NEWS RELEASE

Posted: Dec. 3, 2002

MINNER: BUDGET BALANCING ACT

On my second day as Governor in 2001, I learned that I needed to cut $35 million from the budget if the state was to end the year in the black. I managed to do that -- without affecting services or state employees.

Unfortunately, that was only the beginning. 

In December 2001, I was forced to cut another $24 million from the budget, still avoiding a significant impact on services and state employees. Last spring, I imposed a hiring freeze and took other steps to save $20 million and end the budget year in the black. 

So before the current round of budget cuts, we had already sliced millions and millions of dollars out of the budget to accommodate the slowing economy. But many people probably didn’t notice we had even done it, because we did it in creative ways that didn’t result in changes to the service Delawareans received. 

Now my administration is in the process of making more cuts to offset a $95 million reduction in the revenue that the state had expected to take in this budget year. So far, we have announced $60 million in cuts and savings. And once we figure out how to get through the current budget year (which ends June 30, 2003), I have to contend with an even larger projected deficit for the following year. 

Each round of cuts has been harder than the one before. And I can promise you that the toughest decisions are yet to come. No option is off the table at this point. But Delaware’s financial situation could be far worse. 

In Virginia, Gov. Mark Warner recently announced 1,800 layoffs of state employees, along with massive service cuts, including closing some DMV offices entirely and others for one day a week. Some libraries and museums in Virginia have been forced to cut back hours or close one day a week and Gov. Warner has said the state may have to lay off more workers. Florida has laid off 2,300 state employees and Idaho has eliminated tours and services at state parks.

Pennsylvania has used its emergency reserve and money from the national tobacco settlement to balance the budget, thus using one-time sources of revenue to pay for ongoing expenses. That would be like using your savings account to pay your mortgage—you no longer have any savings and you just have to find another way to pay your mortgage next month. 

Delaware has not yet had to take drastic steps like these other states. In the last two years, Delaware is one of the few – if not the only state – that has not raised taxes, drastically slashed services, laid off employees or raided its emergency reserve funds. 

Instead, we have focused on cutting costs and doing more with less. We have changed the way the state buys health care, altered the way state purchases are made and stopped foundering computer projects. 

Since the revenue forecast was reduced in September, I have been operating under a four-point plan to cut the budget: cutting state agencies by three percent; reviewing and stopping all but the most essential purchases; freezing state positions so no employees are hired to fill any but the most critical vacancies; and continuing to “reengineer” government, which means finding ways to do more with less. 

I know that our state employees are working extra hard to compensate for staff vacancies and other cutbacks. I can’t thank them enough for their effort and dedication. Unfortunately, I have to ask them to hang in there a little longer as we struggle to overcome these tough and uncertain economic times. 

We need to remember that while our current crisis is our toughest yet, we’re still in better shape than several other states. So far, we have not raised taxes, made serious cuts in services, laid off employees or raided our emergency fund. 

I ask that Delawareans bear with me through this challenging time. There are tough decisions still to make, but eventually we know the economy will rebound. And, because of the work we have done, Delaware state government will be more efficient, more effective and prepared for renewed prosperity. 

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