Carney Budget to propose shortfall covered by half new revenue and half spending cuts

Filed in National by on March 18, 2017

Rumors are circulating that Governor “my hands are tied” Carney will propose a budget on Thursday that will seek to close a $350 million budget gap by cutting state expenses by $175 million while raising $175 million in new revenue.

“New revenue” no doubt includes increases to “sin” taxes on cigarettes and liquor, because they always do. But $175 million in new revenue is probably too much to raise entirely on the backs of smokers. So it is possible that a tax increase on the state’s top earners ($60,000 and up) may be in the mix.

If Carney simply stays with the “new revenue” proposed in January by Jack Markell, he would overshoot the $175 million mark. Under Markell’s swansong budget proposal two thirds ($205 million) of the budget deficit would be addressed.

Itemized deductions on the personal income tax would be eliminated, though the standard deduction would be raised to 50 percent. That would raise $18.1 million.

The top personal income tax rate would rise from 6.6 percent to 6.8 percent, at $60,000. That would raise $9.9 million.

The corporate franchise tax, which businesses pay to incorporate in Delaware, would be raised to match inflation and a new top rate would be imposed: $250,000 for companies with $750 million or more in revenues or assets. Combined, that would raise $115 million.

The cigarette tax would grow from $1.60 a pack to $2.60 a pack, raising $18.6 million.

The state’s realty transfer tax would rise from 1.5 percent to 2.5 percent. That would bring in $44 million.

john carney hands tied

Spending Cuts:

Carney has already telegraphed cuts to the pay and benefits of state workers, thereby keeping Markell’s disgust with the wealthy n’er do well bus drivers and park rangers alive.

Beyond that he has also indicated that good schools are an luxury from a bygone age. Is that enough to get to $175 million in cuts? Maybe.

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Jason330 is a deep cover double agent working for the GOP. Don't tell anybody.

Comments (5)

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  1. El Somnambulo says:

    So, we’d have to cut $175 mill from existing state expenses?

    I’d look to get rid of the bean-counters from the Department of Education to start. Except–Carney IS a bean counter. He may view bean counters differently than we do.

    Put an end to the state handing out millions of $$’s in corporate giveaways–unless the state can provide empirical evidence on a case-by-case basis that the state is benefiting from the handouts.

    Do what Markell proposed: A cost-benefit analysis of job training programs and get rid of the chaff, which will inevitably include Jobs For Delaware Graduates. This is probably a zero-sum game in that the money going to useless agencies will go to agencies that are producing. But productivity is important.

    End state funding to the Fort DuPont boondoggle. The project is to the point where it can sink (as Fort DuPont is almost certain to do) or swim on its own. The state has no business handing over a single additional dollar to Dick Cathcart and his hangers-on.

    Fire Tony DeLuca for corruption during his time at DOL. Talk about adding by subtracting. Oh, and no pension b/c I hope the AG prosecutes his ass.

    OK, I’m just venting. But I know that just doing a 10% across-the-board budget cut for every single agency makes no sense. Plus, there are some agencies that largely get their funding from the Feds. And there are others, like police agencies, that should not be held harmless, but will reportedly not face any cuts under Carney’s proposal. OK, John, you wanna hold them harmless? Then either do away with civil forfeiture, or require that those takings (aka ‘thefts’) be added to the General Fund. Either way, you will have effectively ended the practice.

    Needless to say, this is gonna be an interesting week.

  2. jason330 says:

    I forgot about the fact that he ha floated the typical John Carney-esque, buck passing solution of a flat % cut across all agencies.

  3. chris says:

    The reality is that Lavelle and Senate R’s will block the income tax increase from 6.6 to 6.8 percent. Plus it only raises 10 million. That money will be found elsewhere most likely.

  4. The reality is that if Carney proposes such thin gruel, the Rethugs will try to make it thinner. It’s what they do. Why not do something bold, like adding two new brackets for the wealthy, get it through the House which Carney could do if he had the stomach for it, and negotiate from a position of strength for a change?

    And present a unified message that it’s time for the wealthy to pay their fair share. That’s a message that would resonate, especially if you point out the programs that will be cut if the R’s persist in putting the millionaires ahead of everybody else.

    Hey, do what Trump does. Cut stuff that would drive Lavelle apoplectic if cut. Like, for example, funding to bus kids to parochial schools, parochial school nurses, etc. Play some hardball for once.

  5. chris says:

    Budget now $385 million plus deficit….the hole deepens.