DOVER, Del. (AP) — Delaware’s official government revenue forecast for the current fiscal year has grown by more than $70 million since December, but officials still expect total general fund revenue to be slightly lower than last year.
Meeting for the first time this year, the Delaware Economic and Financial Advisory Council on Monday boosted the fiscal 2024 revenue forecast by $71.5 million compared to its December estimate.
The increase is primarily attributable to a $35 million increase in projected personal income tax revenue, and a $34 million increase in the corporate income tax estimate.
David Roose, director of research and tax policy for the state Department of Finance, told DEFAC members that the growth in personal income tax withholding is due partly to strong bonus growth, especially in the financial services industry.
Meanwhile, a projected gain of $15 million from lower abandoned property refunds was largely offset by an $11 million decline in estimated real estate transfer taxes, as the housing market continues to struggle with high interest rates. Estimated real estate tax revenue for fiscal 2025, which starts July 1, declined by $12 million compared to December’s forecast.
Overall, estimated general fund for next year is up by $14.8 million since December. The personal income tax estimate grew by $42.3 million, but projected refunds of corporate income taxes grew by $34.3 million.
Revenue estimates from the gross receipts tax paid by businesses, often referred to as Delaware’s “hidden sales tax,” increased by $8.7 million for this year and $13.4 million for next year. Much of the increase is due to higher oil prices paid by industries, officials said.
Despite the uptick in some revenue categories, state Finance Secretary Rick Geisenberger continued to urge caution as lawmakers prepare to meet later this year to markup Democratic Gov. John Carney’s budget proposal.
According to the council's December estimates, general fund revenue was expected to decline about 2% this year and increase by a similar amount next year, resulting in essentially flat growth. The revised estimates are for a decline of about 1% this year followed by growth of about 1% next year.
“Things have even gotten flatter,” Geisenberger said after Monday’s meeting.
“If our revenue growth doesn’t pick up apace, we’re not going to have the revenue to support the kind of spending growth we’ve had over the past two or three years,” he added.
In January, Carney proposed a state operating budget of more than $6 billion, an increase of more than 8%. The proposed growth in spending is slightly higher than the benchmark recommended by DEFAC and follows an increase of almost 10% percent in the current year’s budget.