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Delaware’s Stimulus Sugar High

While Delawareans have been tightening their purse strings, Delaware’s nearly $5 billion budget continues to bloat, with spending increases, pay increases, and several massive one-time spending projects. The total of these projects is $260.5 million of taxpayer cash, $60.5 million more than the expected “surplus” of $200 million last year, which was simply the exact revenue total generated by Carney’s tax increases in his first year as Governor in 2017.

The federal stimulus “sugar high” allowed the Governor to bring up these massive pet projects once again. While Delaware’s expected revenue shortfall for FY 2021 was avoided, it was only due to $900 million in federal monies from the CARES Act that were drastically out of proportion to the state’s direct COVID-related expenses.

Carney touted Delaware small businesses received 83% of the CARES Act funding that has been spent so far, but this is only due to a tough fight from business leaders and multiple chambers of commerce—after months of pleading for assistance.

It took 69 days, a weak regional effort, and continued pressure from various stakeholders to finally establish Delaware’s Pandemic Resurgence Advisory Committee, and Delaware’s efforts to help its own businesses were next to nonexistent, spare the H.E.L.P. loans that are only available to the hospitality industry.

It’s wasn’t that we couldn’t afford to help our small and family-owned businesses: we had just given $2.5M to a British bank that only a year prior took 500 jobs out of Delaware. Our leaders simply chose not to help.

At the start of the pandemic, Delaware’s senior most politicians admitted their focus was not to help businesses. Other states with more favorable business climates had already recognized the importance of this assistance and taken steps early on to mitigate the problem, but Delaware continued to hold off on state assistance and releasing CARES funds once they were received.

Instead of helping, Delaware General Assembly leadership sent a letter to Rep. Lisa Blunt Rochester and Senators Chris Coons and Tom Carper, begging that federal funds be opened up to be used for other purposes than addressing COVID-related expenses, like the state budget. Luckily for Delaware businesses and workers, the package was restricted to COVID-related funding, and could not be spent for traditional budget items.

After months of delay (which exacerbated Delaware businesses’ needs) the state finally released the money meant to help them recover, once they realized their blanket spending requests would not be met.

The state’s current revenue is propped up from two federal stimulus packages that are a false safety net for the economy and generating one-time increased tax revenues, like those from our the highest in the nationreal estate transfer tax, and worst in the nation corporate tax burden. Rick Geisenberger, Delaware’s Finance Secretary is weary of assuming stable revenues as the pandemic still has no end in sight.

More focus should be on preparing for other budget catastrophes, like those seen in 2008 and 2017. Delaware ranks 45th in the nation for short-term financial stability, yet we spend as if the future is guaranteed. The Joint Finance Committee reviews and authorizes the Governor’s budget during the month of February: call the JFC members if you’re concerned about the lack of rainy Day Funds, the unfunded pension liabilities, the ballooning Medicaid costs, and the repeated delays in support for small business.