Budget process on hold with deficit still remaining

Matt Bittle
Posted 5/26/15


DOVER — After four days of budget meetings, the Legislature’s Joint Finance Committee has eliminated less than a quarter of the $83 million deficit. The initial markup period is over, …

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Budget process on hold with deficit still remaining



DOVER — After four days of budget meetings, the Legislature’s Joint Finance Committee has eliminated less than a quarter of the $83 million deficit. The initial markup period is over, but legislators will meet in June to finalize the budget, which must be balanced in about a month’s time.

With a shortfall of $64.7 million remaining, the budget-writing panel still has work to do. A number of mostly minor cuts have been made to state agencies to reflect projected spending levels, but lawmakers will have to find more money for the fiscal year starting July 1.

A list of the total cuts has not yet been made available, although every branch of government and a variety of agencies have seen changes from the governor’s recommended budget. Of the $18.3 million in cuts, $3.75 million comes from Race to the Top funding the state did not pick up.

Additional funds for the $3.9 billion budget could come from June 15’s updated revenue projections, but lawmakers have another ace up their sleeves: $61 million in mortgage-related settlements reached with the state Department of Justice.

Attorney General Matthew P. Denn had requested $36 million, which came from Bank of America and Citigroup settlements, go to schools, substance abuse treatment and police patrols. Another $25 million, which comes from a more recent settlement, has not been earmarked for a specific goal.

While Mr. Denn intends to use those funds for plans of his own design, JFC ultimately has the authority to determine where the money goes — and the committee is not beholden to the attorney general’s wishes.

Asked after Tuesday’s meeting about that $61 million, co-chair Sen. Harris McDowell, W-Wilmington, made his thoughts clear.

“It’s not his money,” he muttered.

Those funds may be committed “in some people’s minds,” he said, but JFC has not yet allocated any of the $61 million.

While calling a decision to use that one-time money for the general 2016 budget “irresponsible,” he acknowledged shifting at least some of the total for the General Fund is a possibility.

The Delaware Economic and Financial Advisory Council will provide updated revenue projections in about three weeks, and while that could bring in a few extra million, it’s not going to fill the deficit by itself. Legislators could make their job easier by reducing a senior property tax subsidy, but they seemed very reluctant to do so when the issue was discussed last week.

Although the clock is ticking, lawmakers have been down a similar road before, and should no other option present itself, JFC members will have a $61 million safety net.

Legislators also may have more sources of currently unaccounted-for money, according to Sen. McDowell, although he declined to specify where that would come from.

The shortfall could increase by an additional $10 million if lawmakers opt to move a portion of the Department of Transportation’s operating expenses from the Transportation Trust Fund to the General Fund. While leadership in the General Assembly publicly has endorsed the plan, no formal legislation has been filed.

With markup done before the scheduled Thursday end date, JFC will meet again next week to go over the cuts so far.

“Frankly, it’s no surprise to everyone we’ve put off a lot of rather more controversial decisions,” co-chair Rep. Melanie George Smith, D-Bear, said.

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