Delaware revenue estimates fall $45M

Pressure is on state lawmakers after two-year tax collection estimates fell more than $45 million on Monday in the latest projection of the Delaware Economic and Financial Advisory Council.

Gov. Jack Markell relied on the council's higher December estimates when he presented his $3.9 billion budget in January.

Falling tax collections now force the General Assembly's budget-writers to find cuts or raise revenue to balance Delaware's spending plan for the fiscal year beginning July 1.

Lawmakers have also made matters trickier by opposing a Markell administration plan to cut senior property tax credits to save $12.6 million. Republicans and Democrats have also criticized administration proposals to raise state worker deductibles and co-pays to solve a $60 million health plan deficit.

Markell's budget chief said Monday that the budget problem is one for lawmakers, not the administration, to solve.

"They have quite a number of challenging meetings in front of them," Ann Visalli, director of the Delaware Office of Management and Budget, said of lawmakers. "I'll be listening. Hopefully they have some ideas."

Current-year revenue estimates from the state's abandoned property program fell $25 million from December. The program collects money from corporations in the form of uncashed checks, dormant stock accounts and the unused value of gift cards.

State officials said the reduction was not related to a federal court ruling last week that allowed a challenge to Delaware's program to move forward. But David Gregor, the state's deputy Finance Secretary, would also not rule out additional reductions in coming months.

Corporations could be reluctant to settle abandoned property claims with Delaware with a pending federal challenge, Gregor acknowledged. "Obviously the decision is something we're going to monitor closely," he said.

Also Monday, the revenue council reduced estimates for personal income tax collections, bank franchise taxes and lottery taxes, which includes the state's share of casino revenue. Delaware's franchise tax, the fees companies pay to incorporate in Delaware, continues to post strong growth, however, with thousands of corporate entities continuing to choose Delaware as their legal home.

Sen. Harris McDowell, a Wilmington Democrat and co-chair of the General Assembly's budget-writing Joint Finance Committee, said Monday's revenue estimates make a difficult year even more challenging. McDowell suggested cutting state economic development incentives and raising taxes on Delaware's wealthiest residents to close the gap.

"Maybe we need to ask the gazillionares to pay a little more and stop just amassing money they can never spend," McDowell said.

Senate Minority Leader Gary Simpson, a Milford Republican who sits on the revenue council, said he was hoping for better news on Monday.

"I see positive signs in the economy," Simpson said, noting that Delaware's unemployment rate has fallen to 5 percent. "I was hoping some of that would translate into increased revenues."

Contact Jonathan Starkey at (302) 983-6756, on Twitter @jwstarkey or at jstarkey@delawareonline.com.