The Delaware Economic & Financial Advisory Council is seeing a flat revenue outlook as legislators head toward the budget deadline at the end of the month.
The forecast came in at $3.95 billion in net receipts for fiscal 2016, down more than $20 million from the May estimate and about even with receipts in fiscal 2015.
The state is seeing weakness in corporate income tax revenue, with the June estimate down more than 27 percent from May.
Personal income taxes revenue estimates are also down about 4.5 percent from the May forecast. The personal income tax is the largest single source of revenue in the state and stronger growth would have offset the more volatile corporate income tax area, which accounts for about a quarter of the revenue percentage of the corporate income tax.
The weakness in personal income tax revenues could indicate that jobs being created after the recession are not paying as well as those lost during the downturn,
Legislators have been warning that further cuts may need to be made, given the weakness in the revenue outlook. With costs baked in for many areas, such as employee health care and Medicaid, areas to cut are likely to include the grant in aid area that includes state support for nonprofits.
The long-term outlook is for flat revenues in the next two years according to a DEFAC update.
The weaker revenue outlook comes as the economy continues a lengthy expansion and fears that a downturn is looming. However, officials say the upturn has been so weak when compared to its predecessors that the recovery could continue.
Delaware did see a $22 million drop in Medicaid costs, due to fewer enrollees, a possible sign of an economic recovery. However, the state is seeing an increase in employee health care costs, with Gov. Jack Markell suggesting changes that have been largely ignored by the General Assembly.
In the highly publicized case over states suing Delaware over unclaimed property revenues, Delaware is seeking a Supreme Court ruling and the possible appointment of a special master to sort out the situation.
States have been filing suit against Delaware regarding unclaimed money from MoneyGram money orders.
The council discussed ways to have a “more robust discussion” of the state’s fiscal outlook, with one member saying committee meetings air more views and questions on the fiscal outlook than the deliberations of the overall council.
A council is a large group that fills the chairs in the book shelf-laden meeting room at the Buena Vista center south of New Castle.
The council is widely praised in financial circles for its role in helping revenues match expenditures. However, like most forecasters did not forecast the deep recession that hit the state in 2009 and led to tax increases in gaming and other areas that continue to this day.
There were a few signs of tension at the meeting, with one individual appearing to challenge the media to come up with more accurate reporting.
