January 2002

DAVID W. SINGLETON
Secretary of Finance

On December 17th, at its last meeting in 2001, the Delaware Economic and Financial Advisory Council (DEFAC) said the State's expected FY 2002 income has dropped by $30.9 million because of the recession. In addition, DEFAC estimated that the money available for FY 2003 will be $113.7 million less than its June estimate of $2.47 billion. Revenue estimates have been dropping since December 2000.

Shortly after taking office in January, Governor Ruth Ann Minner had to ask Departments to reduce current spending. Then she had to ask them to reduce requests for the FY 2002 Budget. This fall, the Governor told most Departments to plan for a zero-based budget and, in addition, asked the Departments to identify ways to cut 2% in their budgets, just in case. It looks like the "just in case" has arrived.

Delaware's greatest reductions in revenue estimates for both the current and the 2003 budgets are from personal and corporate income taxes, which are falling as a result of the recession. Additional bad revenue news is not all tied to the recession, e.g, Delaware will begin losing lottery income next year as Pennsylvania joins the Powerball. The good news is that Delaware is in a better position than most other States, which have also taken a hit in sales tax.

What will this mean for Delaware's budget, for services, for priorities? What will it mean for capital spending? Will we revisit the formula for capital spending? Will we revisit the 98% rule?

Secretary of Finance David W. Singleton will address the State's financial status and future as well as provide his outlook on Delaware's economic health. With over 15 years in the financial services industry, following eight years of public sector experience as Chief Administrative Officer for the City of Wilmington during both terms of Mayor William McLaughlin, Dave brings an unique expertise to his position as Secretary of Finance.

Beverley Baxter