Delaware Public Media

First State looks for solutions to sudden, staggering budget shortfall

Apr 21, 2020

The First State faces a steep budgetary challenge as it deals with the economic impact of the COVID-19 pandemic.

 

Delaware is staring at combined $749 million budget hole this year and Fiscal Year 2021 according to Monday's Delaware Economic and Financial Advisory Council May estimate.

 

 

"We do have a significant challenge. It's a two pronged challenge," said State Budget Director Mike Jackson Tuesday. "One is the current year, being able to fund our budget with a declining revenue base. The second challenge is being able to fund our budget for Fiscal Year 2021 with uncertain economic forecast."

 

The first issue is a shortfall of about $150 million for the current year.

Jackson says just over $126 million in a reserve fund create two years ago may play a role in handling that, but it wouldn’t entirely solve the problem.

 

“We’re actively working through what our options are to be able to put us in a positive position by the next time our revenue estimating committee meets in May," said   I feel comfortable and confident they we will be able to get there.

Asked Tuesday if state employee layoffs or furloughs are an option, Gov. Carney said he’d like to avoid that, but did not rule it out. 

 

“Our focus will be on protecting our state employees, just as small businesses and others have done that in the face of revenue loss in operations, but we’re going tohave to take whatever measures are necessary to close the gap," said Carney.

 

Jackson adds the state also hopes to avoid using its rainy day fund.

 

“I’m would say we would exhaust all of our resources before we look to use our rainy day fund – whether its for fiscal year 2020 or fiscal year 2021.”

And for now the state cannot use the over $1 billion in federal funding that was allocated for coronavirus relief to fill its revenue shortfall. That money can only be used on new COVID-19 related expenses. Jackson notes the state has not received all of those funds yet and is still seeking guidance on what it can be spent on. 

 

Carney says he anticpates some of it will go toward plans to create places for hospitalized seniors transitioning back to a nursing home or venues to isolate COVID-19 patients who cannot properly isolate at home.

 

Jackson says it's also expected to pay for things like personal protection equipment, child care services the state has provided during the pandemic, mortgage and rental assistance, and initiatives like the state Hospitality Emergency Loan Program (HELP).

 

"I would imagine as we go forward and we, as a state, continue to realize costs that are beyond our budget, we will recognize more initiatives we've put in place," said Jackson.  "There's also working with our municipalities and,  assuming the proper guidance from the [U.S. Treasury Dept.], being able to help were we can with ragrd to cost they may incurring because of the pandemic."

 

The National Governors Association and Delaware’s Congressional delegation are among those lobbying to give states more flexibility to use those funds, including budget stabilization.