Why Should Delaware Care?
More than two-thirds of Delaware’s budget is derived directly or indirectly from state residents through taxes on income, businesses, real estate and sales. How the state chooses to spend that money is paramount to the priorities of the governor and statehouse leaders.
Delaware’s fiscal years run July 1 to June 30, and therefore require the General Assembly to approve state budgets before they leave Dover each June.
The state’s spending limit for next year has topped $7 billion for the first time, but the outlook for revenues is getting more uncertain. That led some legislators – primarily Republicans – to call for greater cuts in spending this year, while Democrats, who control all the levers of power in the state, sought to fund new programs and initiatives.
The FY 2026 budget is the first passed under Gov. Matt Meyer, who rewrote the proposal submitted by his predecessor, Gov. John Carney, under what he termed a “budget reset.”
The legislature primarily relied upon Carney’s original submitted budget for the frameworks of this year’s spending plan, but incorporated some of the requests from Meyer’s “reset.”
The state government actually has four budgets that it approves each year. Here’s a break-down:
1. Operating Budget
The operating budget, or sometimes called the General Fund, is the largest and most important budget that funds the state’s personnel and many of its programs. Lawmakers will often refer to “door openers,” which are annual mandated expenditures that cannot be cut, such as Medicaid payments or school funding formulas. This year the Operating Budget totals $6.58 billion, or 7.37% larger than last year. About two-thirds of it are for door openers.
2. Supplemental Budget
The supplemental budget is a place for one-time spending, including equipment and technology purchases, pilot programs, and short-term projects. Project spending in the supplemental budget is largely dependent upon late-arriving revenue in the state’s budget cycle. This year, the supplemental budget totals $37.6 million, or 77% smaller than last year’s nearly $169 million supplemental budget.
3. Capital Budget
The capital budget is for major construction projects or renovations. The state government primarily funds those projects by issuing debt on the bond market, and then making long-term debt and interest payments to bondholders. This year, the Capital Budget totals about $977 million, or 12% less than last year.
4. Grants-In-Aid
The state government provides funding to volunteer fire companies, nonprofit service providers, senior centers and veterans organizations through a grant process called Grant-In-Aid, or GIA. The idea behind grant-in-aid is that nonprofits can help provide services to residents that the government might otherwise have to provide at a lower cost to taxpayers.
What is in the Operating Budget?
It should come as little surprise that public K-12 education leads the way in spending on Meyer’s first budget. The former middle school math teacher has made the issue of poor test performance a focus of his administration.
In total, 36% of all operating funds will be spent on education, or about 1% more than last year, totaling an increasing of about $230 million. As noted above, much of that sum is mandated by law under the student funding formula, but Meyer is directing an additional $8 million in new funding to early childhood literacy efforts.
The Department Health and Social Services makes up more than a quarter of state spending, primarily on the back of $1.1 billion in annual spending on Medicaid.
It costs Delaware about $272 million a year to run its prison system, which pushes the Department of Correction to the third largest overall expenditure in the budget.
What is in the Capital Budget?
The state’s $977 million Capital Budget includes more than $212 million for state roads and infrastructure and $211 million in funding for new school construction or renovations.
The University of Delaware will receive $30 million, including $20 million earmarked for the eventual construction of Biden Hall, a new facility on its Newark campus. Meanwhile, Delaware State University will also receive $30 million, with $20 million pegged to an indoor field house athletic facility. Delaware Technical Community College will also receive $30 million for renovations and repairs.
The state will spend $50 million to migrate its business records to the digital cloud.
The Delaware State Housing Authority will receive a total of $38 million for initiatives, including $19 million to incentivize the development of affordable rental housing in the state and $5 million for the development of workforce housing.
An investment fund to support the state’s sports tourism industry will receive $10 million, but the Strategic Fund, which incentivizes job creation and business investment, will only receive $5 million this year.
What is in the Supplemental Spending Bill?
Among the one-time initiatives funded this year are $3 million to support teacher-driven projects in public K-12 schools and $2 million to overhaul school disciplinary programs.
Nearly $3 million would support the growth of programs that serve to connect those facing hunger with access to fresh foods.
The state’s cloud migration receives another $2 million from the supplemental bill.
What is in the Grant-In-Aid bill?
Volunteer fire companies will receive a total of $13.2 million from the Grant-In-Aid bill, while emergency medical services and paramedics will receive a total of $21 million.
Senior centers across the state will receive a total of $9.5 million while another nearly $3 million will support the elderly through other programs.
Economic, housing, or labor services are receiving $3.9 million, led by $1.3 million to Jobs for Delaware Graduates, which offers services to at-risk youth to ensure that they enter the workforce after high school if they don’t attend college.
Correction: This story originally reported that the University of Delaware would receive $10 million for the Biden Hall program out of a $30 million appropriation, but it will actually earmark $20 million of the $30 million for Biden Hall. We regret the error.
