Delaware’s latest budget forecast continues to project revenue increases for this fiscal year and the next, but growth remains relatively flat.
The Delaware Economic and Financial Advisory Council (DEFAC) reports an extra $84.6 million in eligible spending for fiscal year 2025 compared to its December report.
Secretary of Finance Rick Geisenberger says this increase is largely due to expected increases in personal income tax, which he says is presumably because of rising wages across the state.
Despite the expected revenue increase, Geisenberger cautions that expenditures are also rising.
“Most of those dollars are spoken for because of rising health care costs and the need to cover both our current year deficit in the state health fund and Medicaid, as well as costs expected in fiscal year 25," he says.
DEFAC is now forecasting a 1% decrease in revenue growth for the current fiscal year and a 1% increase for the next, which Geisenberger describes as even flatter growth than the previously projected 2% decrease and 2% increase respectively.
In its December report, DEFAC projected a .5% increase to the fiscal year 25 general fund, and this month it forecasts an additional .2% jump, but Geisenberger says these extra dollars will have to go towards budgetary pressures in the coming years, including the rising health care costs, employee benefits and wage increases.
“Just funding those will be a challenge, so we need to be cautious about adding other new programs and policies that would also create large door openers in the out years. We’ve made a lot of commitments, and if we’re going to meet those commitments, we should be careful about what else we do," he adds.
Geisenberger says the budgetary surplus during the COVID-19 pandemic helped sustain the recent increase in state expenditures, but the state needs a similar revenue turn around in the coming years to keep pace with spending growth.
