NEWS RELEASE

Posted: Jan. 13, 2003

MINNER: BUDGET SHORTFALL VANISHES

DOVER -- Governor Ruth Ann Minner announced Tuesday that an unexpected $47.1 million abandoned property settlement has solved the state’s remaining budget deficit (based on current projections) for the fiscal year that ends June 30. 

Under the law and various court decisions, when a corporation holds assets belonging to members of the public who cannot be located – known as abandoned property – those assets must be turned over to various state governments after a period of time. This is called escheat. 

“Last week, the Department of Finance successfully completed negotiations with one particular corporation that had accumulated a large amount of abandoned property and has agreed to turn that property over to Delaware and a number of other states,” Gov. Minner said in a news conference at Legislative Hall. “This settlement brings Delaware about $47 million this year and about $11 million in the coming budget year.” 

In September 2002, revenue forecasts for the current year dropped by $95 million due to poor performance of the stock market last summer and the national recession. Prior to Tuesday, Gov. Minner had identified cuts and savings to make up for $60 million of the $95 million deficit. 

Gov. Minner also announced that Delaware received a $4.4 million bond premium last week in its sale of bonds used to finance capital projects. A bond premium is a cash payment given, along with a low interest rate, in order to win a bid to issue the state’s bonds. Goldman, Sachs and Co. provided the low interest rate and bond premium that won the bid to issue Delaware’s bonds. 

“These funds more than fully close the currently projected revenue shortfall for the current fiscal year that was initially identified in September,” Gov. Minner said. 

The Governor also announced that the unexpected revenue allowed her to take back a request for school districts and charter schools to voluntarily cut their budgets and return funds to the state for this year. 

“One of the most difficult things I have had to do in my term is to call on the state’s 19 school districts and charter schools to voluntarily return funds for this fiscal year,” she said. “While I specifically directed the districts not to take resources from the classroom, I know how difficult it has been for them to make mid-year cuts in other areas of their budgets. I am relieved to say that, thanks to this unexpected revenue, we will no longer need the school districts to return money this fiscal year.” 

While obviously pleased by the unexpected revenue and the state’s ability to eliminate the current year deficit as currently projected, Gov. Minner said that the one-time nature of the abandoned property and bond premium payments mean they will not be significant help in solving the budget problem for Fiscal Year 2004. The gap between projected revenues and expenditures for FY04 currently stands at $300 million for the year that will begin July 1. 

“A structural problem of this magnitude – more than 10 percent of our General Fund budget – mandates that all options remain on the table for FY04,” Gov. Minner said. “The details of my budget proposal will be released January 30.”

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