NEW CASTLE COUNTY CHAMBER OF COMMERCE
LEGISLATIVE UPDATE – Week of April 28, 2008

The Budget – Revenue Issues

The Governor’s recommended FY 2009 operating budget started in January at $3.41 billion (growth of 3.8% over FY 2008). Recommended capital spending came to $473.3 million in capital spending. $239.6 million of the capital budget was to go toward public school construction and other public school capital obligations. The other $233.7 million was directed toward transportation infrastructure. However, steeply declining revenue estimates and difficult economic times have changed things considerably.

Following the Monday, April 21 meeting of the Delaware Economic and Financial Advisory Council (DEFAC), the current combined estimated shortfall for fiscal years 2008 and 2009 comes to $373 million. 

As part of efforts to address the shortfall and to have a positive cash balance with which to start FY 2009, $74.7 million has already been cut from this year’s budget (FY 2008).  State budget officials are aiming for another $100 – 150 million in cuts for this year. 

Governor Minner has implemented a hiring freeze and has required state agencies to cut their budget requests by 8% for FY 2009. This will affect services throughout state government and will likely result in substantial personnel cuts in public education. Until Thursday evening (April 24) it seemed as though some 1,500 educators statewide would subject to a reduction in force (RIF). Cuts in education will be noticeable before those in other parts of state government due to a contractual requirement that districts inform teachers subject to RIFs by May 15. Following late day meetings and negotiations among representatives from House and Senate leadership as well as the administration, House Joint Resolution 14 was passed. The resolution states that FY 2009 operating budget cuts in the area of public education shall not exceed $30 million this year. Based on input from the various public school districts, such a guarantee should prevent the better part of the widespread layoffs which were anticipated.

Budget and finance officials in the administration and legislators serving on the committees which craft the operating and capital budgets are saying that “everything is on the table.”  Given the worsening revenue picture and the challenges that deep spending cuts create, revenue enhancement measures may be around the corner.

 

.