Gov. John Carney‘s proposed 2025 state budget of $6.1 billion pours $2.1 billion into education, $2 billion on healthcare for employees, retirees and Medicaid recipients, and $129 million into environmental initiatives.
It’s another record state budget, up nearly 9% from 2024’s $5.6 billion.
Nearly 65% of the growth in the budget over last year’s is salary policy and health-related costs, Carney said.
Educators and state employees are targeted for raises to help make their salaries more competitive with private and other state jobs.
The budget will pony up $93.9 million to pay for employee health insurance plan shortfalls and $56.1 million for a one-time donation to the fund set up to pay retirees’ health insurance, which is woefully underfunded.
The state Medicaid program alone needed $100 million more for its program, partly because of losing extra federal funding during the COVID-19 pandemic.
The healthcare spending along will crowd out other investment in schools, affordable housing, childcare ad raises for state employees and state retirees, Carney said.
Carney’s budget also includes $66.5 million for Grants-in-Aid, which helps nonprofits; $943.7 million in state capital projects, and one-time supplemental appropriation of $91.8 million, which includes money to the retiree insurance fund.
Carney’s proposed budget, which would take effect July 1, the start of fiscal year 2025, must be ratified by the General Assembly before June 30.
The governor had a warning for the legislature during a media preview of his budget.
“One of our primary messages to legislators is to be careful in this year because of the softening of revenues next year and the year off after,” he said. “You don’t want to build in spending in the budget that you’re not going to be able to sustain in the out years.”
Delaware is coming off three years of revenues that produced close to $1 billion of surplus money and allowed the state to give raises, fund projects like clean water initiatives and put money into the state’s budget-smoothing fund.
This year’s budget was built on expected revenues, which provided about $350 million in surply money.
However, revenues are expected to be flat in 2024 and 2025.
“It’s hard to forecast 2026,” said Secretary of Finance Rick Geisenberger. “We may well need to draw up parts of the Budget Stabilization Fund next year. That would be our current forecast right now … based on current revenue forecasts.”
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That’s what it’s there for, he p0inted out.
“So if you grow the operating budget a whole lot this year, then you’re almost certainly going to be drawing that Budget Stabilization Fund down,” Geisenberger said, “and perhaps putting yourself back in the same challenges we had prior to this administration … t0 do budget cuts and tax increases.”
Carney took office in 2018 facing $350 million in budget shortfalls. He issued an executive order to create the Budget Stabilization, which the state also used in 2020 because COVID-19 whacked revenues.
Betsy Price is a Wilmington freelance writer who has 40 years of experience.
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