The Delaware Economic and Financial Advisory Council (DEFAC) offers its initial look at the state’s financial health for the 2027 budget cycle.
And it shows the state could be facing a shortfall.
DEFAC sees additional economic headwinds for the First State, trimming its revenue estimates for the current fiscal year and FY 2027 from where they stood last summer.
Its 2026 revenue estimate fell $98.8 million – a 1.5% decrease from its last meeting in June. The revenue forecast for 2027 is down nearly $47.8 million – a 0.7% decrease.
In both cases, substantial drops to projected corporate franchise tax revenue drove the gloomier overall revenue outlook.
Those drops are largely the result of changes made in the One Big Beautiful Bill Act on corporate taxes, and the fact those changes come mid-year and with a high degree of uncertainty attached.
The changes leave the opening state spending limit for FY 2027 at $6.733 billion. That’s $352.1 million less that the current FY 2026 budget.
Gov. Matt Meyer, in a statement, took the Trump Administration to task for putting stress on the state's bottom line.
“The Trump Administration is working overtime to make the rich richer, all at the expense of everyday Delawareans. Today’s DEFAC update shows that with Trump's recent tax changes, the State of Delaware stands to lose over $400 million in revenue over the next three years — on top of previously forecasted cuts to Medicaid, SNAP, and other critical programs — threatening the services families deserve. But we won’t let that happen, said Meyer in his statement. "In the coming weeks, I’ll work with Democrats and Republicans in the General Assembly on a simple, responsible fix that protects our budget and keeps Delaware competitive, so employers can have certainty, and our investments in schools, public safety, and health care can stay on track.”
The state’s Budget Stabilization Fund can cover that gap. It currently holds $469.3 million dollars, but spending that down would leave state vulnerable in 2028 and beyond.
Even before the One Big Beautiful Bill Act changes, Delaware faced the real threat of looming budget deficits.
Last February, Office of Management and Budget Brian Maxwell said with no policy changes or budget cuts — and assuming 5% operating growth in FY 27 and FY28 — the state would need to pull $325 million from the state’s Budget Stabilization Fund for FY27, and for the following year, the state would fully exhaust the fund, but still have an operating deficit of $407.7 million.
The state’s Office of Budget and Management holds its initial budget FY 2027 hearings next month. DEFAC’s next revenue forecast comes in December.
That December forecast is the one Gov. Meyer will use to craft his 2027 budget proposal.
