The 5 takeaways from Delaware Gov. John Carney's 2025 budget address

Delaware Gov. John Carney on Thursday presented a roughly $6 billion operating budget for 2025 that keeps taxes flat while continuing investments in public education, environment, agriculture, communities and government infrastructure.

While Delaware’s benchmark budgeting strategy and utilizing one-time revenues for one-time expenditures helped avoid cuts and tax increases for fiscal year 2025, Carney warned that future budgets will be much tighter and require fiscal discipline to overcome.

The governor said negative revenues are estimated in 2024 and 2025, and Delaware’s rainy day and budget stabilization money will be needed to help bridge those gaps.

“We’re able to use money from the (budget) stabilization fund to prevent the need to raise taxes and cut spending,” Carney said. “We’re still going to need the budget stabilization fund to address those declines in revenues without cutting dramatically and raising taxes.”

The budget proposal also maintains $410.1 million in the budget stabilization fund in preparation for revenues flatlining in the future. None of this revenue is used to balance the 2025 budget, but the state Office of Management and Budget Director Cerron Cade said if the revenue forecast doesn't change for fiscal year 2026, those funds will be needed next year.

He estimated budget growth of 5% or more could spur the need to use some of those funds.

“It’s probably something we’ll need to dip into in order to present a balanced budget if there aren’t any other changes in taxes or legislation,” Cade said.

Carney postponed his scheduled State of the State speech last week due to illness, but has since rescheduled the presentation for March 5.

RESCHEDULED: Gov. John Carney's annual State of the State speech postponed due to 'illness'

These are the key takeaways to Carney’s spending plan:

Addressing soaring health care costs

Carney said one of the big drivers in this year’s budget is health care costs, which have increased significantly both with the state’s portion of Medicaid and coverage for state employees and retirees.

Delaware spends nearly $2 billion on health care annually, which is nearly 40% of the state’s total operating budget, Carney said.

“We just have to get our arms around these expenditures,” he said. “Otherwise, these expenditures are going to crowd out other investments in teachers’ salaries, education, child care, all the different things that are important to us and important to Delaware families.”

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The budget sets aside $200 million to address future deficits with state health benefits, which includes an estimated $93.9 million shortfall in fiscal year 2025, but it does not include funding to address the current deficit estimated to be about $41.1 million, according to a December 2023 fund report on Delaware’s Global Health Immersion Program.

"The rising cost of health care continues to be a major driver of budget growth and that to a certain degree dictates what we're able to do in other areas," said state Sen. Trey Paradee, D-Dover.

Increased funding for education and professionals

Carney’s proposed budget dedicates $2.1 billion to K-12 public education, including funds to increase educators’ salaries, expand access to subsidized child care and early childhood education, and support other education initiatives.

The funding ensures Delaware continues to move toward a $60,000 starting salary for new teachers; provides a 1% salary bump to paraprofessionals on top of the 2% across-the-board increases for state workers; and dedicates an additional $10 million in opportunity funding to support low-income and English learner students, surpassing the 2025 goal of a total $60 million budget.

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The spending plan also includes investments in higher education, including $30 million to state schools for deferred maintenance, capital improvements and technology upgrades and an $8 million increase in scholarship funding.

The budget includes funding for across-the-board cost of living increases for state workers, the average annual salary of which has increased 31% since 2017, state leaders highlighted in the budget report. Those salary bumps are key, Paradee said.

“We still have a lot of vacancies in some really key areas and key agencies that we need to fill. We’ve done three pretty significant pay increases over the last three budgets, particularly the last two, and that really hasn’t moved the needle that much, particularly in the area of health care and a lot of front-line workers," he said. "So, in order to maintain services, we’re going to have to continue to increase state employee pay so we can be more competitive and be able to retain employees.”

Continued investment in environment, agriculture

The 2025 state budget dedicates $129.6 million for environmental and climate action initiatives, including:

• $7.5 million for electric vehicle infrastructure and clean energy.

• $20 million for open space preservation.

• $24.7 million for shoreline and waterway resiliency.

• $32.8 million for clean water efforts.

Financial support also includes $3.5 million for lead assessment and remediation; $4 million for “cover crop investment to support climate smart initiatives and improve water quality;” and $3.2 million for “conservation cost share to expand water quality improvements and protect human health.”

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There’s also $2 million set aside in the Agricultural Production Insurance Assistance Program to offer financial support for eligible producers.

Government infrastructure investments

The proposed budget includes nearly $100 million for state police, courthouse and public safety infrastructure improvements and renovations, the biggest price tag coming in at $26 million for a new Delaware State Police Troop 4 building between Georgetown and Millsboro in Sussex County.

An additional $77.3 million is budgeted for improvements to other government buildings and facilities along with state parks, and includes $6 million for upgrades to the Carvel State Office Building.

Other funds allocated include:

• $37.3 million for state agency minor capital improvements and deferred maintenance.

• $22 million to build the Emily P. Bissell/Forensic Science Facility.

• $12 million to improve parks statewide.

Ensuring thriving communities, small businesses

The budget continues to invest in Delaware communities, allocating millions of dollars to libraries, affordable housing, downtown development districts and historical and recreational site preservation.

It also sets aside a total of $71.8 million for small business and infrastructure, the largest sum of $25.3 million to be used for research collaborations with state universities.

Initiatives include:

• $12.5 million for supporting jobs in Delaware.

• $10 million to the Site Readiness Fund.

• $10 million for suburban roads and subdivision street paving.

• $5 million for a “graduation lab space.”

• $5 million to the Transportation Infrastructure Investment Fund.

• $4 million to the Riverfront Development Corporation.

Review Carney's 2025 budget presentation

Delaware FY 2025 Budget Presentation by Mandy on Scribd

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This article originally appeared on Delaware News Journal: What to know about Delaware Gov. John Carney's 2025 budget