Delaware’s budget forecasting brain trust reported Sept. 21 that state revenues are down more than $47 million from what it projected when the budget was passed in July.
The Delaware Economic and Financial Advisory Council blamed the skidding revenue estimates on reduced receipts from personal and corporate income taxes, and disappointing returns from the state’s court-crippled sports betting enterprise.
Personal income tax returns are now expected to bring in approximately $20 million less than was expected, even after the General Assembly passed legislation that raised rates for some taxpayers.
In addition, DEFAC said the state can expect to pay an additional $3 million in tax refunds.
Corporate income taxes are expected to fall $4.5 million short of what was budgeted.
Acting Secretary of Finance Tom Cook said the projections are a symptom of high unemployment and falling wages, national trends from which Delaware has not been spared.
“There were two major categories that were lowered,” Cook said. “One was withholding payments, that’s the money businesses submit to us for the people that are employed, plus what we call estimated payments, that’s people who add income because of capital gains or the stock market or something like that … those categories are tracking weak.”
Income tax shortfalls represent the largest share of the projected deficit, but gambling revenues also are off by millions.
When the General Assembly approved sports betting in the spring, the Department of Finance said the state stood to gain $17 million in new revenue — $3 million from sports betting alone and $14 million in so-called “crossover play” on slot machines and other video lottery games at the state’s three racinos.
The latest estimates put the expected sports betting revenues, including crossover play, closer to $6.7 million.
Cook said the new estimates reflect the fact that Delaware is only allowed to offer parlay bets on NFL football games pursuant to the ruling of a federal court.
When the plan was originally conceived, the state expected to offer single game and parlay bets on a variety of professional and college sports, year round.
In addition, DEFAC shaved another $600,000 off projected lottery revenues in anticipation of the introduction of slots at Ocean Downs, a race track located just west of Ocean City, Md. Cook said that facility is expected to cut into the market share of Delaware’s racinos.
Other notable shortfalls on the DEFAC report include a $4 million deficit for real estate transfer taxes and a $1.5 estimated loss from public utility taxes.
