DELAWARE- A new revenue forecast from the Delaware Economic and Financial Advisory Council (DEFAC) has sparked debate among state leaders about how to respond to projected budget shortfalls tied to recent federal tax changes.
Governor Matt Meyer stated that Delaware could lose more than $400 million in revenue over the next three years due to the new tax law. He said the policy would help the rich “at the expense of everyday Delawareans,”. He warned of expected funding cuts for programs such as Medicaid and SNAP. Meyer said he plans to work with both parties to find “a simple, responsible fix” to protect Delaware’s budget and maintain key investments in schools, health care, and public safety.
Democratic legislative leaders echoed the governor’s concern, calling the federal legislation “an assault on state budgets.” They said Delaware’s tax code automatically mirrors federal law, meaning new corporate deductions could directly reduce state revenue. Lawmakers, including Senate President Pro Tempore David Sokola and House Speaker Melissa Minor Brown, expressed support for “decoupling” Delaware’s corporate tax laws from the federal code to prevent hundreds of millions in losses for core state services.
Senate Republicans, however, rejected the governor’s characterization, calling his criticism of Washington “a political distraction.” They said the federal tax changes — which allow businesses to immediately deduct certain expenses — will “encourage investment, job creation, and innovation.” The caucus argued Delaware’s financial challenges stem from “runaway spending and misguided state policy”, not federal reform. GOP lawmakers pointed to the state’s $6.58 billion budget for fiscal year 2026, a 7.4 percent increase, amid what they say are increasing costs for families.
As both sides debate how to stabilize Delaware’s finances, state leaders are expected to meet in the coming weeks and could discuss balancing the budget while keeping Delaware competitive for employers.