Tax hike on the wealthy, more money for teachers, housing. 5 takeaways from Meyer's budget
On Thursday, Gov. Matt Meyer unveiled a budget that raises taxes on higher paid Delawareans, provides additional assistance to those struggling to afford housing and offers further support for Delaware teachers.
Meyer's budget proposal for the next fiscal year is a reset of former Gov. John Carney's spending plan.
He has also prioritized government efficiency, transparency and tax fairness, with particular attention to 'shovel-ready' infrastructure planning in Sussex County and proposed changes in Delaware tax brackets.
The reset also comes at an unprecedented and unpredictable time, as many Delawareans face – or have already faced – impacts from recent actions undertaken by the federal government, and several changes loom large on the horizon.
During his budget presentation, Meyer proposed creating new tax brackets for wealthier residents.
The current income tax rate for people making more than $60,000 in Delaware is 6.6%, which is the highest rate for that income level compared to surrounding states.
In neighboring Pennsylvania, the income tax rate is flat at 3.07%. In Maryland, the rates – even for high-income earners – are lower than Delaware's top rate of 6.6%. And in New Jersey, someone making between $75,000 and $125,000 pays a rate of 6.37%, Tax Foundation data shows.
Meyer's proposed tax brackets would include 'a moderate increase in income tax' for wealthy Delawareans by adding new tax brackets for higher-income earners. For example, those making $125,001 to $250,000 would pay a 6.75% income tax rate.
Meyer said Delawareans with taxable income under $134,667 would see no income tax increase.
The proposal is similar to House Bill 13, which creates two new income brackets: One for those making between $125,001 and $250,000 and another for people making more than $250,000. Delawareans making more than $250,000 would pay a 6.95% income tax rate.
Meyer also proposed an increase in tobacco taxes, and said that state agencies like the DMV are reviewing possible fee increases.
Meyer's reset also includes a roughly $3 million investment in a pilot program designed to go directly to First State classrooms and teachers. Meyer's administration will also seek a supplementary $3 million in private donations for this assistance, particularly as they work with students to raise literacy rates.
This allocation would encourage educator experimentation and creativity.
He also wants to invest $8 million in emergency funding for 'evidence-based literacy programs' led by the state Department of Education.
His reset also includes $8.4 million in additional support for services addressing First State students' mental health and well-being and raising the minimum salary for teachers.
Meyer's budget comes at a moment of uncertainty, as several Delaware federal employees were unexpectedly let go from their positions, and many more facing potential financial cuts in Medicaid and even the possible dismantling of the U.S. Department of Education.
While he told Delaware Online/The News Journal this uncertainty is 'challenging,' Meyer added he is willing to work with President Donald Trump's administration to improve and expand opportunities in Delaware, while also protecting fellow residents.
Meyer added $21.9 million in the budget to brace for potential federal government cuts.
Meyer's reset includes raising investments in affordable housing by approximately $12 million.
Such investments include roughly $6 million in funding for State Rental Assistance Programs.
Meyer also intends to further streamline voucher programming and provide incentives for 'the construction of low-income rental housing' projects and new homes spanning different levels of income.
Meyer also hopes to establish and build 'a coordinated homelessness response system' to help address and prevent homelessness in Delaware.
Meyer presented his intended investments to improve access, affordability and overall quality of health care in the First State.
He wants to provide $85.5 million in funding for Medicaid, ensuring Delawareans receive accessible critical care, and make 'preliminary investments' to explore the possibility of creating a medical school in the Delaware.
Meyer also plans to invest $1.5 million in the Smart Food Program, which would bring better food and nutrition to local communities and schools.
He also budgeted $4.2 million to increase the state's share of the cost of paramedics and first responders from 30% to 35%. Counties bear the rest of the cost.
Meyer must now shore up support for his spending plan from lawmakers.
The Bond Bill and Joint Finance committees and the full General Assembly have until the end of June to debate, alter and approve a budget before sending it to Meyer's desk to sign by June 30.
This article originally appeared on Delaware News Journal: Meyer recommended operating budget raises taxes on Delaware wealthy
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