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State faces $75 million budget shortfall

Cape Gazette of Lewes, Delaware

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With no political will to raise taxes, legislators must cut costs

In the days following the passage of this year's $3.9 billion state operating budget, Speaker of the House Pete Schwartzkopf said conservative projections were showing a $100 million deficit for Fiscal Year 2017, but he said in reality it was probably going to be closer to $150 million or $170 million.

Fast forward 10 months, to the height of the state's budget-writing process, and it appears the conservative projection was a bit high, but not by much.

A May 23 report from the Delaware Economic and Financial Advisory Council, a group charged with projecting state income figures used to create the state budget, showed a $75 million gap between current revenues and Gov. Jack Markell's proposed Fiscal Year 2017 budget of $4,114 billion. Since the governor's budget was unveiled in January, estimated state revenue has dropped $52.8 million.

Schwartzkopf, D-Rehoboth, said he was happy the shortfall isn't as dire as previously projected, but it's still large enough to make the last month of the session difficult. He said the largest portion of the decrease — about $45 million — was in the anticipated amount of revenue in personal and corporate income taxes.

The General Assembly is on a two-week break, while the Joint Finance Committee, 12 state lawmakers rewriting the governor's proposed budget, meets to balance the shortfall.

The committee will meet three days next week, and the full complement of legislators will resume their work Tuesday, June 7. The end of the session is Thursday, June 30.

Schwartzkopf said he wasn't surprised by the change in revenue projections over the past six months.

In Delaware, a significant portion of revenue comes from outside sources, which, he said, can be good because it means Delawareans don't have to carry all the burden, but it also means revenue can fluctuate.

Schwartzkopf said there isn't the political will in Dover to raise revenue to close the gap, which means cost-cutting measures will take place, and that can be tough. The state is the largest employer, and much of the low-hanging fruit has been trimmed balancing the budget in previous years.

Legislators in Dover are very reluctant to raise taxes, said Schwartzkopf, but then they don't come up with any other solutions either.

As for Sussex County, Schwartzkopf said he wasn't aware of anything specifically that was going to be affected by the shortfall, but that he was going to keep a watchful eye on the process.



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Original Publication Date: May 27, 2016



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