Why Should Delaware Care?
The Delaware state budget funds schools, health care and social service programs, parks, police and much more, but concerns around the future economy had worried legislators. A widely watched budget report will ease that tension over the final weeks of the 2025 General Assembly though as more revenue is projected for the state.
Delaware state legislators breathed a sigh of relief Monday after analysts added to the budget limit for the impending fiscal year, giving them room to consider additional spending while uncertainties continue to ripple through the national economy.
Each year, legislators await the May report from the Delaware Economic and Financial Advisory Council (DEFAC), a non-partisan group of business and community leaders, academics and government professionals that sets the state’s official revenue estimates, because they begin the final crafting of the state’s multi-billion-dollar budget after Memorial Day.
Debates over any legislation that would have a significant impact on state finances have been at a standstill for weeks in the General Assembly ahead of the DEFAC report. That’s because a March report cut revenue projections for both the current fiscal year and the next amid a then-erupting global trade war and significant federal spending cuts.
However, on Monday, DEFAC reversed course and added $97.6 million to the upcoming FY 2026 budget limit, pushing the available state revenue to a record-breaking $7.08 billion.
The majority of that increase came from increased payments in personal income tax and fees associated with limited liability companies and limited partnerships (LLCs/LPs).
Former Gov. John Carney proposed $7.01 billion in total spending for the FY 2026 budget before leaving office in January. Now Gov. Matt Meyer has proposed a “budget reset” that changes some spending priorities and adds new ones, but totals about $7.015 billion.
A final accounting of his budget proposal has yet to be filed in the state legislature, but is expected to be officially filed in early June after the last round of markups from the Joint Finance Committee, the subcommittee of House and Senate members who craft the final state budget of the year.
Rep. Kim Williams (D-Stantion), who serves as co-chair of the Joint Finance Committee, said she was relieved to see some extra revenue come in the door late in the legislative session, but said the state should still be “very cautious because of the uncertainty of the federal government.”
It was a message echoed by House Speaker Melissa Minor-Brown (D-New Castle), who warned against overestimating the improved financial picture.
“Obviously, it’s encouraging to see that the DEFAC numbers were better than we anticipated, but that doesn’t mean we should treat this surplus as a holiday windfall. With more federal cuts on the table, on top of those we’ve already seen, we need to be strategic and think toward our future budget. We have to make sure we’re spending wisely so that we’re prepared for what lies ahead and able to lighten the impact of federal cuts for Delawareans,” she said in a statement to Spotlight Delaware.
Minor-Brown’s Republican counterpart, House Minority Leader Tim Dukes (R-Laurel), noted that most of the additional revenue is arriving this year, while projections for next fiscal year are flatter.
He told Spotlight Delaware that legislators should “set aside any realized surplus, and prepare for the fiscal challenges that lie ahead.”
With DEFAC projecting that the state will close FY 2025 with a more than $450 million surplus, it’s unlikely that all of that would be held from state spending.
Meyer has already promoted adding funding to early childhood literacy programs, affordable housing development, and more.
Meanwhile, state legislators have several bills with significant fiscal notes that could still move forward, including the expansion of free school meals and the creation of an Office of the Inspector General. The latter, which would create a new office to ferret out fraud and waste in the government, has been a priority for some legislators and has the support of the governor, but comes with an annual price tag of about $1 million.
“I think you’ll see some stuff going through, but we’re still gonna have to be cautious,” said Williams, the JFC co-chair. “It’s just not up to us. We have JFC and then we have leadership as well. So I think we’ll see some things get through. What they are, I’m not sure right now.”