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Transcript of Delaware Budget Process - UD Biden School Bank Tax CIT GRT Franchise * PIT Other * 2000-2016...

  • 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 2016 Fiscal Year

    P ct

    o f G

    en er

    al F

    un d

    Lottery

    Abandoned Property

    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

    ill io

    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

  • 11 3,