DE State Chamber of Commerce Legislative Brunch (Remarks)
March 21, 2001
I’d like to thank you for allowing me the opportunity to share some of my thoughts with you today. The first thing I’d like to touch on is my legislative agenda. Thanks to the fact that I am still in honeymoon-mode with the press, it’s been relatively well-covered and well-explained. But let me hit the highlights.
First, my major legislative initiatives include Patient’s Bill of Rights, community notification of environmental incidents and my Livable Delaware agenda for addressing growth.
My budgetary priorities include fulfilling my promise to put a reading specialist in every elementary school, enhancing academic after-school programs and funding solutions to a near-crisis in our foster care system.
In the area of public safety, we will work to reduce the DUI limit to .08 and we will work to impose background checks on sales at gun shows and ensure that convicted felons do not retain their weapons.
We will take a look at both the Department of Education and the Office of Information Services in search of any organizational changes that might allow them to do their jobs and serve the people of Delaware better. We will improve our process for putting government on the Internet so that we are more creative, innovative and successful.
Finally, as you will hear tomorrow, we will work to curb sprawl and better direct growth through a series of initiatives that will form my Livable Delaware agenda.
These, and some I haven’t listed, are the issues that Delawareans have spoken to me about most often and most passionately as I sought this office. I am committed to making a difference in each of these areas.
You know, I’ve really been looking forward to speaking to you today, especially since DEFAC met on Monday. As you know, the combined revenue estimates for this year and next year were cut by a total of $119 million.
Now, I know we have some of the most well-off individuals and companies in Delaware represented in this room here today. So you will not be allowed to leave until you give everything in your pockets to Pete Ross and Dave Singleton.
But seriously, the revenues projected by DEFAC on Monday do present a challenge, but it’s far from a crisis, and it’s a challenge that I know we can handle.
While it is true that our revenue forecast has decreased, it is important to know that our revenues our still growing. We are still projecting that we will collect more next year than this year. We are not in negative growth.
Further, there are underlying positives in our economy. Part of the reason for our revenue slowdown is the years of tax cuts that we have passed which are now taking effect. These tax cuts, for both business and individual taxes, make us competitive with other states for economic development – that’s a strength as we face a slowing national economy.
Despite the significant revenue reductions for FY01 and FY02, personal income is still growing. In fact, adjusting for the tax cuts, the growth in personal income for Fiscal 2001 is 7.3 percent, for 2002 it is 4.5 percent and 2003 it is 5.9 percent.
Much of the expenditure growth of the last five years was in one-time investments. That means we have not over built our base budget, and we have new schools, new roads, open space, farmland, and other capital projects to show for it.
Finally, as we look at the next few years, we know that diversification in Delaware’s economy has left the state less dependent on manufacturing and chemicals. The financial and professional services sectors are projected to feel less of a slowdown. And so far, even Delaware’s manufacturers have only had to slow down and cut overtime in order to cope -- no major layoffs, and job growth has slowed but is still growing.
We face, as one of my cabinet secretaries has named it, a “new fiscal reality.” But we are, I believe, well prepared for it.
There are, of course, adjustments and tough decisions to make, though. And I began that process yesterday. I met with my financial team and asked them to work with our state agencies to cut the $20 million out of this fiscal year that is necessary for our budget to balance on June 30. We have already been through that process once since I took office and we will do it again.
We must also revisit our proposed FY02 budget, which we hadn’t even finished yet. We will start by asking our agencies to reduce their requests by 3 percent. I’m not asking for an across the board cut. I want each agency to look at the programs and spending that we have taken on through the fat years, but which we can and must now live without. It’s not necessarily a bad process.
I’ve directed that this examination and adjustment take place with several guidelines:
We will not increase taxes. We will not cut Medicaid services or increase childcare waiting lists. We will not layoff employees. We will not take it out of educational accountability.
We will keep my legislative spending priorities – like reading specialists for our schools, after-school programs, foster care, and parts of my Livable Delaware growth agenda – on the table for now. We will keep a modest pay raise for state employees under consideration. We will look for the efficiencies and organizational changes that I always like to see as a means of saving money.
Finally, for FY02, we should keep to our self-imposed 98 percent spending limit and we should not expand our debt limit. I pledge to work within the rules that have put our fiscal house in order, and I will not jeopardize future years in order to solve a problem in this one.
I have said this week that this is not a crisis. It is a challenge. In fact, Dave Singleton said yesterday that if you think this is a crisis, you haven’t seen a crisis.
I said in my State of the State that I didn’t come to make the easy decisions, I came to make the tough ones. And I assure you our state is in good shape and, with your advice and support, it is in good hands.
Thank you.
