Delaware Gov. John Carney has signed a $703 million capital bond bill for the 2021 fiscal year that was scaled back because of revenue losses from the COVID-19 pandemic.
Carney endorsed the borrowing measure Tuesday afternoon during his COVID-19 media briefing one day after receiving the necessary legislative approval before the start of the new fiscal year Wednesday.
The Democratic governor in January had proposed an $893 million bond bill that would have been the largest debt allocation in Delaware history.
State lawmakers cut the figure by $185 million due to financial headwinds caused by the virus. The state allocated $863 million of bonding for the 2020 fiscal year.
The modified bond bill includes $364 million for transportation projects and $344 million for other infrastructure needs. The legislation earmarks $175.8 million toward aiding school construction projects that have received bond referendum approvals from their local school districts.
“It is a capital budget that maybe does not have the same level of funding in the past, but also will allow for much-needed progress,” State Budget Director Mike Jackson said Tuesday during Carney’s press briefing.
Delaware’s general obligation bonds are rated triple-A by Moody’s Investors Service, S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.
Karen Krop, senior director of Fitch’s U.S. Public Finance group, said the decision to lower Delaware’s planned bond allocation in response to fiscal challenges posed by COVID-19 will not have any credit impact and noted that the move is consistent with the state’s past spending discipline. Krop credits Delaware with having proactive fiscal management that includes constant updates to the state’s revenue forecast.
“They frequently restructure spending to align with anticipated revenues,” Krop said. “They have strong budget resilience.”
The Delaware Economic and Financial Advisory Council lowered the general fund revenue forecast for fiscal 2020 by $325 million last month compared to what was estimated last December, according to Krop. The state received $927 million under the federal CARES Act to be used for reimbursing COVID-19-related expenses.
Carney also signed a $4.5 billion 2021 fiscal year budget Tuesday that avoids drawing down on the state’s Rainy Day Fund. The spending plan designated $63.1 million for a Budget Stabilization Fund to protect against future uncertainty.
“In a year that could have been disastrous from a budget point of view we were able to meet our commitments,” Carney said. “These public construction projects are going to be incredibly important to construction companies in our state and in putting people back to work.”