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State passes pared-down FY ’21 budget that axes readiness funds

From Delaware Business Times

DOVER – The Delaware General Assembly completed its work on the fiscal year 2021 budgets over the past week, delivering something that is smaller than what Gov. John Carney proposed in January due to the impact of the COVID-19 pandemic.

Among the cuts imposed on the annual budgets were several initiatives that aimed to speed up Delaware’s ability to provide space for employers.

The governor proposed a record-setting $4.63 billion operating budget and $893 million capital budget appropriation that was ultimately undone by the financial havoc wrought by the COVID-19 pandemic. In the months since the virus spurred widespread shutdowns of state businesses and limited commerce, Delaware has seen a revenue forecast decline of more than $530 million.

Over the last days in June, state lawmakers approved a $4.54 billion operating budget, about 2.1% larger than the last fiscal year due almost entirely to fixed “door opener” cost increases like pensions, debt service and school enrollment funding. Even though it fell short of Carney’s original proposal, the operating budget is still the largest in the state’s history.

Mike Jackson, director of the state’s Office of Management and Budget, described the FY 2021 budget as one where “no one loses, but no one really wins.”

One reason why the budget was able to largely match the FY 2020 appropriation level was that state officials used half of the Budget Stabilization Fund, which was created under Carney’s tenure to plug smaller budgetary gaps through an annual 2% savings program. Lawmakers were able to use only $63.1 million from that fund to offset losses, while also not touching the state’s long-protected “rainy day” Reserve Fund.

“In a year such as this, to be able to continue to maintain that level of discipline, but also fully funding the state’s ‘rainy day’ fund is a pretty remarkable achievement,” Jackson said at a June 30 press conference where Carney also signed the budget bills.

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