On Thursday, Gov. John Carney proposed a $4.25 billion budget that seemed to strike the right notes.
The 3.5 percent increase in spending includes modest pay increases for state workers and teachers without a tax increase. Money was added for construction projects that had been trimmed back.
That’s a marked contrast from last year’s budget gap that by some ran upwards of half a billion dollars. The budget hole was plugged by tax and fee increases and some spending cuts.
But keep in mind a couple of back stories.
The gaming industry is in jeopardy, due to the high percentage of revenue taken by the state. Yesterday we learned that Dover Downs posted a $1 million loss for the year, despite cost-cutting efforts.
Dover’s loss, which followed a small profit last year is not sustainable and puts thousands of jobs in jeopardy over the long term, since the state’s other two racinos race similar challenges.
Also, a hastily enacted increase in the real estate transfer tax holds the potential of freezing out more first-time homebuyers and those with modest incomes.
This week, legislation has been introduced in an effort to deal with both the transfer tax and casinos. Any efforts to address these matters will affect the budget figures.
The Delaware Business Roundtable also offered a cautionary note:
“Looking ahead, state officials must carefully watch future state economic projections and other variables, such as the impact of the federal tax cuts, to determine whether the governor’s proposal to increase state spending by 3.5 percent is truly sustainable.”
Enjoy your weekend. This newsletter returns on Monday. – Doug Rainey, Publisher.
