Civics 101: Glossary of Terms

Understanding Delaware’s state budget can be challenging — not because the issues aren’t important, but because the language used to describe them is often unfamiliar, technical, or assumed knowledge in political discussions.

As part of Delaware LIVE and Spotlight Delaware’s Civics 101 series, this glossary is designed to serve as a clear, plain-language reference for readers who want to better understand how the state raises, manages, and spends public dollars.

Each article in the Civics 101 series introduces new concepts, institutions, and budget tools that shape Delaware’s financial decisions. With every installment, new terms will be added to this glossary, allowing readers to return to a single, permanent resource as their understanding grows.

• 98% Spending Limit: A rule requiring Delaware to spend no more than 98% of estimated revenue each fiscal year, leaving a 2% cushion against deficits.
• Bond Bill (Capital Improvements Act): Delaware’s “bond bill” (or capital budget) is separate from the “operating budget,” and is used to authorize borrowing for long-term construction and infrastructure projects. Unlike the operating budget (which can pass with a simple majority), the Bond Bill requires a three-quarters supermajority in both the House and Senate. This can give the minority party (usually Republicans) leverage they might not have otherwise had.
• Budget Stabilization Fund: Along with the Budget Reserve Account, this is one of the state’s main safeguards against financial shock. The Budget Stabilization Fund was created in part because the Budget Reserve (see “Rainy Day Fund”) is so intentionally difficult to tap. The Budget Stabilization Fund serves as a more “liquid” savings account, capturing surplus revenue during “good” years to prevent the state from overspending on recurring programs when the economy cools.
• DEFAC Forecast: Official revenue estimate issued by the Delaware Economic and Financial Advisory Council (DEFAC). By state law, the governor and General Assembly must base the budget on DEFAC’s official, politics-free projections.
• Delaware Economic and Financial Advisory Council (DEFAC): Independent body that issues binding revenue forecasts for the state. Appointed by the governor, its members “broadly represent both the public and private sectors of the State’s economy,” and have included finance professionals, attorneys and business leaders. Members of the General Assembly also serve on the board.
• Debt Affordability Limit: Formulas limiting how much the state may borrow, in order to protect its credit ratings. It consists of three checks and balances: (1) The 5% Authorization Cap (limits new debt in a single fiscal year to 5% of that year’s estimated net General Fund revenue); (2) the 15% Debt Service Cap (total annual debt service cannot exceed 15% of the combined General Fund and Transportation Trust Fund revenues) and (3) the Cash Balance Test (maximum annual debt service on General Obligation debt cannot exceed the state’s estimated cash balances, including all reserves, for the following year).
• Federal Transfer Funds: Federal dollars sent to Delaware for specific programs with spending rules.
• Four Buckets of Delaware’s State Budget: Framework dividing state spending into four major categories: General Fund (everyday operations); Special Funds (dedicated dollars for specific purposes, like roads, prevention programs) the Bond Bill (borrowing to pay for roads and facilities); and Federal Transfer Funds (Washington’s contribution for federally mandated programs and expenses).
• General Fund (Operating Budget): Main fund paying for everyday government operations and state services like education, health & social services and public safety.
• Governor’s Recommended Budget: The governor’s proposed spending plan submitted to lawmakers.
• Grants-In-Aid: Funding provided to nonprofits and community organizations.
• Joint Committee on Capital Improvement: Legislative committee that drafts the Bond Bill.
• Joint Finance Committee (JFC): Committee that writes Delaware’s operating budget. One of the most powerful committees in the legislature, the JFC holds public hearings on the governor’s proposed budget, reviews agency requests line-by-line, and ultimately writes the final budget bill that will be voted on by the entire assembly.
• Line-Item Veto: Governor’s authority to strike specific budget items. In Delaware, it’s limited strictly to financial appropriations, making it more restrictive than in some states. It’s an all-or-nothing power – the governor cannot simply lower the dollar amount for a specific item, they must accept or reject the item in its entirety.
• Office of Management and Budget (OMB): As an office under the governor’s authority, the OMB is the “mechanism” that converts policy ideas into a line-item budget — then makes sure the spending is being done properly. After gathering budgetary “wish lists” from each agency in summer, OMB holds public hearings in November. In January, OMB finalizes the Governor’s Recommended Budget (the administration’s official “wish list” for the upcoming fiscal year). This version of the budget is presented  to the General Assembly during the State of the State or a dedicated Budget Address.
• “Rainy Day Fund”: In 1977, Delaware was the first state in the country to create this kind of “emergency fund,” officially known as the Budget Reserve Account. To withdraw money, the General Assembly must pass a bill with a three-fifths “supermajority” in both houses, and the money can only be used for “unanticipated deficits” or to cover revenue reductions. The rules are so strict that Delaware has never actually tapped this fund — even during the 2008 recession or the COVID-19 pandemic. (This fund is one of three budget safeguards, along with the Budget Stabilization Fund and the 98% Spending Limit.)
• Special Funds: Dedicated funds restricted to specific purposes.
• Supplemental Budget: Budget adjustments passed after the main budget.
• Transportation Trust Fund (TTF): Special fund supporting transportation infrastructure.

About the Civics 101 Series: Civics 101 is a continuing explanatory series by Delaware LIVE and the Spotlight Delaware content marketing team designed to help readers understand how state government works and how budget decisions affect everyday life in Delaware. To read other stories in the series, visit the Civics 101 home page.