Markell’s final budget recommendation includes tax increases and cuts

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Markell

Gov. Jack Markell released his final budget for fiscal 2018 that includes budget cuts and an income tax increase.

The budget is expected to face a tough road ahead with incoming Gov. John Carney adding his touches and Republicans seeking additional cuts, perhaps across the board.

Markell stopped short of recommending a state property tax increase. Delaware has the lowest property tax in the region and one of the lowest in the nation.

However, Markell did recommend trimming  the property tax for the elderly, who account for a growing share of the state’s population.

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One controversial proposed cut is ending a state subsidy for paramedic services in the county and tapping into transfer tax revenues that have helped counties avoid property tax increases.

New Castle County  Executive Matthew Meyer issued the following:

“The state faces unique fiscal challenges, and the governor’s recommended budget is a starting point to address the projected gap between State revenues and expenditures.  My team and I have begun to evaluate the New Castle County budget for next year, and we are already facing the challenge of meeting our cost drivers. Keeping our residents safe is among the most important commitments we make to citizens, and 94 percent of our real estate transfer tax revenues are used to fund police, paramedic, 911 and fire department operations.  We must all work collaboratively to ensure that the state budget is developed in a way that is fair to the taxpayers of all counties and does not cut into vital public safety operations that we all expect and deserve.  We look forward to having an open dialogue with the Carney Administration and the General Assembly to discuss these pressing fiscal issues to ensure that the most important public services are preserved this coming year and into the future.”

The proposal includes limiting deductions and raising the rate of the top tax bracket by 0.2 percent.

Also, the Markell proposed an adjustment to the corporate franchise tax, increasing the state assessment on realty transfer tax, and an increase in the cigarette tax.

 “The budgets we have enacted during the past eight years have been critical to supporting the strongest job growth in the region, great educational opportunities from early childhood through college for thousands of more students, and a higher quality of life for all Delawareans,” said Markell.

“There is no sugarcoating that hard decisions are needed to make our budget sustainable and responsible over the long-term, but if we continue to focus on the investments that have the greatest impact on the current and future prosperity of all Delawareans, our state will thrive for years to come, Markell stated.

The budget uses a mix of spending cuts and revenue increases to address a $350 million budget shortfall.

The budget adds the equivalent of 333 new teachers and steps salary increases while maintaining funding for early childhood education.

The governor has proposed $7.5 million to support recommendations of the Wilmington Education Improvement Commission to improve opportunities for Wilmington students. Funding would provide additional resources to address the needs of low-income students in the Red Clay and Christina School Districts, including English Language Learners (ELL), and establish a Wilmington Redistricting Fund to support continued transition and implementation of a plan to give Wilmington residents the ability to engage better in their schools.

Markell recommended $8.5 million for the popular Downtown Development District program and $10 million for the Strategic Fund for assistance to retain and attract business.

 “This balanced plan takes key steps toward structurally resolving the budget deficit not only for Fiscal Year 2018 but also by better positioning Delaware for the future,” said Governor Markell.

Spending reductions include measures to address the unsustainable growth of state employee health benefits and property tax subsidies.

Markell has stressed in previous budget proposals that the State can no longer afford to fund at the same rate as in the past, given skyrocketing health care costs and major increases in the use of the property tax subsidy.

Markell recommended  a new plan for all employees hired on or after January 1, 2008; implementation of deductibles for all plans (some currently have none); elimination of the health insurance premium preference for two state employees who are married (Double State Share); and elimination of the contribution inequity for pensioners on  a  prescription plan.

The proposed Fiscal Year 2018 Recommended Operating Budget totals $4,128.4  billion.

 

 

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