Governor John Carney Issues Executive Order 21 Implementing Budget Smoothing Recommendations of Advisory Panel to DEFAC, chaired by Morris Nichols Partner Mike Houghton
On June 30, Governor John Carney signed an executive order directing the state budget office and the panel that sets Delaware's official revenue forecast to implement the recommendations of an Advisory Panel to the Delaware Economic and Financial Advisory Council (DEFAC) on “budget smoothing” after the legislature did not proceed with a proposed Constitutional amendment that sought to initiate the process of doing so. Morris Nichols partner Mike Houghton was appointed chair of DEFAC in April 2017 and Chair of the Advisory Panel in in August 2017.
DEFAC is charged with providing advice to the Governor and the Secretary of Finance on the State’s overall financial conditions, current and projected economic conditions and trends, tax policy and current and projected trends in the national and local economies which may affect Delaware. The DEFAC Advisory Panel’s recommendations were approved on May 2 and proposed that Delaware take a more sustainable approach to budgeting, better tying expenditures to projected revenues based on a series of economic indicators, all designed to save certain excess funds in the good years and thereby avoid massive cuts in services or dramatic tax increases in the bad years.
Governor Carney and Advisory Panel and DEFAC Chair Mike Houghton issued a joint statement in which Mike noted that the recommended constitutional amendment, which was not acted upon by the General Assembly this year, would have initiated the process of putting into statute a mechanism that “avoided the unhealthy ‘feast or famine’ fiscal cycle we are seeing” in Delaware.
At the press conference at which the Governor signed the executive order, Mike commented that the executive order “doesn't purport to do that which has to be done through a constitutional amendment, but in the absence of legislation this year, it is as far as I think this governor, this administration, can go to implement this mechanism.” The Governor’s decision to endorse the Advisory Panel’s recommendation with his executive order, as well as Mike’s statements concerning the purpose and effect of the executive order, were widely covered by the press including The News Journal, The Washington Post, the Chicago Tribune, and the Houston Chronicle.
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