Delaware revenue projections stagnant

Delaware financial forecasters made little change to their projection for state revenue at Monday’s meeting, but a reversion of cash from the current fiscal year is expected to help the state make ends meet for the coming fiscal year.

The Delaware Economic and Financial Advisory Council made little changes to its prediction of state revenue Monday afternoon. It is their final meeting and projection before Governor Jack Markell unveils his budget plan at the end of January.

“It’s not really any change for me in terms of trying to put together the budget,” said State Budget Director Ann Visalli. “Obviously, I’m always optimistic and I was hoping for a little bit of strength, but this is about where we thought we would be, so that’s good. Our estimates were right on target.”

DEFAC members approved a revenue estimate of $3.729 billion for the current Fiscal Year 2014, down 2.6 percent from the group’s projection in September. The estimate is equal to the actual revenue the state collected for FY 2013.

The projection for FY 2015 increased ever so slightly from the September estimate, up $5.7 million to $3.774 billion. That revenue increase combined with a reversion of unspent funds originally budgeted for the current fiscal year, means the state has about $40 million in more revenue for the new fiscal year.

“For example, a program may have been funded for 12 months at the start of the year in July, [but] the program is slow to get off the ground, so they didn’t spend all 12 months worth of money, they’re only going to spend six months worth of money,” said Visalli.

She says the administration is reaching out to state agencies to see where more money could be found that could be reverted from the current year’s budget into next year. The $40 million earmarked so far for reversion does not eliminate the shortfall for the coming year, but Visalli says, “It helps though, it certainly helps.”

The increase in revenue is not expected to pace with the mandatory increases in state spending for things like Medicaid and education. “[It’s] good, but it’s not good enough,” said State Rep. Melanie George Smith who chairs the Joint Finance Committee. “Even though revenues are still going to be up from last year, it’s not going to be up enough to cover the automatic growth in Medicaid and the automatic growth in the schools, and that’s the real issue. So, we’re going to be ultimately down when you factor that in. So that’s a concern.”

Governor Markell is scheduled to deliver his budget address and present his spending plan for FY 2015 on the final Thursday in January. DEFAC members will reconvene for monthly meetings starting in March and ending in June, when their final projections for state revenue are due. In past years, revenue estimates have been known to vary varied wildly both positively and negatively over that time.

FY 2015 starts on July 1. State law requires the budget to be approved by the end of the day on June 30.