Breathing room: DEFAC projects higher revenue
The Delaware Economic and Financial Advisory Council, which projects state income figures used to compute the state budget, has increased its revenue estimate for the current fiscal year by $88 million compared to its September forecast.
The estimate for fiscal 2017 increased by $79 million, after trimming $7 million in revenue because of lower personal income tax revenues as a result of job cuts at DuPont following its merger with Dow Chemical.
“What it really did for us is take the pressure off,” said House Minority Whip Republican Deborah Hudson. “Our ‘budget hole’ going into the new year was about $190 million. The December DEFAC revenue increase … was $167 million higher than the DEFAC estimate from September. This increase gives the budget committee comfort to know that the core expenses can now be covered. This is good news but does not avoid Delaware’s problem — too many volatile sources of revenue — corporate income tax, lottery, escheat, to name a few.
Legislators or members of the public must not think this is a windfall that allows us to fund new projects or new spending. Really, this just makes us whole.”
Hudson said the new figures do not fully take into account the possible negative effects of the DuPont-Dow merger on Delaware. “That’s one unknown that could be a negative for us in Delaware,” she said.
She said legislators are awaiting the findings of two task forces — one tasked with finding new revenue sources and one finding duplication and possible cuts in state government.
The majority Democratic Caucus released this statement: “The news from the Delaware Economic and Financial Advisory Council is certainly welcome, and it shows that our economy is on the right track. However, we have to keep in mind that DEFAC’s own Revenue Subcommittee found that several of our revenue streams — including the one that saw a sizable increase — can be volatile and should be reformed to achieve greater long-term stability. That means that, while we are pleased to have a better financial picture moving into the budgeting process for fiscal 2017, we cannot declare victory and say that our work is done. We have many challenges facing our state in the coming months, and many of the proposed solutions and other ideas to better our state, which come from both sides of the aisle, carry a price tag.”