Among his final acts as governor, John Carney released a recommended fiscal year 2026 state budget for Governor-elect Matt Meyer to consider.
Carney is recommending an operating budget of just over $6.5 billion for the First State, which is close to $400 million more than what was approved for the current fiscal year.
Including nonprofit funding, capital projects and supplemental appropriations, the state is expected to spend over $7 billion in fiscal year 2026.
In the Governor's Recommended Budget (GRB), Carney has allocated $81.8 million to increase public education salaries, including $60 million to implement the second year of the Public Education Compensation Committee (PECC) recommendations and $14.8 million to provide annual salary step increases.
He is also recommending $66.8 million in Opportunity Funding to support low-income students and multilingual learners and $33.9 million for public education enrollment growth.
Additionally, the former governor allocated $65.8 million to provide a 2% increase for state employee salaries and $61.3 million to support OPEB Trust Fund liability — the pool of money allocated for state retiree healthcare benefits.
Carney's GRB also includes $40.5 million for affordable and workforce housing and allocates $85.5 million for Medicaid growth in Delaware.
The former governor has been a champion of fiscal responsibility and during his tenure created the Budget Stabilization Fund to store away some of the state’s excess revenue for economically challenging years — he is recommending the fund remain untapped at $469.2 million.
Carney has also abided by a Benchmark Appropriation, calculated by the Delaware Economic and Financial Advisory Council (DEFAC) using a benchmark index and the sum of the previous fiscal year's Budget Act and nonprofit and OPEB Fund appropriations.
While efforts to constitutionalize his "budget smoothing" process in 2018 failed, Carney was successful in passing legislation that requires these budget tactics to be considered by future governors.
"They didn't pass the constitutional amendment that we had put forward, but they did approve our Budget Stabilization Fund and that approach — a DEFAC spending target — in the statute. And so that's going to make it a little bit more difficult for them to undo that, and it'll make it easier for the new governor, and I want them to be successful," Carney said at his Wilmington mayoral inauguration Tuesday.
Although, the bill’s language reads more as a recommendation, rather than a requirement. The legislation says any GRB must consider the Benchmark Appropriation and Budget Stabilization Fund requirements, "unless the Governor deems any changes necessary or desirable, in accordance with the Governor's own best judgement and conclusion."
Incoming Gov. Matt Meyer has expressed he’s not too keen on setting aside taxpayer dollars, especially as his administrative tenure is expected to see slowed revenue growth and increased spending needs.
“If we're asking residents to pay us tax every year, that tax should be an accurate number of what we're going to actually spend. I'm not a big fan of collecting excess revenue and socking it away," Meyer said at Spotlight Delaware's Legislative Summit.
Although, Meyer says he has reviewed Carney's recommended budget and plans to incorporate those recommendations into his own GRB.
“There will be revisions to the GRB. We'll probably keep a considerable amount of Gov. Carney's recommended budget, but there will be changes to it based on the values that we believe we were elected to execute on," Meyer said.
Meyer is also entertaining the idea of pushing for a readjustment of Delaware’s income tax brackets.
"I don't think it's right that Delaware families making $70,000 a year pay the same tax rate as Delaware families making $70 million a year. And that's not an election slogan, that's something we're gonna stand by. We're looking at whether it makes sense for this year or for future years, and where we are with our revenue situation," Meyer explained. "New Castle County residents know I also like to reduce taxes for working people, so we're gonna look at the range and see what makes sense, but I do think that that there is a place for certain brackets and income sectors to pay different amounts."
According to DEFAC, Meyer is inheriting one of the best economies in Delaware's recent history, but with revenue growth expected to hit as low as 1.4% in FY27, Carney encourages Meyer and the legislature to remain vigilant.
"I would just encourage him to be fiscally responsible because one thing that we do know is that when when revenues go up, they come back down. And that's why we changed our approach to to appropriating money at the state level," Carney said.
Meyer's inauguration will be held on Jan. 21 and he is expected to release his own recommended budget in the coming months.
