Carney budget increases by 7.4%

Gov. John Carney’s fiscal year 2024 budget, released Jan. 26, includes millions in raises for state employees and for healthcare costs while giving some relief to middle-class families.

His $5.48 billion budget is 7.4% higher than last year, with more than $1.6 billion in federal funds to help pay for technology, healthcare, housing and capital improvements. 

At $1.289 billion, Carney said, the FY24 capital improvement bill is one of the largest proposed, although lower than last year’s record-breaking $1.4 billion figure.

Carney said his team considered tax cuts for residents, but he believes raising teacher salaries is more meaningful and “bang for our taxpayer buck” than an additional tax cut that probably “would not be very meaningful for most folks.”

Still, his budget includes some tax relief for middle-class earners starting in 2025. If the General Assembly approves Carney’s proposal, middle-class tax relief would come in the form of an increase in the standard deduction by 75% for tax filers – $5,700 for individuals and $11,400 for joint filers.

Secretary of Finance Rick Geisenberger said he expects 50,000 tax filers will switch to the standard deduction under the plan.

“This is going to make it easier for filers. We see a lot of simplification,” he said, especially for those who take the federal standard deduction, but then itemize on their state returns. Another 20,000 tax filers, he said, would fall off the tax rolls because their liability will go to zero.

Carney said the change will hopefully encourage more workers to return to full-time employment.

“So again, a mechanism to help workers there at the margin, moving around from one employer to another, and making it more beneficial to go to work,” Carney said.

A minimum wage increase to $15 per hour for full-time merit state workers and a 3% increase for all state workers is aimed to retain the state’s existing workforce.

“Obviously we’re competing with the Amazons and McDonald’s of the world when it comes to employees, and there are a lot of vacancies we see [in the state],” said Cerron Cade, secretary of the Department of Labor. “This is a strategy to address that.”

Officials recently said the state has 37,000 job openings, which have received only 21,000 applicants.

To address rising healthcare costs, the budget sets aside a one-time supplemental amount of $324.9 million. Officials said the state is facing a $143.2 million deficit for its Group Health Insurance Plan.

“We put an incredible amount of money into healthcare. Healthcare for employees, healthcare for retirees, healthcare for low-income folks through Medicaid,” Carney said. “Those dollars that we have to divert to healthcare are dollars that can’t go into the paychecks of state employees. That’s something to think about. Same thing with retirees. If we have a big retiree health number, that’s a number we can’t put in to increase their pension checks.”

The state is facing a lawsuit filed by state retirees who protested last summer over changes to their medical plans.

A drop in revenue is projected in the near future, Carney said, but he is committed to creating a strong and sustainable budget through a process that allows 98% in spending and puts the rest in a Budget Stabilization Fund. The FY24 budget sets aside $18.9 million in the fund for a total of $421.5 million in reserves created over Carney’s two terms in office. Add to it cash in the state’s rainy-day fund, and it totals nearly $1 billion in reserves, Carney said.

In an effort to provide more affordable housing, Carney said his budget includes $101.5 million which, along with $60 million in American Rescue Plan Act money, will create new units for low-income families – an investment with implications in Sussex County.

“One of the things we’re hearing more and more in Sussex County, particularly on the eastern side – workers who go to work every day and don’t have a place to live that they can afford,” he said.

On the education front, although teachers are slated to receive a 9% bump in salaries, inflation has taken a toll on the amount of money put aside for school construction. 

“We’re focusing more on existing projects we already had in our hopper and not really adding a lot of new things,” Cade said, of the $197 million earmarked for school construction and renovation.

Programs for low-income students and language learners include $53 million for opportunity funding and $10 million for a Wilmington learning collaborative.

A Governor’s Summer Fellowship Program aims to erase the learning loss experienced during the COVID-19 shutdown with $2 million earmarked for high school seniors to help with summer school. “[We’re] working with school districts and encourage them to have stronger, more robust summer programs,” Carney said. 

Other budget earmarks include:

• $322 million for transportation improvements

• $45 million for economic development

• $21 million for a new Delaware State Police Troop 4
• $10 million for agricultural preservation
• $10 million for open space
• $10 million more to help low-income families pay for childcare.