Governor John Carney has proposed a $4.7 billion budget for Fiscal Year 2022, which includes a small raise for state employees and a COVID-19 contingency fund for the ongoing pandemic.
As governments across the country are forced to slash their budgets and layoff employees, Carney's FY '22 budget spends 3.5% more than last year and offers state employees a 1% raise or $500, whichever is higher, while still stashing $68 million in reserves to replenish the Budget Stabilization Fund. That would bring the fund's balance to $131 million according to new Office of Management and Budget director Cerron Cade.
"We utilized $63 million of the $126 million that was in that fund previously to mitigate downturns in revenue that we experienced during Fiscal Year '21," Cade noted.
"We built up our reserves; we balanced the budget without cutting critical services, we did not raise taxes on families, personal taxes...we did not borrow money other than in our capital budget; we did not lay off state employees or cut their pay as many states are forced to do this year," said Carney.
The state employee pay increase would cost $22.7 million, which includes $4.2 million for year-one of a phased-in approach that seeks to gradually raise minimum wage for state employees to $15 per hour. As many as 630 state employees are currently making under $15 per hour, according to the state.
"The goal...still is to make sure that state employees who go to work and work hard every day are not living under the [federal] poverty level--that's lower than $15 an hour. This move here in this budget will take us above that."
COVID Contingency Fund
It's unclear what exactly the $30 million COVID-19 contingency fund would be spent on, but it's likely to include testing, contact tracing, and vaccine administration logistics. The contingency fund's goal is to give the Division of Public Health flexibility to fill gaps in its COVID-19 response that aren't covered by federal money.
"We do expect certain programs will get support from the new federal package," said Carney. "It's hard to know the future with COVID-19, but our numbers are better today. Hospitalizations dropped again...under 600 for the first time in a long time. It's hard to believe that we're characterizing 600 positive cases a day as a good thing, when I was complaining about 100 in the summer. But it's a contingency for just that purpose. We don't know yet."
What the state does know: it's not going to get money directly from the federal government to allocate as it sees fit.
"We chose really to support unemployment, to support small businesses, to support child care and early education, and to support lots of relief for renters, for homeowners, and the like. My understanding is what we're getting now is resources that are targeted directly for education or schools or directly for vaccinations," said Carney. "That type of thing."
His FY '22 budget includes $38 million in Opportunity Funding for low-income students, English Language Learners, and mental health supports in schools. This includes a $10 million increase, as well as a one-time funding increase from FY '20.
That figure is required to jump to $60 million by 2025 as part of a equity in education lawsuit settlement, with General Assembly approval.
The settlement agreement specifically calls for Opportunity Funding to be funded at no less than $35 million in school years 2021-2022 and 2022-2023, and no less than $50 million by 2023-2024.
Thursday, state Rep. Laura Sturgeon introduced Senate Bill 56, which would expand Opportunity Funding in accordance with the settlement. State Rep. Kim Williams also introduced House Bill 86 that would fund basic special education services for children in grades K-3, closing a gap in funding for the state's youngest learners, making it consistent across all grade levels. This too, is part of the legal settlement.
Education advocates have called this increase in funding a "baseline" but have said tens of millions more is needed to level the playing field.
Also, as a part of that settlement, the state will spend $1 million on a county ombudsperson and an intervention program that identifies disparate discipline and unfair treatment of students.
Another $3 million will be spent on mental health supports in schools. This funding replaces expiring federal funds.
Salary increases and steps for educators will total $22.4 million in this proposed spending plan. Educators will also see the 1% pay raise. Student unit counts will cost another $20 million and another $2.4 million is devoted to potential student enrollment growth.
Economic Development + Other Initiatives
The governor's spending plan devotes more than $50 million to economic development:
- $20 million Strategic Fund
- $10 million on Site Readiness
- $10 million Graduation Lab Space
- $10 million Transportation Infrastructure Fund
- $2 million Delaware Prosperity Partnership
The proposed spending plan will spend $3.6 million in one-time funds for the purchase and deployment of body cameras, including $1.6 million for cameras and the remainder for cloud storage and personnel costs. It's not, however, enough to equip every officer in the state with a body camera.
"This starts a phased-in approach, and we're going to be working collectively with the Department of Justice, Office of Defense Services, Department of Safety and Homeland security, and our goal is to have a statewide program fully implemented by 2025," said Cade.
The state will also have to spend $12.5 million on its share of Medicaid.
Capital Budget/Bond Bill
The bond/capital budget is proposed at its largest amount in state history at $894.4 million. Of that, $377.1 million is devoted to the Transportation Trust Fund. Clean water initiatives will see a $50 million investment while open space and farmland preservation programs will each see $10 million in funding.
Another $3 million is also set aside in the capital budget to match $8 million in federal funds to expand the state's Public Health Laboratory in Smyrna.
"Which is going to be incredibly important as we prepare for this crisis as well as future health crises down the line," said Cade.
Nearly $261 million will be spent on one-time capital projects--including $185 million on school construction and renovation, with a new school planned in the City of Wilmington--and another $35 million on capital improvements and maintenance to state buildings, as well as $30 million ($10 million each) for campus improvements to Delaware Tech, University of Delaware, and Delaware State University.
"One of the CARES Act allocations...around $45 million is going to be used from that fund to help support some of the costs tat all those schools related to some of the tuition losses...especially early in the pandemic," said Finance Sec. Rick Geisenberger.
The capital budget also includes the following investments:
- $50 million on the Clean Water Trust Fund
- $50 million for new Family Court facilities in Kent, Sussex counties (Sussex construction to begin in summer, will take two years; Kent project on a two-and-a-half-year timetable)
- $15 million for deferred maintenance at K-12 public schools
- $8.3 public safety communications
- $3.5 million for Troop 6 (Prices Corner)
- $2.1 million for Howard R. Young Correctional Institution infirmary renovations
Other capital budget investments include:
- $8 million on historic preservation and recreational sites
- $6 million on affordable housing
- $5.5 million on Downtown Development Districts
- $5 million beach preservation
- $4 million on Strong Neighborhoods Housing Fund (vacant housing from Wilmington to Seaford)
- $2.75 million on libraries
Lawmakers may also seek to spend capital budget funds on security improvements to Legislative Hall in the wake of threats of violence after the Capitol riot. But the governor told WDEL he hasn't seen any proposals on that front.
"Our budget does not, to my knowledge, include that, and that's something they obviously have to approve. I certainly would support necessary improvements, improvements that they deem necessary," said the governor.
There's also no funding in the governor's proposed budget to assist counties with the costs of a property reassessment, a process also tied to a court battle.
"That's kind of a discussion for another time. There were just kind of a lot of moving parts with respect to the legal matter...it's still an issue I think about. It's an issue that ought to get done," said the governor.
The governor is proposing $55.5 million for the Grant-in-Aid budget, which provides funds to local non-profits, veterans homes, senior centers, and volunteer fire companies--all groups that are also struggling during the pandemic. That's up slightly from the year prior.
The General Assembly's Joint Finance Committee begins its budget hearings next week. Lawmakers must pass a spending plan by June 30, 2021 for the fiscal year that begins July 1, 2021.