NEW CASTLE — The panel that issues Delaware’s official financial forecast said Monday that the state has $43.5 million less revenue for the current fiscal year than the amount on which lawmakers based this year’s budget.
The Delaware Economic and Financial Advisory Council lowered its revenue forecast for the current year by $21 million compared with its June estimate. But when actions taken by lawmakers after the June forecast to shift money from land preservation and energy programs into the general fund are taken into account, the revenue difference between now and June more than doubles.
The panel also lowered its revenue forecast for fiscal 2018, which starts in July, by about $6 million, a change that equates to zero revenue growth over the next year based on current projections.
“We have more cash going out the door than coming in…. We basically have a no-growth period from (fiscal) ‘16 to ‘18,” deputy finance director David Gregor told council members.
“If we just try to fund this year’s budget next year, with no cost increases or anything, we’d be $167 million short,” Gregor added.
The flat revenue forecast contrasts to what has become perennial growth in the state budget, with this year’s spending plan about 4.5 percent higher than last year’s.
State budget officials will begin hearing funding requests from state agencies for fiscal 2018 in November.
Budget director Brian Maxwell said agency directors have been instructed to present spending proposals reflecting both a 1 percent increase and a 1 percent decrease.
“We’ll be heavily focused on the 1 percent decreases,” Maxwell said after Monday’s meeting.
The biggest factor in the lower revenue forecast for this year was abandoned property collections, with $20 million in expected receipts pushed off until next year, because of what officials described as a “timing differential.”
“From a budget perspective, it’s a wash,” Finance Secretary Tom Cook said. “But you do see the tail-off when we start going into the following fiscal years.”
Cook’s agency has been the subject of several lawsuits in recent years from corporations critical of the way the state aggressively targets abandoned property, reaching back several years into companies’ records to search for it and using estimates to calculate what it is owed when documentation is lacking.
Last month, attorneys reached a settlement in a lawsuit filed by packaging company Temple-Inland Inc., a subsidiary of Memphis-based International Paper, which challenged Delaware’s claim to almost $1.4 million in purported uncashed accounts payable and payroll checks.
The settlement was reached after a federal judge issued a ruling blasting Delaware’s abandoned property, or escheat, practices, saying they violate due process and amount to a game of “gotcha” that “shocks the conscience.”
Cook told DEFAC members Monday that Gov. Jack Markell’s administration would be introducing legislation in December to address outstanding issues raised by the judge’s ruling, including possibly shortening the “lookback” period in which the state delves into a company’s records.