delaware budget process - ud biden school · bank tax cit grt franchise * pit other * 2000-2016...
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Delaware Budget Process Robert L. Scoglietti Office of Management and Budget October 2, 2015
…or demystifying how $ are allocated in Dover
Agenda o Budget Process
n Revenue n Appropriations
o Other issues
Budget Process Revenue
Delaware’s revenue mix is unique o Relatively low property taxes o No sales tax (no local share)
n State level gross receipts tax o Corporations’ legal home
n Reliance on related taxes & fees
o Non-tax revenues -- lottery & abandoned property
Delaware Economic & Financial Advisory Council (DEFAC)
o Responsible for preparing & approving THE revenue & expenditure forecast.
o Members appointed by the Governor to serve at their pleasure.
o Membership of DEFAC broadly represents both the public and private sectors of the State’s economy.
o Two Subcommittees: Revenue and Expenditure o Full Council meets 6x/year and ratifies estimates from
subcommittees
Types of Funds
General Funds
Appropriated Special Funds
Non-Appropriated Special Funds
Delaware Fiscal Year 2016 Revenue Forecast
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Personal Income Tax, 32.0
Public Utility, 1.3 Realty Tax, 2.2
Lottery, 5.0 Corp. Income Tax, 3.6
Other Tax Revenue 4.4 *Other Non-Tax, 4.7
**Incorporation Revenue, 25.4
Bank Franchise Taxes 2.2
Business Gross Receipts Taxes, 5.6
Abandoned Property, 13.6
*Includes Prior Year Unencumbered Cash Balance.
**Includes Corporate Franchise Taxes, Business Entity Fees, and Limited Partnerships & Limited Liability Corporations.
¢ ¢
¢ ¢
¢
¢
¢
¢
¢¢ ¢
Changing Revenue Composition
21.9%17.8% 16.7% 17.9% 15.8% 12.6%
39.4%
36.8%32.1% 30.7%
26.4% 32.0%
15.8%
18.9%21.3% 19.3%
23.6%25.4%
7.5%7.0%
5.9%6.1%
6.0%5.6%
5.7%5.4%
4.7%4.0%
2.7%3.6%
6.5% 9.2%15.2%
13.6%
2.2% 5.2% 8.1% 8.1% 8.5% 5.0%
6.2%4.4%
4.7%
1.7%
2.2%4.7%
3.1%2.7%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1990 1995 2000 2005 2010 2016Fiscal Year
Pct
of G
ener
al F
und
Lottery
AbandonedProperty
Bank Tax
CIT
GRT
Franchise *
PIT
Other
* 2000-2016 Franchise figures include LP/LLC collections.
DEFAC Revenues FY 2010 - 2018
$3,235
$3,531
$3,359
$3,730 $3,730
$3,955 $3,951 $3,947
$4,059
3,000
3,200
3,400
3,600
3,800
4,000
4,200
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018
DEFAC 9
$ M
illio
n
Budget Process Appropriations
Delaware’s Services are Concentrated at State o All Adult and Juvenile Social Services
n Public Health, Health, Mental Health, Child Support, Aging Services, Medicaid, TANF, Family Services, Unemployment, Vocational Rehab
o All Prosecutorial, Public Defender, and the vast majority of Judicial services
o All Detention (Pre-Adjudication), all Jail (2 years or less) and all Prison facilities
Delaware’s Services are Concentrated at State o Approximately 70% of Public Education
funding (Operating and Capital) o The majority of Transportation and Public
Transit Services o Largest Police Force in State o 50% of Public Library Construction Funding
Legislation o Bill
o Amend Code
o Appropriate funds o Amend local government charter o Direct someone to do something
o Joint Resolution o Direct someone to do something o Only in effect during the General Assembly
o Resolution o Ask someone to do something o Statement or declaration
o Constitutional Amendment
Appropriations Legislation o Appropriations:
n Operating Budget n Capital Budget (Bond
Bill) n Grants – in – Aid
o Epilogue (!)
Delaware’s Appropriations Legislation o Operating Budget
n Contains operating funding and position strength authorization for agencies, legislature, judiciary, higher education, education.
n Funds and positions are appropriated by line item (Personnel Costs, Travel, Contractual Svcs, Supplies and Materials, Energy, Capital Outlay, Debt Service) or Program (Medicaid, International Trade, Assisted Living)
n Budget is authored by Joint Finance Committee, requires simple majority vote
Delaware’s Appropriations Legislation (cont’d)
o Capital Improvements Act (Bond Bill) n Appropriates funds for major/minor capital
improvements for state agencies, public schools, Higher Ed institutions
n Also appropriates funds for: o DelDOT (TTF Capital program) o Economic Development (Strat Fund, Port) o Infrastructure /Land Use (Open Space, Farmland,
Water/Wastewater, Drainage) o Specific Funds to Locals
Delaware’s Appropriations Legislation (cont’d)
o Bond Bill (cont’d) n Authored by Joint Legislative Committee on
Capital Improvements (Bond Bill committee), requires 3/4 approval of Legislature
Public Education, 33.4¢
Higher Education, 5.9¢
Services for Children, Youth
and Their Families, 4.0¢
Judicial, 2.4¢
Other Agencies, 15.1¢
Health and Social Services, 28.6¢
Correction, 7.3¢
Safety and Homeland
Security, 3.3¢
FY 2016 Operating Budget
18
Delaware’s Appropriations Legislation (cont’d)
o Grants - In - Aid Legislation n Appropriates operating funds to non-profit social
service agencies and fire/ambulance companies who provide services for Delaware citizens
n Includes the annual subsidy for the county paramedic programs
n Authored by the Joint Finance Committee, requires 3/4 vote majority for approval.
n May see amendments to operating budget in this bill
o 98% Appropriation Limit n Cannot exceed an appropriation of 98% of
estimated State General Fund revenue for each fiscal year
o 2% Set-Aside n Can appropriate between 98%-100% in
emergency situations o Rainy Day Fund
n Balance of 5% of Gross General Fund Revenue n Can only be appropriated by 3/5 vote
Constitutional and Statutory Spending Limitations
o Debt Issuance n Fiscal year general obligation debt issue may
not exceed 5% of estimated net General Fund revenue for that fiscal year
n Total fiscal year debt service may not exceed 15% of estimated gross General Fund revenue plus Transportation Trust Fund
n No new debt obligation can be incurred if the maximum annual debt payments exceeds the state’s cumulative cash balances
Constitutional and Statutory Spending Limitations
Governor’s Recommended Budget o The Recommended Budget is
the Governor’s “Turn at the Plate” n POLICY/POLITICS -
Opportunity to Show How Resources Will Be Allocated to Implement the Vision Presented in the State of the State
n FINANCIAL - Opportunity to Present Financial Plan
n STATE OPERATIONS - Must Provide for General Operations of the State
Governor’s Budget Development – Early Fall o Validate financial principles o Review Revenues, Sept. DEFAC is key o Identify “Door Openers” o Review Tax policy o Provide framework for policy development
Door Openers n Debt Service n Employment Costs – Salary, Pension, Health n Medicaid n School Unit Growth n Funding Legislative Initiatives n Federal Mandates
o MMIS o Federal oversight (DPC, DOC)
Door Openers: Medicaid Eligibles
25
-
50,000
100,000
150,000
200,000
250,000
FY 10 FY 11 FY 12 FY 13 FY 14 FY 15
173,771
193,633 207,067
212,693 217,658 224,198
Medicaid Average Monthly Eligibles
Average Monthly
113,
924
114,
276
115,
103
116,
277
117,
098
118,
419
119,
780
120,
591
121,
763
121,
921
6,56
7
7,58
0
8,51
2
8,62
6
9,17
3
9,52
5
10,3
22
10,4
38
11,0
78
12,5
21
100,000 102,500 105,000 107,500 110,000 112,500 115,000 117,500 120,000 122,500 125,000 127,500 130,000 132,500 135,000 137,500
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15
Enr
ollm
ent
School Year District Charter
120,491 121,856 123,615 124,903
126,271 127,944
130,102 131,029
132,841 134,442
Door Opener:Enrollment Growth: PK - 12th Grade
Excludes DAFB students
24 Charter Schools
19 School
Districts
26
Timetable – Governor’s Budget Development
o August-September (Budget Guidelines/Target) o October (Budget Requests From Agencies) o November (Budget Hearings) o December (Meetings with Governor, DEFAC) o Early January (Budget Director reviews budget with
Cabinet Officials) o Late January (Governor presents budget to Legislature)
Timetable – Legislative Budget Development
o February-March (Joint Finance Committee, Bond Bill Committee holds Public Hearings)
o April-May (Joint Finance Committee Mark-Up)
o June (JFC Mark Up continues, Bond Bill and Grant in Aid)
o June 30th (Budget, Bond and Grant-In-Aid Bill passes the Legislature and Governor signs)
Major Actors in the Budget Process Legislative Branch o General Assembly
n Sets appropriations for state government
o Joint Finance Committee (JFC)/Joint Bond Bill Committee n Reviews & marks up
Governor’s budget n Proposes budget for
consideration by legislature o Office of the Controller
General n Counterpart to OMB n Staffs to JFC & Bond Bill
Committee
Joint Appropriations Committees o Structure
n 2 committees – JFC, Bond n Chairs rotate n 6 House/6 Senate n By politics, 8 D, 4R
JFC Markup o “Governor proposes and the Legislature disposes” o Use Governor’s Recommended Budget as blueprint o Use Governor’s Budget as starting point for motions
n Very important to get Gov Budget voted in, takes 7 to vote it out
o Usually 10-15 major issues n Salary n Policy – enacted programs n Operating n Caucus members issues
FY 2015 Recommended Financial Plan
32
General Fund Operating Budget $3,908.4 million
Transportation Trust Fund Budget $344.9 million
Grants-in-Aid $43.0 million
Bond and Capital Improvements Act $456.3 million - State Capital Projects……………………..$247.9 million - Transportation Projects…………………..$209.3 million
Where do I find…..? Item Location Municipal Street Aid/Community Transportation Funds
Bond Bill, DelDOT
Drainage Bond Bill, DNREC “Resource Conservation and Development”
Libraries Operating and Bond bill, Dept of State Volunteer Fire/Ambulance funding Grant in Aid Fund to Combat Violent Crime Operating budget, DSHS SALLE Grant in Aid LEPC Operating budget, DSHS Water/Wastewater Bond bill, DNREC Housing Development Fund Operating budget, Bond bill, DSHA Downtown Development Districts Bond bill, DSHA “Urban Redevelopment” Tourism Operating Budget, DEDO (Executive)
Final Thoughts
Long Term Challenges
o Infrastructure o Revenue
n Abandoned Property n Lottery
o Aging population o What level of services do taxpayers want
and are willing to pay for?
Budget Development – Other Thoughts o Budgeting is a process. Those who succeed are
experts in not only the policy but the process. o Numbers always have to be correct. o Show enough detail to get policy makers to
understand the issue but not too much to lose them. o KNOW your issue but also know how it affects
people. o Compromise and negotiation lead to more
constructive longer term relationships in Legislative Hall
Questions??