A week after a plan to rebate approximately $100 million to Delaware citizens was proposed, State lawmakers reached an agreement on a bipartisan plan to significantly increase that total.
The relief plan, agreed to in principle by the leaders of each of the legislature’s four party caucuses, would send $300 in direct payments to every Delawarean who filed a 2020 tax return -- the most recent tax year for which returns are available.
The agreement followed a new state revenue forecast issued by the Delaware Economic & Financial Advisory Council (DEFAC) on Monday. According to the non-partisan group, in the three months that have passed since the last estimate was issued, the amount of money available to state budget-writers for the upcoming fiscal year jumped by an additional $349 million.
Before the new projection, state officials had already been anticipating a cash surplus of about $800 million.
With gas prices climbing above $4 per gallon, lawmakers had considered instituting a state “gas tax holiday.” However, the rebate proved to be a more viable method to provide financial relief to most Delawareans.
Delaware’s gas tax revenue supports bonds sold to finance the Transportation Trust Fund, which is used to build and maintain roads and bridges. State law forbids reducing gas tax revenue while there are outstanding transportation bonds in need of repayment.
The rebate approach should also prove to be more beneficial for most citizens. Suspending the state’s 23-cents-per-gallon levy on gasoline would typically result in a savings of less than $5 per fill-up. A motorist would have to fill-up more than 60 times to gain the same benefit provided by the rebate.
Furnishing the $300 rebate for each of the more than 600,000 Delawareans who filed a 2020 tax return would cost approximately $187 million.
“The state has hundreds-of-millions of dollars more than what is needed to pay for our annual funding bills, including prudently setting aside money in reserve,” said State House Minority Leader Danny Short, R-Seaford. “Hopefully, this rebate will not be treated as a final solution, but rather as a good start towards balancing the state’s needs with those of our citizens.”
Faw Casson will keep you posted on any developments.