Gov. John Carney delivers his 2025 budget proposal, requesting an 8.25% increase in general fund spending from the current year.
While Carney is requesting an overall increase in the operating budget — from $5.6 billion in FY24 to $6.075 billion — due to salary increases and rising health care costs, his proposal includes decreases in other categories as state revenues continue to drop.
Carney is proposing a 7.6% decrease in Grants-in-Aid funding. The General Assembly approved close to $72 million last year; this year, Carney is recommending $66.5 million be allocated for nonprofit funding.
He's also requesting around $944 million for the Bonds and Capital Improvements Act. This request is a 32% decrease from last year's $1.4 billion.
Finally, Carney is recommending cutting one-time supplemental funding in half from last year's $194.5 million to $91.8 million in FY25. $56.1 million of the request would go toward Other Post-Employment Benefits (OPEB) liabilities.
OPEB is used to pay the state's benefits for post-retirement health insurance under the state employees' pension plan.
Senate Bill 175 requires that every year, at least 1% of the general fund operating budget for the prior fiscal year is appropriated to the OPEB Fund.
Carney’s proposal reflects his emphasis on long-term fiscal health, believing the state may need to tap its Budget Stabilization Fund in future years as revenues decrease.
Office of Management and Budget Director Cerron Cade notes the Governor's FY25 request does not dip into the current $410.1 million in the Budget Stabilization Fund.
“Legislators, they look at what’s right in front of them, and sometimes they don’t look to the next year, and what we’re trying to get them to do is to look to the next year with the Budget Stabilization Fund and just be careful about what you commit to this year," Carney says.
Health Care
Health care costs account for nearly 40% of operating budget growth with the state paying close to $2 billion on Medicaid and insurance plans for state employees and retirees — this is a $200 million increase from FY24.
"We just need to do a better job of controlling health care costs. We've got to get a greater focus on healthy lifestyles and healthy living. We kind of lost track of that during the pandemic," Carney says.
“To me, it’s kind of a wake up call to legislators that this is 40% of our budget and the numbers are going up faster than our revenue growth, and that means you’re not going to be able to do things that you would otherwise want to do."
He notes one of the main reasons health care costs have jumped is the loss of federal Medicaid reimbursement post-pandemic. The state now must cover those costs, which falls under Carney's requested $1 billion for Medicaid coverage.
"We got preferred reimbursements during Medicaid for additional populations, and the reimbursements went away before the populations did," he says.
Another source for concern is the projected $38.4 million deficit the Delaware Group Health Insurance Plan.
Cade says the FY25 budget request does not provide any funding to address this year's shortfall, but it does include $93.9 million to address next year's projected deficit.
Cade says these deficits are due to increased health insurance utilization across the board, but made special note of higher-than-projected coverage of diabetes medication, weight loss medication and bariatric surgeries.
Salary Increases
Carney is also requesting $122.2 million for competitive salary increases, which includes a 2% raise across the board for state employees.
$45.2 million would go towards meeting the majority of the Public Education Compensation Committee's recommendation's for public education salary increases.
This request includes meeting the goal of a $60,000 starting teacher salary in Delaware by FY28.
It also includes a one-time 1% salary increase for paraprofessionals, a one-time 2.5% salary increase for food worker and the 2% salary increase for custodians and secretaries.
The request supports PECC's recommendation to increase bus driver's pay to $25 per hour, but aims to do it over a two-year period instead of a one-year period.
The budget request does not include PECC's recommendation to partially fund an IT professional in public schools, which had a projected price tag of close to $6.5 million.
Environment and Climate
Gov. Carney is requesting $129.6 million for environmental and climate action initiatives, including:
- $24.7 million for shoreline and waterway resiliency
- $20 million for aglands preservation and open space
- $32.8 million for clean water
He us also requesting $7.5 million for electrical vehicle infrastructure and clean energy, which will help with the roll-out of the recently implemented Advanced Clean Car II Act by the Department of Natural Resources and Environmental Control.
Other proposed spending in Carney’s 2025 budget plan includes:
- $10 million to Opportunity Funding grants for low-income and English learner students, bringing the total Opportunity Funding spending to $63 million.
- $20.2 million for continued funding of Wilmington Learning Collaborative and Redding Consortium focused on Wilmington school.
- $17.3 million for nental health services for elementary, middle and high school students.
- $30.0 million to the University of Delaware, Delaware State University and Delaware Tech for deferred maintenance, capital improvements and technology upgrades.
- $8 million in increases to First State PROMISE scholarship at UD, SEED+ at Delaware Tech and UD, and INSPIRE scholarship at DSU
- $32.8 million for the Clean Water Trust and State Revolving funds
- $3.5 million for lead assessment and remediation
- $10 million each for Farmland Preservation and Open Space Preservation
- $6.1 million to expand early childhood education Purchase of Care family eligibility to 200% of the Federal Poverty level
- $3.5 million to Early Childhood Assistance Program (ECAP)
