By Joe Rogalsky,
Delaware State News
DOVER — Today’s revenue forecasts could determine whether Gov. Ruth Ann Minner and her budget-writing team have a blue Christmas.
With decorations of red on green Christmas trees, the Delaware Economic and Financial Advisory Council will meet at Buena Vista in New Castle to paint the state’s financial picture.
Gov. Minner is set to release her budget recommendations for fiscal year 2007 on Jan. 26. The new budget year kicks in July 1.
Work on the capital and operating proposals began in the fall and heats up through the holiday season.
Should DEFAC increase its projections for fiscal years 2006 and 2007, it could be a joyous Noel.
But the panel could resemble the Grinch by lowering estimates and leaving budget writers looking for ways to cut spending.
Though the state expects to collect more than $3 billion in general fund revenue this year for the first time, state officials say they are far from swimming in cash.
The state will have to pay more for health care, energy and other must-have items in fiscal 2007.
The prices of the state’s community college scholarship program and full-day kindergarten, for example, will add to the budget.
“It is going to be a tough year, there is no question, because of the increased costs and the new programs,” Gov. Minner said.
Besides the increasing costs, the state budget also has to absorb revenue losses from expected job cuts at MBNA and out-of-state gambling competition could crimp state spending.
The revenue situation impacts everything from starting new programs to whether state workers receive raises.
“When you add it all up, I don’t see a lot of money on the table,” said Senate Minority Leader Sen. John C. Still III, R-Dover.
“I think our numbers are going to grow with the economy, but we are going to have to be very careful. I think it is going to be a tough budget year.”
In June, Gov. Minner and legislators agreed on a reduction of the tax levied on businesses’ total sales.
Republican legislators said in the summer that they’d like to see the tax chopped again, but Gov. Minner isn’t committing to any reductions until she sees DEFAC’s findings.
“I might consider it if the December DEFAC numbers look extremely good, but last year the December DEFAC numbers did not look good,” the governor said.
The state’s operating budget for fiscal 2006 is $2.8 billion, about 7.3 percent higher than fiscal 2005.
The capital budget, which funds construction projects and land acquisition, totaled $834.8 million.
Last fiscal year, the state took in $2.88 billion in revenue.
DEFAC expects the state to collect $3.02 billion this year and $3.11 billion in fiscal 2007, based on the panel’s September meeting.
In case DEFAC’s projections drop, state agencies were instructed to develop a list of potential cuts.
The reductions, which were submitted to the Office of Management and Budget along with spending requests earlier this year, would have to be scrutinized before they would be implemented.
“These are just the starting points of discussion with agencies,” said Robert Scoglietti, the OMB’s director of policy and external affairs.
“If in fact we were forced to do cuts we would review each submission on their merits, gauge the impacts of each cut and ultimately develop a package that would minimize service delivery to Delaware citizens similar to our practice earlier in the decade.”
Staff writer Joe Rogalsky can be reached at 741-8226 or jrogalsky@newszap.com
