- Associated Press - Monday, May 19, 2014

NEW CASTLE, Del. (AP) - State lawmakers preparing to start drafting a budget for the upcoming fiscal year got some unwelcome news Monday from the panel that sets Delaware’s official financial projections.

The Delaware Economic and Financial Advisory Council on Monday lowered its revenue estimate for the fiscal year starting July 1 by $19 million compared to its April estimate. That leaves a current gap of about $41 million between projected revenue for fiscal 2015 and Democratic Gov. Jack Markell’s proposed spending plan.

But an even more pressing problem for Markell administration officials is how to close a $14 million hole in the current year’s budget before the fiscal year ends June 30. That deficit remains despite an additional $34.6 million in unspent money reverting to the general fund since DEFAC met last month.

“Today’s DEFAC numbers will make an already challenging budget year more difficult,” state budget director Ann Visalli said in a written statement.

Visalli said administration officials will be working with legislative budget writers over the next few weeks to address the current year’s deficit and develop a balanced spending plan for next year.

DEFAC members cited lower estimates for personal and corporate income tax revenue, and for abandoned property collections, in downgrading revenue projections. Increased estimates for corporate franchise taxes and business entity fees were not enough to offset the declines in other major revenue categories

Senate Minority Leader Gary Simpson, R-Milford, said the latest revenue numbers bolster GOP arguments that state agencies should be asked to trim spending by 2 percent, a suggestion that Democrats have rebuffed.

“We are in a precarious situation,” Simpson said. “…. If I told you to cut 2 percent out of your household budget, you could do it. If you really thought you were going to go into foreclosure or a serious financial condition, you could easily cut 2 percent.”

Simpson suggested that if Democrats don’t seriously negotiate a budget fix with Republicans, GOP lawmakers could withhold their budget bill votes. Two of the three annual budget bills require three-quarters majorities in the House and Senate, margins that Democrats who control both chambers don’t have.

“I’m saying that’s a possibility,” Simpson said. “I don’t like to threaten.”

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