Hey it’s Monday,

State Treasurer Ken Simpler’s newsletter is a must-read for businesspeople concerned that the current Delaware budget process is a horse and buggy enterprise that drags down the Delaware economy.

Simpler, one of a couple of statewide GOP officeholders,  outlines the findings of an advisory panel charged with helping the state avoid the near chaos we see at times in Legislative Hall when revenue shortfalls occur.  The panel came about after legislators last year wrestled with a  $400 million budget shortfall.

 Click here  to read Simpler’s report.

As Simpler notes, current practices are four decades old and in need of big changes.

The biggest takeaways –  a change in revenue forecasting practices to a more realistic multi-year model, and the use of a budget stabilization fund that  bolsters the current “Rainy Day Fund.”  

The  Rainy Day Fund fund is never used, since draining it would lower the state’s bond rating and set off other alarms.

There is also a recommendation to lower the state’s high income tax rate by curbing itemized deductions and placing an income means test on breaks for senior citizens.

With many legislators in that age group and intense lobbying pressure that would accompany such a proposal, don’t hold your breath on the plan gaining traction.

We have heard little about the advisory group ’s report this year, due in part to the windfall in state revenues.

 A gold rush mentality ensued as interest groups of all stripes made their pitches.

Grant-In-Aid –  which assists nonprofits in the state – could see last year’s cuts restored. Pay increases for state workers and a symbolic bonus for state retirees are also part of the package.

And here’s some news that may or may not come as a shock.

 The Delaware State News notes that the operating budget that could pass at the end of the month actually represents  a  5.2 percent increase  from last year. That’s hardly a model of fiscal responsibility.

Worse yet, we are seeing a lost opportunity to bring some modern-day thinking into the budget process.

A strong case could be made that a two to three percent increase in spending from a year ago should have been crafted,  with the remaining proceeds going into the budget stabilization fund.

To its credit, The General Assembly’s  Joint Finance Committee set aside less than $50 million for next year’s budget, knowing that the fiscal picture is likely to get worse. That could become a down payment on a stabilization fund.

Those with knowledge of the numbers, from the governor on down, know the current way of doing things won’t work, even in the short term.

Sadly, the nature of government is to let the money burn a hole in its pocket and avoid tough decisions during an election year.

Yes, the sun is out after a wet weekend. Enjoy the day  The newsletter returns tomorrow. – Doug Rainey, publisher.