Financial forecasts show state with a $1 billion surplus

0
Reading Time: < 1 minute

Delaware is anticipating a $1 billion surplus, based on forecasts presented at the meeting Monday of the Delaware Financial Advisory Council (DEFAC).

Members were presented with forecasts showing the surplus that comes as federal relief funds pick up some state expenses related to the coronavirus pandemic.

Revenues from personal income taxes and other sources are running ahead of earlier forecasts, despite the state’s six percent-plus jobless rates.

Also, revenue comparisons are based on 2020 figures, which were greatly impacted by job losses due to the coronavirus pandemic.

Delaware faces constraints in using the funds to lower taxes or shore up its employee pension system due to strings attached to federal relief funding.

Major expenses, such as unemployment insurance payments and an expansion of Medicaid for those with lower incomes, have received funding from federal stimulus packages. That money will eventually go away.

The Caesar Rodney Institute, a public policy group, has pushed for a tax cut that would use the existing surplus, which is set aside as part of Gov. John Carney’s “tax smoothing.” Tax smoothing aims to provide budget funds when times are tougher.

Whether that would pass muster remains unclear.

Also, progressive legislators, who comprise a larger percentage of General Assembly members, will push for an expansion of social programs.

A final DEFAC meeting will be held in June, before the adoption of the state budget.

Click here for forecasts of revenues and expenditures.

Facebook Comments