budget.
Carney is also proposing a one-time supplemental appropriation of $325 million for the operating budget, which includes $51 million toward the state’s current $8.9 billion liability for post-employment benefits for retired state workers.

The final part of Carney’s spending plan is $59.8 million in grants of taxpayer money for community organizations, nonprofit groups and volunteer fire companies, down from the current year’s record $69.4 million grants package.
Carney’s proposal includes pay raises of 9% for teachers and 3% for other public school employees. It also increases “Opportunity Funding” targeted at improving academic performance among “disadvantaged students,” by $15 million over the current year to $53 million. The funding applies to students with disabilities, low income or whose first language is not English.

The budget proposal also includes $30 million for mental health services for elementary and middle-school students.
Last year, Carney signed legislation mandating that weighted funding for disadvantaged students —defined as low-income students, students whose first language is not English and students with disabilities — become a permanent fixture in the state budget. The legislation was required under the state’s settlement of a 2018 lawsuit alleging that Delaware was failing to provide adequate educational opportunities for those students.

Carney also wants to raise the minimum wage for full-time government workers to $15 an hour, and to increase subsidies for child care providers by $10 million and increase the eligibility for subsidized care.

The governor also is proposing $101.5 million for affordable housing initiatives, with $60 million of that total coming from the federal American Rescue Plan Act of 2021. Other proposals include $53.7 million for environmental initiatives and $50 million for economic development.

Despite hundreds of millions in new spending, Carney’s proposal maintains the state’s $316 million “rainy day fund,” which has never been tapped, and directs almost $19 million into a separate “budget stabilization” reserve fund he created, bringing the total to $421.5 million.

Administration officials also are proposing to increase the standard deduction for personal income tax filers by 75% to $5,700 for individuals and $11,400 for joint filers, starting in tax year 2024. The budget proposal also calls for increasing the refundable Earned Income Tax Credit to 7.5% of the federal credit, starting in tax year 2023.

Officials said the changes would cost the state $24.9M in fiscal 2024 and $55.7 million the following year.

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