Legislation to codify Gov. John Carney’s budget smoothing process heads to the Senate Floor, but Republican State Rep. Danny Short (R-Seaford) calls for more.
In 2018, Carney signed an executive order directing the panel responsible for Delaware’s official revenue projections, known as DEFAC, to calculate an advisory “benchmark appropriation” for the governor to use when crafting their budget.
It also created a budget stabilization fund to dip into during revenue shortfalls.
Now that the executive order will expire with the end of Carney's term in January, lawmakers are looking for ways to keep these budgetary oversight measures intact.
Joint Finance Committee Chair Trey Paradee (D-Dover)introduced a bill that would enshrine those requirements in state law, including having DEFAC continue to calculate and report a spending benchmark, but it does not mandate adherence to that benchmark.
"We don't know what types of economic challenges this state might face in the future — 10 years, 20 years, 30 years, 50 years down the road — and it's important that we do not handcuff future governors or future General Assemblies, so it does provide some flexibility there," Paradee said during the bill's hearing in the Senate Executive Committee.
He did clarify future governors must provide an explanation if they decide to deviate from the growth benchmark.
Paradee's legislation cleared the committee on Thursday with bipartisan support and includes sponsorship from Short, but later that day, Short — who is a member of DEFAC — announced his plans to introduce his own budgetary oversight legislation.
Short's bill, which he has dubbed The State Spending Accountability Act, would permanently establish the state spending growth benchmark by adding it to the state constitution.
It would also create the Budget Accountability Review Commission (BARC), similar to the Diamond State Hospital Cost Review Board Democratic lawmakers are trying to pass in an effort to curb rising health care costs, which would require Delaware hospital budgets to be reviewed in their compliance with the set healthcare spending benchmark.
The creation of a hospital cost review board has faced strong opposition from the healthcare industry and Republican legislators, but Short says if the state is going to try and regulate hospital spending, they should work harder to regulate their own spending.
“[If] we try to run these outside agencies if they don’t comply to what we want, then we ought to be willing to have that same window of opportunity for another group to oversee what we’re doing — and we’re worse than ones that we’re trying to regulate," Short said.
In 2021, the state's total healthcare expenditures increased 11.2% relative to the 3.25% growth benchmark, and 2022 saw a 6.3% expenditure increase relative to the 3% benchmark.
Hospital expenditures continues to be the single largest category of total medical expenses for the state, with in-patient and out-patient services making up around 40% of overall medical spend.
But Short notes the state’s budget has exceeded its own spending growth benchmark by over 50% the past two years, and it is currently on track to be at least 42% over the budget growth target for the upcoming fiscal year.
“I mean, we’re going to oversee budgets of the hospitals, then why wouldn’t it be appropriate for somebody to have oversight of what the state is doing? We have blown through our benchmark far greater than the benchmark of what the hospitals are doing," he said.
Short is proposing an 11-member commission that would be charged with aligning the proposed state budget with the calculated DEFAC growth benchmark, with membership from one representative of each county government, the DEFAC Chair, state lawmakers and representatives of the business community.
Under his bill, no state budget could proceed to a vote in the legislature without BARC approval.
Short said its unclear if his bill will have bipartisan support, but he plans to circulate the legislation for co-sponsorship in the coming week.
