Remarks by Governor Ruth Ann Minner Announcing FY02 Budget and Bond Bill Revisions
May 10, 2001
Thank you for joining me here today.
The budget process for a new governor is a unique one. When I came into office in January, Gov. Carper had already prepared a budget for Fiscal Year 2002. My job since then has been to do three things: first, rework the proposed budget to include my priorities and implement my legislative agenda – things I talked to the people about and they talked to me about last year; second, to cope with the declining revenue forecasts, reductions that not only eliminated $24 million that Gov. Carper had left unallocated for me to use, but which required cuts in both our operating and capital budgets for next year; and third, to accommodate unavoidable rising costs, especially in the area of health care.
This has been a challenge, but it is one that I can say that I – and more precisely my budget team – have met and met successfully.
The budgets I am proposing today for the Joint Finance and Bond Bill committees to consider includes the priority items I announced as far back as the State of the State address in January. I have not gotten as much for each of them as I would like, but almost every agency has had to curtail their plans for next year and so have I.
Additions
This budget now includes $2.35 million for reading specialists. Instead of every elementary school, in this first year we will place them in 47 elementary schools that have low reading scores on our state tests. We will plan to add reading specialists to the rest of the schools in coming years. We also expect there might be some federal funding available for this project in the coming year.
This budget now includes $200,000 for pilot after-school academic programs that will provide extra help to children who are struggling to keep up in their classes. Districts will apply competitively to the Department of Education for the use of this money and, again, we will hope to add to it in future years. I am also very grateful that private businesses have expressed an interest in helping to fund this important effort.
This budget now includes half a million dollars to implement the forthcoming recommendations of my Foster Care Task Force, improving a system that cares for 900 Delaware children.
This budget now includes a two percent pay raise for state employees, teachers, school district employees and higher education employees.
This budget now includes $1 million for e-government, so we can work to make state government more accessible to the people it serves.
This budget now includes $500,000 to insure there are no waiting lists for childcare and $130,000 to eliminate a waiting list for adult education.
This revised budget is significant not just in what it added, but also in what it did not reduce. While there are reductions from the Carper proposed budget in almost every agency, there is one area that not only wasn’t reduced, but actually increased in my rewrite of the budget. That is education.
The people who elected me sent an unequivocal message that education was the most important issue to them and I agree. I have done my best to keep intact funding for the implementation of education accountability and have added in other initiatives as well, like reading specialists and after-school programs.
There are also additions to this budget that come from necessity to meet obligations, namely $4.6 million added to DHSS to deal with rising Medicaid costs and $4.7 million to cope with a nursing shortage at the Delaware Psychiatric Center.
Reductions
To make all these additions to the budget, we did have to make some reductions in the Carper proposed budget. Please keep in mind that most agencies were set to experience budget growth under the Carper budget proposal, and so making these reductions does not necessarily mean that their departmental budgets were cut from the FY01 level. You have a chart that shows both the Carper plan for the budget as well as the changes we made and the growth from FY01 to FY02 under my budget plan.
Again, these changes were made both to accommodate my priorities, but also to cope with reductions in revenue forecast for FY01 and 02 that total $110 million since the Carper budget proposal was released in December.
First, the Carper proposal had planned to add $52 million in cash to the FY02 bond bill. Recent years of surpluses had allowed hundreds of millions of dollars to be added to the bond bill each year, meaning more capital projects could be accomplished than our five percent debt limit would allow.
I think everyone understood along the way that this would be the first place to look for budget cuts to avoid cuts in state agency services. As a result of the decreases in revenue, there will not be cash added to the bond bill this year. That made it necessary to eliminate $48 million in projects that had been planned for FY02.
If additional revenue is declared by DEFAC between now and June 30, I would recommend that these reductions receive first consideration, along with any school referendums that pass in that time and additional funding for farmland preservation that will help meet my Livable Delaware goals.
Major bond bill changes include $35 million in school construction that will not occur because referendums did not pass or construction is scheduled in a way that will not require funding next fiscal year. We have also chosen to spread funding for some projects out over several years rather than paying for them all at once.
We also went back and combed prior year bond bill allocations for money left over from projects that had been completed under budget or which were behind schedule and did not yet need the money allocated for them. We saved $14.7 million this way.
Projects that fell under this category included $4 million for dredging of the Delaware River channel, which clearly will not occur in the next year, and $2.4 million for underground storage tank cleanup, a program that has a surplus.
In the operating budget, every agency and branch of state government responded positively to my request to rework their budgets in order to cope with these tough times. The chart you have shows that nearly every agency made reductions in their proposed budgets. I can tell you that this level of participation in budget reductions is pretty much unprecedented in all my time in state government. I am deeply grateful for the cooperation we have received from every part of state government in achieving our goals.
The reductions to the FY02 operating budget that made possible the additions I spoke of earlier came largely in bits and pieces from all of our agencies, but they totaled about $50 million. We are not filling many vacancies that currently exist and are cutting amounts for things like travel and contractual services. We have not made significant cuts to direct service programs and we have not laid off any full-time employees.
I believe that, after seven years of a healthy economy and budget growth above the rate of inflation, going through this exercise of cutting back on less-necessary items in order to focus on our priorities is a healthy one. Again, I am grateful for the spirit demonstrated by everyone in state government who took on this task.
Closing
Two months ago, I announced that in addressing the projected shortfall for Fiscal Year 2002, there were clear guidelines we would follow. No tax increases. No layoffs. No cuts to Medicaid and no childcare waiting lists. Preserving education accountability.
Funding my priorities. Funding a pay raise. Cutting fat and being more efficient. Keeping to our 98 percent spending limit. During my term, the state will live within its fiscal resources.
I am proud to say that we have adhered to these guidelines and made the tough choices to keep Delaware in sound financial condition. The economy runs in cycles and slowdowns like the one we’re experiencing are inevitable. We will be judged not by our ability to prevent them, but by our ability to manage them. I am proud of this budget, and I look forward to discussing it with the JFC, the Bond Bill Committee and the members of the General Assembly over the coming weeks.
Thank you.
