State revenue forecast bleak

A drop of $98 million in revenue from last quarter is projected to continue next fiscal year, according to revenue data released Oct. 20 by the Delaware Economic and Financial Advisory Council.

Fiscal Year 2026 revenues for October came in at $6.684 billion compared to June revenues of $6.782, resulting in the 0.2% drop of about $98 million. Next year’s projection for third quarter FY 2027 shows an expected drop of nearly $48 million, according to DEFAC’s General Revenue Worksheet.

Revenue from corporation income tax had the biggest decline this past quarter, down nearly half. Less refunds, DEFAC shows the tax down about $132 million.

The same time period next fiscal year projects a drop of about $170 million or 12% in corporation income tax.

Overall drops put DEFAC’s budget outlook for FY 2027 at $6.733 billion, a decrease of $352 million from the current budget.

Following DEFAC’s meeting, Gov. Matt Meyer issued a statement saying Delaware stands to lose over $400 million in revenue over the next three years from the Trump administration’s tax changes and cuts to other federal programs.

"In the coming weeks, I’ll work with Democrats and Republicans in the General Assembly on a simple, responsible fix that protects our budget and keeps Delaware competitive, so employers can have certainty, and our investments in schools, public safety and healthcare can stay on track,” Meyer said. 

Democratic leadership, which controls the state legislature, puts the blame on Trump’s Big Beautiful Bill, which they said is packed with corporate deductions applied retroactively.

“We now need to move with the urgency the moment requires to protect funding for critical programs that support Delawareans across the state,” they wrote in a statement. “We support taking appropriate, timely action that makes it clear our state laws will not double down on Washington’s corporate tax giveaways.”

In turn, Senate Republicans issued their own statement saying blaming the federal government for Delaware’s budget shortfall instead of failed state policy is a political distraction. The current FY 2026 budget approved by the General Assembly was an increase of 7.4% from the previous year. Only three Republican senators voted against it, and five Republican representatives.

“What’s hurting Delaware isn’t federal reform, it’s runaway spending and misguided state policy,” the statement reads. “As much as Democrats like to demonize tax cuts for businesses, they forget that every paycheck begins with someone taking a risk to start or grow a business. When government tries to provide everything, it replaces opportunity with dependency. Real progress doesn’t come from bureaucracy, it comes from empowering people to work, create, and build a better life for their families.”

Republicans said the $220 million drop in state corporate tax revenue was caused by a new federal law that allows businesses to immediately write off their research and equipment costs.

“However, this change encourages investment, job creation and drives innovation,” the Republicans wrote. “It’s a course correction by the federal government that will put more Americans to work, expand opportunity for young families and strengthen our economy. Washington, D.C., just did what Delaware won’t do: reward work, investment and innovation. If we truly care about the next generation, we’ll stop taxing and regulating them out of their future.”