- Associated Press - Monday, May 18, 2015

NEW CASTLE, Del. (AP) - Legislative budget writers will have a little more money to work with than previously thought following an increase in Delaware’s projected revenues for the fiscal year starting July 1.

The Delaware Economic and Financial Advisory Council, which sets the state’s official revenue projections, increased its estimate of revenue available for fiscal 2016 by about $18.5 million on Monday, following a decline of about $22 million last month.

Lawmakers will use the latest figures as they begin meeting Tuesday to mark up Democratic Gov. Jack Markell’s proposed fiscal 2016 budget.

The higher revenue projections are due almost entirely to increased estimates for corporate income taxes, along with slight upward adjustments in real estate transfer and cigarette taxes.

“There’s been some very nice collections … this month,” Ken Lewis, head of DEFAC’s revenue subcommittee, said of the corporate income tax.

But Lewis also noted that net corporate income tax revenue is expected to fall over the next two years, from an estimated $211 million this year to $182 million next year and only $160 million in fiscal 2017.

A panel charged by Markell earlier this year with exploring how to make Delaware’s revenue portfolio less unpredictable and more reflective of economic conditions has made several recommendations regarding the corporate income tax, one of the state’s more volatile revenue sources. Those recommendations include reducing the corporate income tax rate, evening out the distribution of quarterly estimated payments on profits, and revising how Delaware apportions the profits of multistate firms.

Meanwhile, despite the latest uptick, estimates of revenue available for FY16 are still down about $48 million since Markell proposed a $3.9 billion budget in January.

In addition to the $48 million gap, lawmakers will need to find an additional $21 million in Markell’s spending plan after a state panel, led by his budget director, declined to go along with an administration proposal to increase state employee health care contributions by $26 million.

Lawmakers’ reluctance to go along with Markell’s proposal to reduce tax breaks for senior citizens and to eliminate transportation stipends for parents of private school students could force the Joint Finance Committee to try to find ways to free up another $14 million more to balance his proposed budget.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide