By PATRICK JACKSON and J.L. MILLER
Dover Bureau reporters
1/30/2003
Balancing Delaware's budget for next year will require eliminating 400 vacant state jobs, cutting aid to local schools, delaying some school construction and raising cigarette and corporate franchise taxes, Gov. Ruth Ann Minner said today.
Those actions are among dozens of spending cuts, budget fund transfers and service reductions Minner proposed in the $2.4 billion spending plan she presented to the General Assembly for the budget year that begins July 1. She proposed spending 1.7 percent more than the Legislature approved for the current year. That's the smallest increase in the state's budget since 1992.
Minner's plan includes no layoffs, although state workers not covered by union contracts would get no raises next year. The tax increases she proposed would raise an extra $142 million; the spending cuts total more than $150 million.
The state's corporate franchise tax would be increased by 17 percent to bring in an estimated $89 million more in revenue. Even without the increase, the current budget estimates the tax would bring in $447.5 million, just under a quarter of the state's income.
The cigarette tax would increase from 24 cents a pack to 50 cents a pack, increasing revenues by $23.5 million. Minner called for a similar cigarette tax last spring, but withdrew it when state revenues improved in June.
The measures proposed today are needed because corporate and personal income taxes are expected to decline because of the economic slowdown, and costs are up for things that cannot be cut, such as the Medicaid health insurance program for the poor, Minner has said.
State officials said the combination of lower revenues and growing expenses meant a potential budget gap for 2004 of $250 million to $300 million.
"While I believe that we have cut costs and made government more efficient, I also believe that there are certain obligations government has and certain services the state provides that should not be eliminated," Minner said in her budget speech to the Legislature this afternoon. "We cannot solve a $300 million problem completely through cuts without affecting children, the elderly, the poor, public safety and our state's competitiveness."
Minner also proposed allowing the state's three slot casinos to add new machines, remain open until 4 a.m. daily and open at noon on Sunday. Casinos now are open from 10 a.m. to 2 a.m. Monday through Saturday, and from 1 p.m. to 2 a.m. on Sundays. In return, the proposed budget calls for a new 1.2 percent surcharge on casino profits. That should bring in an extra $16 million.
Minner's budget also proposed:
# A 1 percent, $10 million cut in state funding for local schools.
# Saving $3.3 million by making counties pay a larger share of the cost of paramedic service.
# Making the Department of Motor Vehicles a part of the Department of Transportation, which would save $9.7 million from the General Fund, which is paid for by taxes and other revenues. DelDOT operations are paid for from a separate trust fund that collects highway tolls and taxes on fuel, among other things.
The General Assembly's Joint Finance Committee, which writes the budget bill each year, will hold hearings on Minner's proposed spending plan throughout February. By law, the budget bill must be in place by July 1.
Reach Patrick Jackson at 678-4274 or pjackson@delawareonline.com and J.L. Miller at 678-4271 or jlmiller@delawareonline.com.
