Delaware Gov. Meyer takes on Trump administration amid federal financial uncertainties

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Delaware Gov. Matt Meyer laid out his legislative priorities and his vision for the state’s future in a joint address to the General Assembly in Dover on Thursday.

He declared the state of the state was “strong,” despite Delaware predicting  slower future economic growth in future years that could force it to deplete money it has socked away.

Meyer gave his budget “reset” last month. He’s proposing a budget of nearly $6.6 billion for fiscal year 2026, up 7.4% from $6.1 billion for fiscal year 2025. The plan does not touch either the state’s Budget Stabilization Fund or the Rainy Day Fund, relying instead on new revenue from the change in tax brackets and an increase in fees.

The governor acknowledged the difficulty of crafting the state budget amid major policy shifts at the federal level, including funding freezes and cuts plus varying levels of tariffs.

“In building this year’s budget, our team is managing swings in revenue and expenses in the tens of millions of dollars — sometimes from one hour or day to the next, sometimes from one headline out of Washington to the next,” he said.

Under Delaware’s current income tax system, Delawareans making over $60,000 a year pay the state’s top tax rate of 6.6%. Meyer said he wants the new brackets to start at $125,000 of annual income, then go to $250,000 before topping out at $500,000. If the tax brackets plan gets approved by lawmakers, earnings between $60,000 and $125,000 would be taxed at a 6.6% rate. The tax rate would rise to 6.75% for income earned between $125,000 and $250,000, go to 6.85% for income earned between $250,000 and $500,000 and jump to 6.95% for wages over $500,000. The governor argued the plan would reduce taxes for most Delawareans.

Meyer’s budget depends on the additional $16.5 million in personal income revenue in 2026 and $35.2 million in 2027. His proposed cigarette tax of an extra $0.50 per pack would generate $8 million next year and $11.5 million in 2027. New revenue from other tobacco products would amount to $12.5 million over the next two years.

Senate Majority Leader Bryan Townsend, D-Newark, said they have been supportive in the past of changing the tax brackets to be more equitable, but need more specifics on the governor’s proposal.

“Figuring out how things change if you do this or do that, while we’re also tracking energy costs and trying to provide relief to Delawareans in that form, and fundamentally figuring out ways that we have to fill in further cuts at the federal level,” he said. “That’s all in flux. And so figuring out what the total picture is, is a really important part for our caucus to understand how to best approach the issue of revenues.”

Republican lawmakers voiced skepticism about Meyer’s tax proposal, while expressing a willingness to work on a bipartisan basis.

“Some of the initiatives I think are great and we can move forward with, the question is where do you get the money from?” said House Minority Leader Tim Dukes, R-Laurel.

Dukes and other Republican leaders said that the governor’s plan to create three new tax brackets could place an undue burden on middle- and upper-income earners.

“I don’t believe that it is a fair tax and I think his numbers are inflated by saying that many people will get a tax break,” Dukes said. “Where the rubber really will meet the road is when legislation comes out and we can really see the numbers and make a full understanding of that and then make our decision on whether we want to support that initiative or not.”

Senate Minority Whip Brian Pettyjohn, R-Georgetown, argued the proposed savings for lower income Delawareans would be insignificant.

“The tax decreases that he’s proposing for lower income Delawareans, they’re so small, they really don’t amount to anything,” he said. “With increased costs … a lot of the savings that he’s touting are going to be eaten up by additional costs that Delawareans are seeing right now.”

Meyer called for setting partisanship aside in his speech, but also criticized supporters of President Donald Trump’s administration.

“You can’t give more fuel to the arsonist with one hand, and then with the other hand point your finger disapprovingly and say ‘We aren’t putting the fires out fast enough,’” he said. “We have to be able to work together. We have to be responsible in that work.”

In his speech, Meyer also endorsed a cabinet-level secretary of Veterans Affairs and a statewide Inspector General Office.

On education, Meyer said he supports redesigning the public school funding formula and spending $75 million to raise educator salaries. Earlier this year, he declared a “literacy emergency” in Delaware after 8th-grade reading scores dropped to a 27-year low.

The governor said affordable housing and healthcare was lacking in the state. Delaware has a shortage of doctors and long wait times.

“Delaware is one of only four states that does not have a medical school,” he said. “We have a shortage of qualified medical professionals, particularly in Sussex and Kent Counties. We must make Delaware a great place to train doctors, nurses and medical support staff, recruiting and retaining the best and brightest.”

Pettyjohn said the tax brackets could place barriers on recruiting health care professionals and bringing a medical school to Delaware.

“We are in a crisis in healthcare. However, at the same time, he wants to increase the tax burden on them by raising their tax rate,” Pettyjohn said. “We’ve really got to come to a solution as to where our priorities are and stick with it rather than these talking points that sound good, but once you take everything in their entirety, they don’t really make a whole lot of sense.”

Meyer also touched on the Port of Wilmington, where a battle over nominees to the Diamond State Port Corporation Board has played out between the governor and Senate leadership. Meyer has submitted a slate of names who are scheduled to get a hearing next week.

Meyer and Senate Democrats were at odds over whether Meyer could withdraw names submitted by former Lt. Gov. Bethany Hall-Long during her two weeks as governor after Gov. John Carney resigned early to become mayor of Wilmington. Supreme Court justices ruled in a March advisory opinion that the governor had the authority to change nominations up until confirmation.

“Under my administration, we plan to actually get the long-discussed expansion done, creating thousands of good-paying union jobs and hundreds of millions of dollars in economic impact for the state,” Meyer said.

Meyer said he also hopes to appoint a new marijuana commissioner in the coming days. Delaware legalized adult-use of cannabis in 2023. Sales were anticipated to start this spring, but delays have pushed back those expectations.

This story was supported by a statehouse coverage grant from the Corporation for Public Broadcasting.