“The figure we got is a $337 million gap – right now – that we got to close,” said Sen. Robert Venables, D-Laurel, about the unofficial gathering to discuss revenue and spending.

Corporate, bank franchise and personal income taxes are down, contributing to the persistent deficit. In addition, for the budget that begins July 1, 2010, the state is not expecting to receive the one-time-only $200 million in federal stimulus funds that helped to balance the current budget.

“We need to have these meetings periodically to see where we are, but I don’t think there’s anyone who knows what to do,” said Venables.

Venables, chairman of the Bond Bill Committee, said Democratic leaders, including House Majority Leader Pete Schwartzkopf, D-Rehoboth Beach, and Speaker of the House Bob Gilligan, D-Wilmington, met in the governor’s office with Office of Management and Budget Director Ann Visalli for the private briefing.

Attempts to reach Visalli at press time were unsuccessful. A legislative aide said Gilligan was out of town.

Rep. Dennis P. Williams, D-Wilmington, chairman of the Joint Finance Committee, said, “The forecast is pretty grim at this time, but we’ll get through it just like we did last year.”

Schwartzkopf said the grave economic forecast comes early in the fiscal planning stage and revenues might not be as bad as predicted.

“Keep in mind, this is a running process until June. Figures fluctuate greatly from month to month,” said Schwartzkopf.

Schwartzkopf said there is a shortage of $280 million plus brick-and-mortar projects that total about $60 million, bringing the deficit to roughly $340 million. Schwartzkopf also credited lawmakers with lowering spending and expenditures to balance this year’s budget. He said the General Assembly cut $400 million in spending, too. He also said the state’s cash reserves leave Delaware on stable ground. “We’re not falling behind, but the problem will be with the coming year. It’s going to be a very tough year,” he said. Still, Schwartzkopf said he is cautiously optimistic that the recession will dissipate.

Lobbyist Robert Byrd, a member of the Delaware Economic and Financial Advisory Council (DEFAC), said he did not attend the briefing, but, like Schwartzkopf, he downplayed the deficit.

“They’re looking at something we haven’t looked at yet,” he said, referring to the upcoming DEFAC meeting in December. Those DEFAC figures will help Markell recommend a balanced budget next year.

Byrd said if Congress passes a healthcare bill, the state might receive Medicare appropriations that will give the General Assembly time to work on the deficit. He also said Democratic leaders may have not considered tax increases in their calculations.

“I don’t think it’s as bad as they’re saying either. I’m more optimistic about this economy, more than other people are. I think there’s some room for some of these numbers to turn up,” said Byrd.

GOP’s Booth irked

The closed-door meeting is leaving some members of the GOP fuming about being left out. Sen. Joe Booth, R-Georgetown, said, “We were excluded. It’s a shame, if he’s meeting with one caucus and not the other. I can tell you right now, the budget is going to be hurting, because, once again, we based the budget on numbers coming from DEFAC that are not accurate.”

Booth also said $600,000 in attorney fees to defend the state to allow single-game bets is a cost that could have been avoided.

“I think we would have been in better shape, budget-wise, if we would have made more cuts that are going to have to be made next year,” he said.

But Venables said lawmakers are not considering tax increases – yet. “There wasn’t much support in talking of tax increases. If there’s not tax increases, you would think there would be cuts somewhere,” he said.

Representatives to face voters

The deficit is likely to loom over all 41 representatives whose House seats will be open for the 2010 elections.

“It’ll be an election year. Will lawmakers be raising taxes or laying people off?” said Delaware State University law professor Sam Hoff. “You do have to look at efficiency in state spending and other state departments.” Hoff said state officials should look at establishing a national park in Delaware as a way to creatively make money. He also suggested tapping the state’s tourism sector to find ways to raise money.

“I think the governor learned his lesson that he should probably form a bipartisan group so as not to appear to lock out Republicans. But, it’s their problem too,” he said.

James Butkiewicz, a University of Delaware economics professor, said state and municipal employment grew too rapidly in the early part of this decade. Butkiewicz said the state could save money by consolidating Delaware’s 19 school districts – a cornerstone of Markell’s campaign platform. Butkiewicz also said cutbacks might affect higher education, as they have in other states.

All lawmakers to be briefed

Rogalsky said the recent meeting was one of many in which all lawmakers will be included.

“In time all four caucuses will be briefed. It’s not unusual, especially in the fall, to ramp up for January. The governor and budget people are meeting with all four caucuses. Obviously, the Democrats just had their meeting. We keep everyone in the cycle of communications,” said Rogalsky.