Delaware’s revenue forecast is looking better heading into the new year.
The Delaware Economic and Financial Advisory Council met Monday to offer its final projection of how much money the state has to work before Gov. John Carney unveils his recommended budget next month.
DEFAC adjusted its forecast up by $264 million since meeting last in October, a 4.7% increase.
That leaves the amount Carney and state lawmakers have to spend flirting with six billion dollars for the first time. The state’s appropriation limit stands at $5.95 billion.
DEFAC’s October meeting put the state’s appropriation at $5.68 billion, and the state’s budget last year stood at $5.75 billion, which included almost a billion in one-time spending.
DEFAC chair Michael Houghton notes the bounce is even larger compared to what was expected in June.
“To have an 823 million dollar extraordinary revenue number is almost incomprehensible,” said Houghton. “But I’m sure our friends in the General Assembly will, in all of their wisdom working with the governor’s office, determine what will happen. I can only pray that what happens is good and thought-out and wise.”
The state saw big increases in revenue from personal and corporate income taxes, due in part to strong economic growth coming out of the COVID pandemic.
Much of the increase came from far greater than expected collections of corporate income taxes, says Director of Research and Tax Policy David Roose.
“Growth is reasonable, strong growth is reasonable — I think given the data and the anecdotes and everything else,” said Roose. “But the growth that we’re seeing really goes beyond what you might expect based on everything we know.”
State budget officials found the federal stimulus funding helped contribute to the positive economic outlook the state is experiencing.
A big increase in state expenses comes from capital projects. But budget officials note much of the $300 million increase is the capital projects approved this year beginning the bulk of their construction.
Office of Management and Budget Deputy Director Cali Engelsiepen says most capital projects run on three year plans, so the first year mostly consists of planning and design, while the bulk of the spending happens in the second two years of the project.
Unemployment levels are expected to continue a sharp decline, with an anticipated 4 percent increase in employment next year, and around another 3 percent over the following two years.
Gov. Carney will use these numbers to create his recommended budget for the 2023 fiscal year. He’ll unveil that next month.
DEFAC next meets in March.
Roman Battaglia is a corps member with Report for America, a national service program that places journalists into local newsrooms.
