BETHEL

DE House of Rep. Newsletter – #647 November 21, 2025

These are the latest articles from the DE House of Representatives:

ARTICLES IN THIS EDITION

• NEWS: Controversial Tax Bill Signed by Governor Minutes After Clearing the Legislature
• OPINION: Delaware’s Got an Addiction Problem, and It’s Not What You Think
• NEWS: Diabetes Reduction Proposal Part of Delaware’s Bid for $1 Billion
• NEWS: Next Meeting of the Special Committee Investigating the Reassessment Process Set

Controversial Tax Bill Signed by Governor Minutes After Clearing the Legislature

Governor Matt Meyer signed House Bill 255 (as amended) on Wednesday, shortly after the Senate approved the measure in a contested vote.

The House of Representatives had approved the bill on a split vote last week.

At issue was the impact on Delaware from federal tax changes signed into law in early July. Our state, like all others, links portions of its tax laws to the federal code, so decisions made in the nation’s capital can affect Delaware collections.

The new state statute breaks links to selected provisions of the federal law intended to encourage business investments in research and development and production improvements. The changes would have given business owners greater flexibility in claiming deductions for these expenses and made some of these favorable terms retroactive.

The Delaware Division of Revenue had maintained that if no action were taken, Delaware would have lost a total of $410 million in revenue over three years, with the majority of that ($223 million) occurring in the current fiscal year.

However, that number did not account for the state’s other revenue streams, making the potential reduction appear to have a much larger impact.

The total revenue state revenue estimate for the current fiscal year, released by the nonpartisan Delaware Economic and Financial Advisory Council (DEFAC) last month, tells a different story. It forecast a reduction of about $98 million, less than half the figure cited by the Meyer administration to make its case for a crisis that required urgent action.

To put that figure into context, $98 million is less than 1.5% of the FY 2026 state operating budget of $6.58 billion and well within the buffer the state builds into every budget to account for revenue fluctuations.

House and Senate Republicans, all of whom opposed House Bill 255, argued that calling the legislature back into extraordinary session to pass the decoupling legislation was needlessly reactionary. They noted that the next state budget will not take effect until July 1 and that five of the six annual revenue estimates on which the state bases its spending have yet to be made.

Opponents also noted that the state’s business reputation, which accounts for revenue streams that pay for a third of the budget, has been undermined recently, with companies such as Tripadvisor, Dropbox, Andreessen Horowitz, The Trade Desk, Coinbase, and Neuralink leaving Delaware to incorporate elsewhere. They say the impulsive enactment of HB 255 will further erode confidence in Delaware as a stable, business-friendly venue, while costing companies operating here funds they could have used to grow and create jobs.

Also expressing opposition to the bill were: the Delaware State Chamber of Commerce, the New Castle County Chamber of Commerce, the Delaware Business Roundtable, the Delaware Society of CPAs, DelawareBio, former Democratic State Representative Quin Johnson (a past chair of the committees that drafted the State of Delaware’s operating and capital budgets), and former Delaware Secretary of Finance Rick Geisenberger.

OPINION

Delaware’s Got an Addiction Problem, and It’s Not What You Think

By State Rep. Danny Short

The State of Delaware has a monkey on its back, and I have a front row seat to watch the troubling signs of withdrawal as it risks not getting its fix.

I’m a member of the Joint Finance Committee (JFC), the 12-member group of lawmakers that fashions the annual state operating budget.

Most Delawareans find the budget process dull as dishwater and tend to ignore any news about it. That’s unfortunate, because the issues related to where the state government obtains its funds, how it allocates them, and where it spends them impact every citizen in countless ways. 

First, we need to take a quick dive into State Budgeting 101.

Unlike the federal government, Delaware is limited by law to spend no more than 98% of its expected revenue.

The state’s revenue forecasts are made six times per fiscal year: October, December, March, April, May, and June.

The governor, working with the Office of Management and Budget, holds budget hearings each fall, which are now underway. Using testimony from the state agencies and the revenue forecast issued in December, they will write a recommended budget for the upcoming fiscal year. That spending plan will be presented to the public and lawmakers in late January. 

The group I am on, the JFC, will review this proposal, hold our own budget hearings in February and early March, and make changes. This is often a highly partisan process, with Republicans outnumbered on the committee by a margin of 2 to 1. 

The JFC continues to monitor the new revenue estimates as they are issued through the spring. The budget we produce must be enacted before the start of the new fiscal year on July 1 and is mandated to appropriate no more than the spending limit set by the June estimate.

The 2% unbudgeted buffer built into the process provides flexibility in case the revenue projections prove to have been overly optimistic. We also have two reserve accounts. The Budget Stabilization Fund (a.k.a., the budget smoothing account) contains about $469 million. This set-aside was explicitly created to bridge a temporary, unforeseen budget shortfall. The Budgetary Reserve Account (a.k.a. the Rainy Day Fund) is maintained at 5% of annual state revenue and currently contains $366.5 million. Since its creation in 1980, it has never been tapped, as it’s intended only for dire circumstances.

For the most part, this system kept us out of trouble. Mostly. But it is not perfect.

When times are good and the state’s coffers are overflowing, we can still spend nearly everything that comes in. That’s a problem because it builds costs into the base operating budget that are supposed to be accounted for at the start of each cycle.

During and after the pandemic, the federal government threw billions of dollars at state governments, which were only too happy to spend the largesse. In Delaware, the strong economy, combined with federal dollars, fueled extravagant spending growth.

House and Senate Democrats, who control the annual state budgeting process, as well as the former Carney administration, enacted a series of spending hikes. Between FY 2021 and FY 2025, actual General Fund appropriations jumped by more than $2.4 billion, or more than 53%. That does not even include the additional 5% to 7% increase in the current fiscal year.

I don’t know many Delaware families or businesses that experienced such an increase in purchasing power over the same period.

The challenge for state budget writers, and the Meyer administration, is that spending over this span far outpaced revenue growth. Governor Meyer and his staff were aware that a reckoning was coming. Late last March, Office of Management and Budget Director Brian Maxwell indicated that the Meyer administration not only envisioned spending all of the $469 million in the Budget Stabilization Fund, but that within two years, the state could face a nearly half-billion-dollar shortfall. 

Instead of trying to live within its means, the Meyer administration recently called the General Assembly into an extraordinary session to pass a bill eliminating tax benefits intended to encourage businesses to invest in research and development and production improvements. I voted against the measure because it will facilitate higher state spending, hinder local business development, and give Delaware corporate interests further reason to doubt our state’s waning business-friendly reputation. It cleared the House and the Senate on party-line votes and was swiftly signed into law by the governor.

Spending money faster than it comes in is the irrational act of an addict, who bases his reasoning entirely on getting the next fix, never weighing the future consequences of his actions. We need to break this cycle of spending dependence to protect the interests of everyone who relies on a stable state government for vital services and assistance.

Diabetes Reduction Proposal Part of Delaware’s Bid for $1 Billion

The State of Delaware has submitted an application for up to $1 billion from the federal Rural Health Transformation Program.

The filing includes 15 projects, programs, and initiatives to expand healthcare access, lower costs, and increase the medical workforce in Kent and Sussex counties. The objective is to improve health outcomes for the 40% of Delawareans residing in rural areas.

Congress appropriated $50 billion for the Trump administration program this past summer. Half of the total funding will be distributed equally among states, with the remaining half allocated based on technical factors and the quality of the application. Awards are expected to be received by the end of this year.

“Investing in rural healthcare is key to building a better healthcare system that works for all Delawareans,” said President & CEO of the Delaware Healthcare Association Brian Frazee. “That begins with laser-focused efforts for our rural communities that support innovation, workforce, access, and more.”

House Substitute 1 for House Bill 163, the Delaware Diabetes Wellness Act, authored by State Rep. Jeff Hilovsky (photo), was a part of Delaware’s Rural Health Transformation Program application.

The legislation, pending action in the House Appropriations Committee, seeks to establish a three-year pilot study of a group of diabetic patients. Under the initiative, medical professionals utilizing technological tools would actively manage participants, guiding and incentivizing them to improve outcomes. The state reportedly spends about $1 billion annually on diabetes-related issues. If successful, the study could develop new protocols that save taxpayers tens of millions of dollars annually while improving public health.

“The program proposed by my bill will receive some, if not all, of the funding necessary to change our current reactive ‘sick care’ to proactive ‘well care’ for people with Type 2 Diabetes,” Rep. Hilovsky said. “It’s a big win for Delaware healthcare!”

State applications were required to include initiatives addressing preventive care, sustainable access, workforce development, innovative care, and tech innovation.

The other projects in Delaware’s proposal package include efforts to expand “Food is Medicine” programs, broaden the use of telehealth services and remote monitoring, and start a rural medical residency recruitment program.

The state’s complete application and supporting documents can be examined by clicking here.

SPECIAL COMMITTEE INVESTIGATING PROPERTY REASSEMENT

THE NEXT MEETING TO BE HELD ON TUESDAY, DECEMBER 2ND, IN THE HOUSE CHAMBER

To follow the live proceedings, visit:  legis.Delaware.gov