By Joe Rogalsky,
Delaware State News
NEW CASTLE — State revenue forecasts went up slightly Monday, meaning Gov. Ruth Ann Minner and her budget team might be able to act a little less like Ebenezer Scrooge when crafting spending proposals next month.
The Delaware Economic and Financial Advisory Council increased its estimates by $57 million for fiscal years 2006 and 2007.
The council projected state revenues would be $3.05 billion for this fiscal year and $3.14 billion for fiscal 2007.
The higher predictions will give Gov. Minner $3.18 billion in general fund revenue to allocate between the operating and capital budgets, plus about $160 million in bonds that will help fund the capital budget.
Revenue predictions have risen $85 million since fiscal 2006 began July 1.
Gov. Minner and Jennifer W. Davis, director of the Office of Management and Budget, will compile the fiscal 2007 spending recommendations over the next few weeks. The governor releases her proposals Jan. 26.
“I wish we could have come in with a few more million, but you can’t be greedy,” Secretary of Finance Richard S. Cordrey said.
“I would think the ($85 million) will make the governor about three-quarters happy until she hears what (Mrs. Davis) is going to spend it on.”
Though the state’s operating budget will increase beyond this year’s $2.82 billion, officials are warning they are not going to resemble Santa Claus with a sack full of money for agencies.
Mrs. Davis listed health care, education, transportation and energy as areas that will dominate the budget.
On top of the spending pressures, Monday’s estimates do not include predictions of revenue lost as a result of the MBNA-Bank of America merger.
“Obviously, the economy is doing well, but the governor will face significant challenges in putting this budget together,” Mrs. Davis said.
“The taxpayers will have a difficult time understanding. We had a relatively good year last year and we were able to address pent-up demands.
“There will be expectations we can do that this year and those expectations will have to be tempered.”
DEFAC’s increases stem largely from growth in the corporate and personal income tax categories, two of the top revenue pillars in the state’s general fund.
Council member Frederick Dixon, an economist, said the economy has persevered despite recent interest rate hikes, devastating hurricanes and increasing energy prices.
“It’s a good-looking forecast and it’s a good-looking economy,” Mr. Dixon said.
“We are in a sweet spot right now.”
Predictions for the realty transfer tax grew for fiscal 2006 by $10 million to $122.6 million, but remained the same for fiscal 2007 at $112 million. The state collected $113.6 million in fiscal 2005.
Revenues from the tax have risen as the state’s real estate boom continues, defying some forecasts of a cooling-off period.
Money from the tax so far in fiscal 2006 has outpaced expectations, leading to the increase.
Dr. Kenneth Lewis, a University of Delaware economics professor, said the real estate market would likely stay hot as long as interest rates for mortgages do not get too high.
“There are conflicting signals,” Dr. Lewis said of the state’s real estate market.
“There is some anecdotal evidence of the housing market slowing down in Sussex County.
“We really think this thing may be slowing its growth rate.”
Staff writer Joe Rogalsky can be reached at 741-8226 or jrogalsky@newszap.com
