The first meeting of the General Assembly’s Joint Finance Committee Tuesday gave lawmakers a chance to respond directly to Gov. John Carney’s proposed fiscal plan for 2024.
That plan includes two notable tax relief proposals: raising Delaware’s standard deduction by 75 percent and increasing the refundability of the earned income tax credit. Finance Secretary Rick Geisenberger told the JFC that the tax proposal is an attempt to offer relief to middle- and low-income households.
"Frankly, the best way to do that – and the simplest way to do it – is to expand the standard deduction," he said. "As I’m sure you all know, the federal standard deduction was expanded dramatically in 2017. Our standard deduction hasn’t been expanded since 1999 or 2000."
JFC Chair Sen. Trey Paradee expressed support for both proposals, which would primarily benefit Delaware households with gross incomes under $75,000.
"I was also very happy to see that it was targeted towards people on the lower end of the income scale who have been more impacted by inflation," he said. "In many ways, inflation works like a regressive tax in that regard."
The two proposals would cost the state a combined $55.7 million when fully implemented in 2025.
In total, Carney’s proposed budget entails a more than seven percent increase in spending – higher than the state’s benchmark for year-over-year budget increases.
During Tuesday’s JFC hearing, Geisenberger also discussed how that increase can coexist with the state’s efforts to avoid a budget crisis if Delaware’s unusually volatile revenue streams shrink.
In the next two years, Geisenberger predicts declines in franchise taxes, corporate income taxes and realty transfer taxes. "What goes up must come down," Geisenberger said. "We're seeing some of these revenues come back down to earth," forecasting a three percent decline in overall revenues in fiscal year 2024.
To prepare for that drop, Geisenberger says Carney’s plan focuses on one-time spending and investments in the state’s budget stabilization fund, though it also requires some ongoing spending, including increases in state employee and public educator salaries.
