Legislature passes $5.6B FY 2024 budget
DOVER – The legislature approved the state’s Fiscal Year 2024 operating budget totaling $5.6 billion and a $193.5 million one-time supplemental funding bill on Tuesday, sending the measure to Gov. John Carney who is expected to sign it.
The operating budget is about 10% bigger than last year’s spending plan and subsequently drew some opposition from Republicans. Eight voted against the budget in the House of Representatives on June 22 while three opposed it in the State Senate on Tuesday.
“Delawareans expect us to pass a responsible, sustainable budget that protects taxpayer money and makes our state more competitive. This budget does exactly that. We are raising salaries for teachers, getting more resources in our highest-needs classrooms, investing in affordable housing, and continuing to save for more difficult years,” Carney said in a statement thanking legislators for their work.
The legislature’s Joint Finance Committee (JFC), which reviews and revises the governor’s proposed budget, added more than $124.5 million to its proposal. Among major additions, the JFC included $48.7 million more to address growing Medicaid expenditures as well as $13 million for nursing care facilities and home care workers to tap into federal grant matches. It also approved $4.1 million to stand up a new regulatory system for recreational marijuana, which Carney allowed to become law without his signature.
“The members of the Joint Finance Committee did incredible work this year in striking a fiscally responsible balance between funding new programs and initiatives that will improve the lives of our neighbors, and maintaining the healthy reserves needed to help the state of Delaware weather the challenges we may face in the years ahead,” JFC Co-Chair Sen. Trey Paradee said in a statement following the budget’s approval. “I am confident the spending plans we passed today will put our state on solid footing and advance our efforts to build a healthy and prosperous future for all Delawareans.”
Among the highlights of the budget are raises for full-time state workers ranging from 3% to 9%, depending on pay grade, with the lowest grades receiving the highest percentage raises. Collective bargaining units would receive previously negotiated pay increases. Education employees will receive a 3% raise and applicable step increases, while teachers will receive a total pay increase of 9%. The budget also establishes a $15 minimum wage for full-time merit state employees.
The salary boost aims to help the state government hire hundreds of open positions in a tight labor market, while boosts to teacher salaries likewise aim to keep more teachers from moving out of state.
In the supplemental spending bill, legislators allocated $51 million to address outstanding long-term liability costs associated with retiree health benefits and $30 million for statewide housing investments to address Delaware’s housing crisis.
In the last meeting of the state’s independent financial analysts before legislators vote on the Fiscal Year 2024 budget, steady income from May and June added $84.3 million to the budget appropriation limit.
The final report from the Delaware Economic and Financial Advisory Council (DEFAC), a non-partisan group of business and community leaders, academics, and government professionals that sets the state’s official revenue estimates, increased the spending limit to more than $6.63 billion. That’s more than $360 million more than the initial forecast made last October for FY 2024 but only about $59 million more than what Gov. John Carney proposed in his budget.
Legislators are scheduled to consider the state’s capital budget and grants-in-aid bills over the next few days, completing the full budgeting of revenue.
Meanwhile, concern is growing about what work may need to be done to curtail spending next year’s budget, with DEFAC predicting a 3% decline in revenue next year compared to the current year and a FY 2025 that would also see declines from FY 2023.
“As we look ahead, past this current budget year, there are some concerns … We have seen a decline of nearly $250 million in revenue and we are also currently aware of nearly $300 million in coming expenses in next year’s budget which are going to be very difficult to avoid,” Paradee told his colleagues on Tuesday. “This is a two-year General Assembly. And hopefully DEFAC will give us some positive news in the months to come and maybe there’ll be some room to do some other good things.”
The state is sitting on considerable savings that help protect its AAA bond rating, including $316.4 million in its “Rainy Day” reserve fund and $402.6 million in the Budget Stabilization Fund, a discretionary fund that could be tapped to fix future deficits.