Other States Facing Similar Budget Woes as Delaware

Other States Facing Similar Budget Woes as Delaware

by James DeChene

The Wall Street Journal reported this week that at Connecticut Governor Dan Malloy’s state of the state address, he called on state labor unions to make concessions to help close a $1.5 billion budget deficit and also called for changes in how public education is funded in the state. He went on to say that pension obligations for state employees and unions would rise by $360 million in the fiscal year that begins in July, and pressed public employees to help close the state’s funding shortfall. The governor also said the state should recalculate how it allocates educational funding to towns and cities to guarantee an equal access to quality education regardless of where students live.

In December, Massachusetts Governor Charlie Baker cut $98 million across 140 state agencies to help curtail a looming budget gap. Amid earlier reports of underwhelming tax revenue, and a projected $294 million budget shortfall, Baker’s budget office had indicated that the mid-year cuts could be possible.

If this sounds familiar, it should. Delaware has struggled with similar hurdles, and recent forecasts show a potential $350 million gap headed into the 149th General Assembly. Of particular note, across these three examples, is the obvious desperate need for structural reform of state government. This includes the services it chooses to provide, and how to continue to provide funding. Continued stop-gap measures to plug increasingly large budget holes is unsustainable long-term, and there are reports, such as the DEFAC Taskforce on Revenues and the Delaware Business Roundtable’s Growth Agenda, that offer a blueprint toward getting a handle on out of control cost increases. It should be an interesting year in Dover as these issues are debated.