Delaware budget committee cuts $51 million to balance budget

DOVER, Del. (AP) — With Republican lawmakers balking at tax increases, legislative budget writers on Wednesday approved more than $51 million in additional spending cuts to balance a budget for the fiscal year starting Saturday.

The Joint Finance Committee also agreed to zero out spending next year for an annual package of grants to nonprofit groups, community agencies and volunteer fire companies, a move sure to generate vocal opposition from those constituencies in the final days of this year’s session.

In voting for the spending cuts, committee members watered down some proposals from Democratic Gov. John Carney.

Carney proposed saving $3.5 million by eliminating a state benefit allowing spouses who are both active or retired state workers to pay a combined health insurance premium of only $25 a month. Under the committee’s proposal, retirees can keep the current benefit, while active working couples would be responsible for 50 percent of the employee share of the premium, saving taxpayers only $1.6 million.

The panel also agreed to set a goal of $2 million in savings from unspecified changes to state employee health insurance plans. That’s less than a third of the $6.5 million in savings proposed by Carney by forcing state employees, who pay on average only about 10 percent of their health care premiums, to pay an additional 3 percent.

“We feel a certain amount of responsibility to employees,” said committee co-chair Sen. Harris McDowell III, D-Wilmington.

The panel did go along with Carney’s proposals for a 1.5 percent reduction in state funding for public school operations, which would save $15 million, and a $22 million reduction to an “educational sustainment fund” that provides additional discretionary funds to local districts. Lawmakers would allow school districts to raise taxes, without holding referenda, to cover reductions in the sustainment fund, although districts would be required to use reserve funds before raising taxes without approval by local residents.

The cuts approved Wednesday also include $5 million from Medicaid cost savings the administration expects to work out with managed care providers, and $2.7 million less in spending to meet enrollment growth in public schools.

“There are some strategies that still have to occur,” said budget director Mike Jackson of the proposed Medicaid savings, which he said would not directly affect benefits for covered individuals.

Wednesday’s cuts are on top of more than $80 million in cuts approved by the committee last month, including about $30 million in cuts not proposed by Carney. Rather than making structural changes to state agencies or programs, many of the cuts involve shifting costs on to local governments and school districts.

“None of these cuts were placed on government of any significant magnitude, … no significant reform,” said House Minority Leader Danny Short, R-Seaford. “This is the proverbial can, it has been kicked way down the road again.”

The final piece of the budget puzzle put together by the committee involves the annual grants package to community and charitable groups, which totaled about $46 million this year. Budget writers previously agreed to trim grant funding by about $10 million next year but went further Wednesday, agreeing to take $37 million purportedly intended for grants to close the gap in the proposed general fund budget.

“It’s horrible,” Rep. Melanie George Smith, co-chair of the finance committee, said of the lack of funding for nonprofits and community groups.

“For some of them … the cut may be enough that they’re not going to be able to sustain operations,” said Smith, D-Bear, who is hoping lawmakers can agree on a revenue package so grant funding can be restored.
Meanwhile, budget negotiations between legislative leaders have bogged down amid disagreements over Democratic proposals to increase taxes on Delawareans and Republican demands that the state rein in spending. Lawmakers on both sides are eyeing legislation to keep government operating in the event a budget agreement is not reached by Saturday morning.

Democratic lawmakers, meanwhile, criticized the cuts made Wednesday, blaming Republicans, even though Democrats have an 8-4 majority on the finance committee.

Senate president pro tem David McBride, D-New Castle, criticized GOP lawmakers for “dictating” that lawmakers inflict pain on seniors, school children, veterans and others who rely on services provided by nonprofits, adding that he intends to hold Republicans accountable.

Republicans fired back, saying the cuts demonstrate the values held by Democrats.

“They have declared that they value union campaign checks and unsustainable spending over the most needy in Delaware,” GOP Senate leaders Gary Simpson of Milford and Greg Lavelle of Wilmington said in a prepared statement. “The idea that they would use our nonprofits as a tool in budget negotiations is mean-spirited and pathetic.”