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February 22, 2025 In Blog

Navigating Fiscal Challenges In Delaware: Insights from the FY 26 State Budget Hearings

By: State Representative, Kevin S. Hensley, Guest Contributor

This year’s hearings on the FY 26 state budget have been interesting thus far.  We’ve had brand new cabinet secretaries presenting their department’s priorities, having been on the job for less than thirty days.  Furthermore, the Governors Recommended Budget (GRB) which is being considered is actually the budget put forth by former Governor Carney on his last day of office in January.  We’ve been told that Governor Meyer will be performing a budget “reset” in March – no one seems to know at this time how this will affect what we’ve been working on during this month of February.

In the budget overview, OMB Director Maxwell informed us that the proposed budget represents a 6.9% increase over the FY 25 budget.  Please note that the prior two years budgets have seen growth by just under 10% each year.  I have suggested since my time on the Joint Finance Committee that this amount of growth would not be sustainable and that we ought to be looking at how to keep spending under control.

Unfortunately, it seems that I’ve been right after all . . . it is currently projected that at this rate, we will be running a 325 million deficit in FY 27 and a 143 million deficit in FY 28.  The Administration has proposed that we raid the budget stabilization account (one of our two state savings accounts) to cover the shortfall.  This in essence would completely deplete this account.   I do not agree that this is the proper approach.  Instead, we should be looking at the number of vacant positions in state government of three years or more and move to eliminate some or all of them from the operating budget.  My feeling is if they’ve not been filled at this point, and the agency seems to be operating fine without them, that we remove them from the books.

Our budget challenges in part are related to the increased cost of those programs we are obligated to fund (often referred to as “door openers”).  These include an $85 million increase in the Medicaid program for FY 26.  While the number of participants in the program has dropped from about 310,000 Delawareans to 290,000 currently, the cost of services has increased.  Other programs include $26 million additional to cover just enrollment growth in our public schools throughout the state and $81 million to cover increases in teachers salaries.

In addition to the State’s operating budget, there are two additional pots of money – the Bond fund to cover the costs of infrastructure projects and the Grant In Aid budget to subsidize the work of hundreds of non-profits throughout the State.  I have long been advocating to increase this allocation which has been fairly flat over the past several years.  These organizations do great work for some of the State’s most vulnerable population and are critical in addressing the needs of thousands of Delawareans.

Please stay tuned as we continue to work through the budget and don’t be shy about weighing in with your thoughts to your State Senator or Representative.

State Representative Kevin Hensley, elected to the House of Representatives in 2014, represents the 9th District, which includes the Odessa, Townsend, and Port Penn areas in Delaware. Kevin is an Associate Broker with RE/MAX Premier Properties, a Founding Member of the MOT Charter School, and an advocate for nonprofit organizations that support members of the IDD community, including Easterseals and Ability Network of Delaware.