Meyer increases budget 7.4% but warns of lean times

A new Fiscal Year 2026 budget offered by Gov. Matt Meyer March 27 offers raises for teachers and state workers along with tax increases for higher-end earners, and it came with a clear warning that federal funds may be drying up.

“I just presented an operating budget that grows at 7.4%, but based on carry-over funds and revenue, there is enough to support the plan that we have here. We’re balanced,” said Brian Maxwell, director of the Office of Management and Budget. “But if we look out from Fiscal Year 2027 and 2028, revenues are growing at 1.2% and 2.3%, respectively.”

In other words, not a whole lot.

To offer some protection in the event of federal budget cuts, Meyer has set aside $21.9 million for a federal uncertainty contingency fund in addition to keeping the budget stabilization fund that former Gov. John Carney created as a buffer fund for when revenue goes south.

Although Meyer previously stated that he is not a fan of surplus funds because the money should go back to the people, the budget stabilization fund remains intact. 

In answer to those who have asked why budget stabilization money isn’t being used now, Maxwell said he plans on using it if nothing changes.

“It will be gone in two years,” he said. 

He also said he does not want to use the federal uncertainty money at all.

“That assumes something has happened … We have to plan now,” he said. 

Meyer said he did not anticipate federal spending cuts when he ran for office.

“One in every $3 spent by the state comes from federal spending,” he said. 

To help make up some revenue, he is proposing three new tax brackets for earners who make $125,000, $250,000 and $500,000. Tax rate information on those brackets was not readily available. Meyer estimated 92% of taxpayers will see a reduction in their income tax.

“We’re going to adjust some tax brackets to make sure the wealthiest Delawareans truly pay their fair share,” said Meyer. “Under this budget, no Delawarean who has taxable income under $134,667 annually will pay any more in income taxes … The [current] highest tax bracket that starts with taxable income at $60,000 simply is not fair.” 

In public education, Meyer’s budget supports a starting public school teacher salary of $52,515, with a goal of eventually reaching $60,000 by FY 2028.

Other investment includes $3 million in the classroom for literacy, with millions more going for language learners and at-risk students. An investment of $500,000 is earmarked to get cellphones out of the classrooms.

Maxwell said school administrators say a pilot program has helped with classroom discipline issues and positive interactions among students.

Other spending supports affordable housing with $19 million going into a housing development fund, $6 million for state rental assistance and $3 million for workforce housing.

The budget funds group health insurance for state workers at $27.5 million, with $61.3 million for post-employment benefits. Medicaid is funded with $85.5 million.

A medical school feasibility study is in the budget for $250,000.