Markell proposes $3.5B budget with no new tax hike

Delaware Gov. Jack Markell's $3.54 billion operating budget proposal for the next fiscal year includes additional spending for Medicaid and schools but calls for no tax or fee increases.

The budget, proposed by the Democratic governor on Thursday, represents an increase of 1 percent over this year's operating budget.

“It's about investing in jobs, it's about investing in schools, and it's about governing responsibly,” Markell said.

The biggest single addition to the budget is $27 million in new spending for school staffing, previously funded with federal stimulus money that is now no longer available, administration officials said.

Markell also is recommending about $22 million in additional spending for Medicaid to meet enrollment growth in the government health care program for the poor. Officials expect an additional 20,000 people to be added to the state's Medicaid rolls, bringing the total to about 234,000.

Delaware must address skyrocketing costs for Medicaid and state employee health care, noting that Medicaid beneficiaries, state employees and retirees represent almost 40 percent of Delaware's health insurance market, with an annual taxpayer price tag of $1.7 billion in state and federal funds, he said.

His budget assumes only about $4 million in Medicaid savings, partly from copays for prescription drugs and therapy visits.

Last year, Markell was unable to persuade lawmakers to trim $5 million in Medicaid spending by restricting recipients to no more than three emergency room visits each year for non-urgent medical purposes, and requiring a small copay for doctor and therapist visits.

“The problem is bigger than a copay here or a physical therapy visit there,” said Markell, adding that his administration hopes to work with the state medical society and hospital association to find a comprehensive solution.

John Sigler, chairman of the state Republican Party, said he appreciates that Markell's proposed budget does not include any tax increases. He said it also contains no serious budget cuts.

“Our state has an institutional problem,” Sigler said in a statement. “It spends too much money, and has a state government that is far too big.”

Lawmakers had little comment because they had not had time to look at Markell's proposal. House Speaker Robert Gilligan agreed that the state needs to take a hard look at Medicaid.

Gilligan, D-Wilmington, suggested that copays, no matter how small, should be one factor to consider.

“There's a general feeling among many of us that everybody should pay something,” he said.

Both Gilligan and Markell indicated that they do not favor changing the eligibility criteria for Medicaid.

“In the end, we didn't think that would be the right move,” Markell said.

Other items in the governor's proposed budget include almost $50 million in additional funding for state employee pay and pension increases that lawmakers granted last year.

While Markell has said job creation is a top priority for his administration, he is recommending $31 million for Delaware's strategic fund in a continued effort to attract and retain private-sector employers. That's down from $30 million in the current year.

“We think the $30 million for the strategic fund is a good investment that we can really do a lot with,” Markell said. “We had to make lots of choices. I can think of lots of things that we would like to have done, but we live in a real world.”

In addition to the operating budget, Markell is proposing a capital budget of $448 million, with $213 million targeted for transportation improvements and $235 million for schools and other construction projects. Officials are proposing to use about $38 million in general fund cash for the capital budget, down from $115 million this year.

Total general fund appropriations in Markell's proposal, including the operating budget, capital budget and $40 million in grants to nonprofits and community agencies, are about $42 million lower than the current year's budget.

“We know this plan is reasonable and responsible,” said state budget director Ann Visalli, noting that it adheres to a cap restricting spending to 98 percent of available revenue and does not touch the state's $186 million rainy day fund.

In addition to the $27 million in new education spending to replace the federal stimulus funds, Markell is proposing about $9 million in new funding to hire teachers and other school staff to meet growth in school enrollment.

Administration officials are proposing $2 million each for Delaware's agricultural land and open space preservation programs, down from current funding of $10 million each.

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