Senate passes $3.8 billion budget
Lawmakers in the Delaware Senate gave approval Tuesday to a $3.8 billion state budget for the fiscal year beginning on July 1.
The budget raises operational spending by 2.4 percent over the previous year, mainly because of higher mandatory spending on public education and Medicaid, the low-income program.
Balancing the budget relies on $40 million typically used to fund road improvements and $50 million in higher corporate formation taxes, passed by the General Assembly in April.
The Senate voted 18-3 Tuesday to pass the budget. It now heads to the House.
Three Senate Republicans voted against the plan. They were Sen. Colin Bonini, R-Dover South; Sen. Brian Pettyjohn, R-Georgetown; and Sen. Gerald Hocker, R-Ocean View.
"It's a budget that's a little bit hard to be really proud of," said Sen. Harris McDowell, a Wilmington Democrat and co-chair of the budget-writing Joint Finance Committee. "We started the year thinking we would have a lot more money to deal with."
Tax collections fell in the months since January, when Gov. Jack Markell recommended his budget, forcing the budget committee to produce a plan that appropriates about $20 million less than the governor's spending recommendations.
Lawmakers did very little cutting, however, instead shifting money around to pay for important expenses. The budget committee used tobacco settlement reserve funds, for example, to fund a children's insurance program and a bond premium to make a $8.6 million debt payment.
Markell's budget included a full-year 1 percent raise for state workers. Lawmakers instead voted in a $500 across-the-board raise but delayed the hike until January 1 to save money.
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Higher Medicaid enrollment is expected to cost state taxpayers another $24 million in the year beginning July 1, with higher student enrollment requiring nearly $19 million in new public education spending on teachers. Step raises for teachers will cost another $9.2 million.
Lawmakers did vote, for a second straight year, to raise taxes to balance the budget. In April, Markell signed legislation that raised annual tax on the state's limited liability companies, limited partnerships and general partnerships from $250 to $300 a year, a move expected to generate about $33 million annually.
The bill, which was not opposed by the corporate community, also increased the minimum annual corporate franchise tax on businesses incorporated in the state by $100, from $75 to $175, raising $18 million.
Perhaps more controversially, Markell and lawmakers used $40 million earmarked for road and bridge improvements to balance the budget.
Markell proposed replacing that money by raising the state's per-gallon gas tax by a dime, but election-year lawmakers pushed back. In a compromise last week, lawmakers and administration officials agreed to raise tolls along Del. 1 to finance $10 million in paving projects. The state also will borrow $20 million for additional paving.
Even with the deal, capital transportation spending will fall from $192 million in the current year to about $160 million next year. Markell had hoped to spend $228 million with higher taxes and additional borrowing.
From the Senate floor on Tuesday, Bonini urged fellow lawmakers to focus more on reducing state spending in future years, especially on Medicaid and personnel costs.
"Until we are willing to make some difficult decisions in this building on those two things, personnel and benefits and Medicaid, we are eventually going to run into a wall and have a very bad outcome, in my humble opinion," Bonini said. "I hope we are going to start having those discussions."
Contact Jonathan Starkey at 983-6756, on Twitter@jwstarkey or at jstarkey@delawareonline.com.