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Good morning,

One of the myths making the rounds is a  $400 million windfall in the state budget.

Granted, revenues have been on the upswing in the state.

As noted   in a story in yesterday’s  newsletter,  employment figures were not as dismal as first thought.  Concrete payroll information showed a gain of 2,900 jobs, rather than a loss over a one-year period that came from preliminary estimates.

Gov. John Carney took advantage of the upswing with a proposed budget that comes with a 3.5 percent increase in spending. The package includes employee  raises. 

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It would have been preferable to have seen a zero increase, with specific cuts needed to reach that figure. The headlines would have been ugly, but it would have been a  good starting point.

Add in the Delaware Economic and Financial Advisory Council’s higher revenue estimates and you come up with a $400 million figure.  If you subtract out Carney’s budget, the so-called windfall is less than $200 million.

It should be noted that some of this money is a one-shot deal that will go away.  Meanwhile, the state’s structural budget deficit, brought by higher Medicaid and employee health care costs,  will wipe out any cushion, perhaps as early as next year.

Meanwhile, various interests are eying the so-called windfall.

The nonprofit community, which lost $25 million   from Dover’s effort to plug last year ’s nearly half a billion dollar budget gap, is aggressively lobbying for those funds to be restored.

On the other side of the spectrum, the casino industry, which employs a few thousand taxpayers, also needs relief from the state’s aggressive revenue sharing formula.

Other examples abound and don’t be surprised to see last-minute deal-making at the end of June.

What is clearly lacking is a look at best practices by other states and cities.

Instead,  the folks in Dover take a  “not invented here” approach in fiscal matters, relying on increasingly antiquated formulas in school finance and other areas.

It adds up to a  lot of potential misinformation and the potential for bad decisions.

A note to our valued readers.  The Delaware Business Now newsletter will not be posted on Memorial Day, July 4th   and Labor Day. – Doug Rainey, publisher

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