- Associated Press - Monday, March 17, 2014

NEW CASTLE, Del. (AP) - The panel that sets Delaware’s official financial projections lowered revenue expectations for the current year by almost $108 million on Monday, putting more pressure on state lawmakers who must develop a balanced budget for the upcoming fiscal year.

The Delaware Economic and Financial Advisory Council lowered its overall revenue estimate for the current fiscal year by $107.8 million compared to its December forecast. Leading the decline was a $70 million drop in estimated corporate income taxes.

At the same time, the council raised its revenue estimate for fiscal 2015, which starts July 1, by $67.5 million, largely based on a rebound of corporate income tax revenue.

That still leaves lawmakers and administration officials with about $40 million less in general fund revenue available for fiscal 2015 than they thought they had in December.

“It presents a challenge, but I’m sure we’ll be able to come up with some options, keeping in mind that most of the drop-off is in the current fiscal year,” said budget director Ann Visalli.

Those options include asking state agencies to hold the line on spending for the rest of this year, and possibly revising the fiscal 2015 budget that Gov. Jack Markell proposed in January. The legislature’s budget writing committee has been reviewing it in recent weeks.

“We certainly will focus on expenditures for the remainder of the year, but I would not anticipate that that would be the entire solution,” Visalli said. She said the forecasting panel meets three more times before a budget must be passed.

“We won’t make any final decisions until it gets further along,” Visalli said.

Nevertheless, the latest revenue estimates could spell trouble for a proposal by administration officials and lawmakers to grant financial relief to Delaware’s three casinos in an effort to keep them competitive with new casinos in neighboring states. Members of a study commission voted last week to recommend changes that could cost the state’s general fund more than $20 million a year. They include having the state split the costs for slot machine vendors and fees with the casinos, eliminating the annual $3 million table games fee paid by the casinos, and reducing the state’s share of table game

“Obviously there’s priorities that have to be set by the General Assembly and the administration,” said state finance secretary Tom Cook, chair of the gambling study commission.

Members of the financial forecast panel said the decline in the revenue estimate for the current fiscal years includes not just corporate income taxes, but abandoned property, estate taxes, bank franchise taxes, gross receipts taxes and lottery proceeds.

“There are a lot of negatives here, but most of them are small,” said revenue subcommittee chairman Ken Lewis, noting that the huge decline in estimated corporate income tax revenue this year will be offset by a corresponding bump next year.

Lewis said the decline in this year’s estimate includes a $26.4 million resolution of a refund claim that has been pending for several years, and a federal audit that has pushed payments expected this year into next year.

Meanwhile, lottery revenue is expected to continue to decline next year to $20 million less than what was collected in fiscal 2013, partly because the response to recently authorized Internet gambling has been less than officials had hoped.

On the plus side, the panel boosted corporate franchise tax estimates by more than $22 million over the current and upcoming fiscal years compared to December’s projections.

“This is essentially good news about the IPO market and sort of a reflection of the stock market,” Lewis said.

Copyright © 2016 The Washington Times, LLC.

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