State panel pitches budget limits (Scott Goss)

Picture of a man, taken from the rear with his head turned to the left. “State Sen. Harris McDowell discusses Delaware’s budget situation during a special committee meeting exploring the distribution of public services funded by the county versus the state.”

Last year there was a $400M budget hole that had to be filled, this year there will be a fight “over how to spend $350 million in extra revenue.” But fear not, as “a panel of economists and political leaders” has a plan designed to stop this “kind of boom-and-bust rollercoaster.” It’s called budget smoothing, details to be provided at some point.

In addition, the 15-member panel wants to advance a series of “tax reform” proposals that would provide more stable tax revenue from year to year. The deal is backed by Gov. John Carney & Treasurer Ken Simpler, but “selling it to state legislators could prove difficult.” In effect, Democrats would have to give up “large annual spending increases” while Republicans would have to “swallow what amounts to a hike in the state’s personal income tax.” A DE constitutional amendment would be part of the package.

Sen. McDowell has expressed doubts about setting excess revenue aside as called for by the proposal. “To me, it’s an arbitrary suggestion to fix a problem that doesn’t exist.”

Gov. Carney calls the budget outlook a long-term problem that calls for a long-term solution. Then DE could get back to making “investments that matter” – in our schools, communities and economy.

Treasurer Simpler disputes the idea that the problem is cyclical budget cycles; he says there is a structural problem that looks worse in down years but is always present. The goal is a level of spending growth that can be sustained long term.

The real problem is not structural, it’s a lack of fiscal discipline. And we’re still waiting to see the language of the constitutional amendment, which is supposed to magically solve that problem.
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