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Among
other things, it calls for:
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Cutting the state workforce by at
least 400 positions by continuing the hiring freeze and
permanently eliminating vacancies that have been or will be
'frozen';
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No pay
raises for state employees except those for which the state is
contractually obligated;
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Reducing
the level of state financing of public schools by $10 million,
with the reductions aimed at things other than classroom
staffing and activities;
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Stretching out school construction and renovation projects;
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Using the
state's spending muscle to slow the rate of growth in both
Medicaid and employee health plan costs;
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A 17%
increase in corporate franchise taxes and fees, but no parallel
increase in franchise costs for banks;
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'Uncoupling' Delaware's estate tax from the federal estate tax,
which is being phased out, and doing the same with tax on dividend
income if President Bush's proposal to eliminate such income from
federal taxation is enacted.
There
also is a proposal to morph the Department of Public Safety into
a state Department of Public Safety & Homeland Security by
moving the emergency management agency into the existing
organization. The Division of Motor Vehicles would be moved into
the Delaware Department of Transportation. Its boiler safety
division would go to the Department of Natural Resources &
Environmental Control.
The
state's three privately-owned race tracks would be permitted to
extend operating hours of their slot machine casinos and add
more machines, but the state would take a larger portion of the
additional revenue that generates through imposition of a
surcharge.
The tax
on cigarettes would be more that doubled, going to 50¢
from 24¢.
The
governor is asking for a 3% reduction in the amount distributed
as grants to nonprofit organizations.
Capital
spending would be pegged at $392.3 million, down from $407.1
million in the present fiscal year.
Cutbacks
in what are described as "nonessential state services" initiated
to meet this year's revenue shortfall would be continued.
Those are
the highlights of a complex package of proposals dealing with
both the spending and revenue sides of the $2.4 billion budget
presented to the Assembly on Jan. 30.
General
fund spending would be 1.7% higher than this year, the lowest
increase since fiscal 1992. If increases in the cost of things
mandated by existing laws, are taken out of the budget, "we
actually would have negative growth," said budget director
Jennifer ' J.J.' Davis.
The
governor took the unusual step of going before a joint session
to explain her proposal, rather than just sending over a thick
document crammed with numbers prefixed with dollar signs.
The
intent is to underscore the seriousness of the budget crisis and
continue an education program to muster public support for
attacking it at the roots, according to Davis. Those roots are
wrapped around what she and others, including the governor in
her Sate of the State address, have been referring to as a
"structural problem."
Simply
stated, there is a $300 million gap between maintaining the present level of state spending and anticipated
revenue. Not until fiscal 2006, would revenue match what the
Assembly originally voted to spend this fiscal year.
There
isn't -- as has been widely reported by some media -- an actual
'budget deficit', either in this fiscal year nor the one which
begins on July 1. That is because the state constitution forbids
deficit spending and because there is not yet a budget for next
year.
The
proposal Minner submitted is a balanced budget. It meets the
constitutional requirement that spending not exceed 98% of
anticipated revenue.
The most
recent forecast by the Delaware Economic & Financial Advisory
Council, based on current tax rates and laws governing other
revenue streams projects revenue for fiscal 2004 to amount to
$2.3 billion. Minner's proposals on that side of the ledger
would boost income by $144.5 million.
Governors, of course, do not decree state budgets; that is a
legislative function. The Assembly is about to go into recess
for six weeks to allow its Joint Finance Committee time to study Minner's proposal through a series of hearings and begin to
craft the actual budget for adoption toward the end of the
present legislative session in June.
Davis
said that the finance committee and the Assembly as a whole
have, in the past "acted in a responsible and nonpartisan way"
when it came to dealing with basic state finances. "I expect
nothing less for the future," she added. The executive branch
will "cooperate fully" in the process, she pledged.
Secretary
of Finance David Singleton indicated that the revenue-raising
requests are defensible beyond their crisis-addressing
attributes. The cigarette tax, for instance, would be half of
what it is in Pennsylvania, Maryland and New Jersey and lower
than in 32 other states. Corporate franchise rates have not been
raised in more than a decade and company executives are likely
to regard this increase as "reasonable" in comparison with much
higher increases in other costs of doing business, he said.
Both the
governor and the Assembly are required by law to use financial
council forecasts as the basis for preparing the budget. The
panel is scheduled to meet four times between now and when the
final vote is taken. Since economy watching is not an exact
science, each of those meetings is expected to produce revisions
in the forecasts.
If they
show revenue likely to increase, Davis said some of the
requested curbs on spending can be dropped.
If the
changes go the other way, the situation becomes more painful,
according to Gregory Patterson, Minner's press secretary. "There is
not much more she can cut and still sleep at night," he said,
adding that would probably "put us in the position where we have to do
what other states have done."
Mitigating against casting Minner's proposals to the Assembly
totally into a sea of gloom and doom is a claim that Delaware's
situation vis-à-vis its sister states is comparatively rosy.
Among the comparisons offered are Tennessee's dropping 250,000
people from Medicaid rolls, Kentucky releasing convicts before
completion of their sentences, Arizona's selling state office
buildings, Colorado putting public schools on four-day weeks and
layoffs of government workers in Virginia and New Jersey.
Davis
said that fiscal prudence here "has been reaffirmed by Wall
Street." Delaware is one of only eight states whose bonds are
rated triple-A, the highest granted by the three major rating
agencies.
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