On January 12, the outgoing administration released the Governor’s Recommended Budget for fiscal year 2018 (details here). News reports described the budget as a mix of tax increases and spending cuts that would affect many groups. However, when the budget proposal is put under the microscope, the taxes get bigger, but the cuts seem to disappear.
There’s no debating the tax increases that are in this budget.
All told, those increases total $216.6 million. Now, let’s examine the “cuts” and see where they fall.
The first “cut” is the elimination of the property tax cut for seniors. But this isn’t a cut at all. It’s a tax increase. As a result of this action, seniors in Delaware will have to spend $25,183,700 more on their property taxes than they do this year. So we can add this tax increase to the above, raising our tax increase total to $241.8 million.
The next group of cuts is the “Agency and Program Cuts” section. Three portions of that section — Open Space, Farmland Preservation and the Energy Efficiency Fund — weren’t fully funded in 2017, and therefore aren’t being reduced. This isn’t a cut. It is an accounting trick.
The remainder of the “Agency and Program Cuts” totals $31.8 million in “Agency Base Budget Reductions.” Of that total, $14.5 million results from shifting more of the cost burden for public school transportation to the school districts. Which might as well be another tax increase — coming to a referendum near you! So that leaves $17.2 million in reductions at the state agencies — none of which are a permanent reduction in program spending.
The next set of cuts is $12.8 million to the Grants-In-Aid bill. These aren’t reductions in government spending as you or I would understand it. These are reductions in funding for the state’s nonprofits — reductions that would likely be restored in the future.
Finally, under the “Other Reductions,” we find $19.5 million in reductions — $14 million of which is an amortization adjustment (another accounting trick).
Overall, there is nothing in this budget that could reasonably be understood as a reduction in government except the $24 million that would be saved by shifting state employees to Consumer Driven Healthcare plans.
This is not a good faith effort to fix our structural budget problems. This is a budget that reflects a government that has no idea which programs are working and which are not. The priorities in this proposal are fully weighted on the side of tax increases and shifting expenses to the counties and school districts, which would result in tax increases at that level. There are no meaningful program cuts proposed in this budget. Are we to believe that every program in state government is successful? Do we even know if they are?
We believe that the $350 million deficit can be closed, and that it can be done responsibly — not only for this fiscal year, but for future fiscal years as well. But it can not be done without rooting out and eliminating programs that are not working. That is part of the oversight responsibility of the General Assembly — a responsibility that has too often gone unfulfilled as we’ve grown to be one of the most expensive governments in the country.
Structural budget reforms are also required moving forward, such as evidence-based budgeting and a strict enforcement of The Delaware Governmental Accountability Act that provides specific measurables for each unit in government.
I look forward to working with my colleagues to fix our budget process and make our government more effective for all people, while reducing the burden for taxpayers.