DOVER — On his final day in office, Gov. John Carney released the proposed Fiscal Year 2026 budget for the state that includes the usual hallmarks of his spending plans.
The operating budget is below what state financial and economic experts set as the limit for the operating budget at $6.6 billion, still a 7% year-over-year increase from last year’s package. It also includes maintenance funds for the budget stabilization fund at $469.2 million as well as funds for Other Post-Employment Benefits for state employees.
Carney’s proposed budget also includes $1.02 billion in bond-funded, multi-year capital improvement projects and $78 million set aside for the grants-in-aid process.
In all, the 74th Governor’s final budget proposal allocates $7.02 billion— just a fraction less than what it was last year.
“My final recommended budget continues to responsibly invest taxpayer dollars where they will have the biggest impact,” Carney said in a prepared statement Monday afternoon. “For eight years, I’ve been focused on getting our fiscal house in order, and I want to thank the members of the General Assembly for their partnership in this work. It has been an honor serving as your governor.”
In essence, the proposed FY 2026 budget serves as Carney’s swan song as he now heads to serve as Wilmington’s next mayor. Carney had spent years implementing financial policies, such as the budget stabilization fund to shore up savings in the event of an economic downturn, so Delaware— which has its income highly dependent on income and corporate tax— would not have to tap its so-called “rainy day” savings fund in tough times.
In fact, the budget stabilization fund has now been codified into law. Carney proposes adding $59 million to it compared last year’s $410 million.
Carney traditionally reveals his budget proposals at the end of January after the legislature reconvenes for about a week to set the tone for one of the biggest priorities each and every year. But the fiscally-conservative governor signed off on the proposal right before he stepped down and just days before Delaware will see its first of two governors to be sworn in by February.
Lt. Gov. Bethany Hall-Long will be sworn in Jan. 7, as Gov.-elect Matt Meyer will be inaugurated on Jan. 21.
The practice of an outgoing governor releasing a budget proposal— essentially a spending plan that may impact all Delawareans and hundreds of construction projects and scores of nonprofits if enacted — is common. Former Gov. Tom Carper did the same before he headed to the U.S. Senate in 2001.
The Carney administration then rewrote the budget proposal left behind by former Gov. Jack Markell in the spring of 2016 during the budget mark-up process. It’s likely that the incoming Meyer administration will do the same.
Economic Development
The governor’s proposed budget once again funds the major grant funds his administration developed with a proposed annual allocation of $39.7 million. There are no new grant programs included in Carney’s spending plan.
The Strategic Fund, which provides grants to employers who create or retain jobs or make significant investments in Delaware, would receive $20 million.
The Site Readiness Fund, which supports site work, planning and infrastructure installation as a way to attract new businesses, would receive $10 million.
The Transportation Infrastructure Investment Fund (TIIF) which backs changes to the state roads and railways to support large development projects would receive $5 million.
Finally, the Graduated Lab Space Fund, which matches investments in the building or retrofitting of new lab space for the rising life sciences sector, would receive $4.7 million.
Education Investments
With this proposed budget, Carney touted the investments in Delaware’s children and education systems, as well as the third year of an increase in teacher salaries. He allocated $81.8 million for public education salaries, including $14.8 million in annual step increases.
The proposed FY 26 budget also boosts Opportunity Funding by $3.8 million – Delaware’s solution to provide weighted funding and classroom-based support to students from low-income backgrounds or English learners in public schools – providing a total of $66.8 million for the initiative overall.
The proposed bond bill also includes $210 million in capital projects in the Appoquinimink, Christina, Colonial, Red Clay, Smyrna, and New Castle County and Sussex Vocational Technical districts.
The governor also allocated $76.9 million for the Purchase of Care, once again fulfilling the subsidy for low-income families.
Other investments
Now that the American Rescue Plan Act funds have been either spent or allocated, Carney still set aside $40.5 million in housing investments, including programs like the newly established Workforce Housing Program that grants investors to be reimbursed 20% of costs for housing projects designed to keep workers.
The budget also includes $63 million in Clean Water investments — something Carney had started budgeting for last year— as well as $80 million for the three public universities and public colleges in the state. Carney also has set aside $20 million for a “Biden Hall” at University of Delaware included in that amount.
He also allocated $31.5 million to continue both SEED and Inspire scholarships as well.
Finally, Carney has worked to address two long-lingering issues faced in Delaware — benefits for retired state employees and Medicaid coverage. The outgoing governor budgeted for $85.5 million for Medicaid services growth, as well as $61.3 million for the Other Post-Employment Benefits
