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Gov. Carney's recommended budget includes weighted raise for state employees

Gov. John Carney unveils his recommended budget for the upcoming fiscal year. The state continues to see unexpectedly high numbers of surplus cash.

Carney's proposed 2023 budget pushes Delaware’s state budget near $5 billion for the first time, sitting at $4.99 billion. But he says the plan still reflects smooth and responsible budget growth after previous success with that approach.

His budget plan is 4.6% larger than this year, but still adds just over $15 million to the Budget Stabilization savings fund — topping the fund off at around $302 million.

Carney cites that fund, combined with responsible spending, as the reason the state made it through the worst of the pandemic without major spending cuts or tax increases.

"That has served us well, particularly when the bottom fell out with COVID-19 — and our approach this year will serve us well in the future again," Carney says.

Last year’s operating budget was $4.77 billion, which represented a 4.9% increase over the previous year. But that represented the budget after state lawmaker’s tweaks, Carney’s recommended budget last year was more conservative, and represented a 3.5% increase.

Secretary of Finance Rick Geisenberger says now is not the time to be making rash decisions with the state budget.

“The biggest areas of concern on the revenue side are that — the reason we have this revenue available to spend for this financial plan is from three of our most volatile revenue sources.”

Those sources are the state’s Realty Transfer tax, Corporate income tax and expected revenues from personal income tax. Geisenberger says all three sources have grown four times as fast in the last two years as they did in the previous ten.

“The Real estate transfer tax has grown 30% a year for each of the last two years.” says Geisenberger. “Normally it grows about 7.5% during good times; over the last ten years that’s been the average, taking out the effects of the rate increase that went into effect a few years ago.”

One area the governor wants to spend more is state employee wages, proposing an increase that addresses equity and helps attract workers amidst a shortage.

“It is designed to make us more competitive. Because we have a lot of vacancies. We have lots of people who are eligible for retirement. So the answer is yes; there are pay increases in this budget to try to address those competitive needs.”

The state typically gives out increases across the board, like a 2% increase, or a flat $1,000.

But the weighted system proposed could give employees between a 2-9% increase, with the lowest paid employees receiving the highest increases.

Office of Management and Budget director Cerron Cade says the employees on the lowest end of the pay scale will be the last ones to get to the $15/hour level, including temporary employees and paraprofessionals in public schools.

He says they’re on track to ensuring all state employees are at or above $15/hour by 2025, as dictated by the new state lawpassed last year.

That proposal also includes a one-time $500 bonus for state retirees.

Carney says state employee compensation needs to get more competitive.

“We know that the Amazon plants that are near some of our facilities are paying hourly rates that exceed $15 and hour and challenge our agencies to fill the vacant positions that they have,” he says.

Carney recently installed Claire DeMatteis as the new secretary for the Department of Human Resources, with the express goal of improving state employee recruitment and retention; something DeMatteis worked on in her role as Department of Correction commissioner in prior years.

And Carney’s focus on one-time spending remains, with much of the state’s excess revenue coming from highly volatile sources. Spending priorities include school construction, transportation, economic development and clean water.

Some of his budget highlights are:

  • $60 Million for economic development, including further investments in site readiness and transportation infrastructure.
  • $404.7 million towards environmental justice projects; including $30 million for farmland and open space preservation, shoreline resiliency and $367 million into the state's clean water fund ($355 million of that coming from federal sources)
  • $11.5 million in increases for child care providers and workers
  • $80 million to finish funding for the construction of new family court facilities in Kent and Sussex counties.
  • $45 million for deferred maintenance at each of Delaware's public universities, funding boosts for college scholarships, and $107 million in allocation of federal funds for pandemic-related projects at universities.

The budget commits nearly $340 million towards funding school projects, with much of that going towards statewide school infrastructure upgrades. That piece also includes around $13 million to implement recommendations from the Redding Consortium and $7 million to support Carney’s own Wilmington Learning Collaborative push.

Next to the general budget is a $1.18 billion capital budget, a $57 million grant-in-aid bill and $215 million in proposed one-time-spending. That capital budget is less than last year’s $1.36 billion record breaker, but Carney notes there are lots of federal infrastructure dollars coming into the state in the next few years.

Carney says he’d consider lowering tax rates strategically in future years, especially if it were designed to attract more workers to the state — but that won’t happen unless increasing revenue stabilizes.

The Joint Finance Committee begins its budget hearings next week.

Roman Battaglia is a corps member withReport for America, a national service program that places journalists into local newsrooms.

Roman Battaglia grew up in Portland, Ore, and now reports for Delaware Public Media as a Report For America corps member. He focuses on politics, elections and legislation activity at the local, county and state levels.