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December state revenue forecast shows slight uptick

Delaware Public Media

The Delaware Economic & Financial Advisory Council, or DEFAC, is projecting the state will have a bit more money next fiscal year.

Tax increases enacted last legislative session have brought in less revenue than expected.

The latest DEFAC forecast is $23 million higher than forecasted in September. Geisenberger said abandoned property claims as the primary reason for the higher December projection. He said the process has slowed, especially business claims, because of identity theft concerns.

“When someone’s making a business claim, we don’t just need to check their identification," he said. "We need to make that they in fact are the authorized person making a claim on behalf of that business. And we’re increasing our processes and procedures for making sure the claims we’re looking at are legitimate.”

Geisenberger said the slower process leads to fewer refunds and that’s why it looks like the state took in additional revenue since September. But that also helps give lawmakers about $88 million more for the next fiscal year than anticipated in June.

Earlier this year, lawmakers approved increases in taxes for alcohol and cigarettes to help close a $300 million deficit. They also raised the realty transfer tax. But revenue generated has so far fallen short of expectations.

Geisenberger said lawmakers hadn’t adjusted the realty transfer tax or alcohol taxes in decades, so it was hard to forecast how much revenue it would generate.

“There really could be two factors" he said. "One is retailers stocking up in advance of the tax taking effect, and the other being consumers perhaps stocking up in advance of that tax taking effect.”

Even if this month’s forecast holds, much of what was cut from last year’s budget can’t be added back in without raising additional revenue. The state’s also dealing with rises in education spending, health care costs and additional funding requested for the Department of Corrections.

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