The governor’s legislative liaison told a group of nonprofit workers nobody’s going to be able to pull a rabbit out of a hat and solve the state’s budget dilemma next year. “There have been times before when we pulled rabbits out of hats, but there are no more rabbits. In fact, the hat is gone. We auctioned the hat off to raise funds,” Cerron Cade said.
More than 100 representatives from 83 nonprofits packed the meeting room when the Delaware Alliance For Nonprofit Advancement called a meeting Oct. 20 to help organize its members for the upcoming legislative session. The alliance distributed “toolkits” for the nonprofit sector — handouts that include a primer on how the budget cycle works, a list of web resources and a suggested phone conversation to influence a legislator.
Sheila Bravo, the alliance’s new director, emphasized that the state made a decision to have the services the community needs delivered through the nonprofits. She said 67 percent of nonprofits receive state money through grants or contracts.
Last year, the legislators used a $2 million windfall of mortgage settlement money to plug the budget gap at the eleventh hours, after it appeared they would have to winnow the $46 million budget for grants-in-aid to nonprofits, fire companies and paramedics. But, looking ahead t0 2016, Rep. Melanie George Smith, co-chair of the legislature’s Joint Finance Committee, told the group: “There’s not really any free money handing out there any more.”
The state may have a $500 million problem on the revenue side next year as well. Two court cases are pending on the legality of Delaware’s escheat laws – the laws that mandate unclaimed funds revert to the state.
“Right now there’s a projected $150 million gap,” Smith said, adding the state can cut expenses or raise corporate taxes or personal income taxes to get revenue. “It’s an election year though, so, if I were predicting right now, I’d count on not having that revenue.”
While legislators usually work only in their districts during the summer, George said they have been working around the clock this year doing budget calculations. She said it is possible the legislature will have to cut more than 5 percent of the grant-in-aid budget.
She said her preference is to change grant-in-aid from a mission-based award to an outcome-based one, and the Pew Charitable Trust, already studying the state’s adult criminal justice system, will help the state with that task but it won’t happen so because it requires consensus and a scaffolding that don’t exist yet.
“When you’re trying to move a giant ship, you can’t just turn the wheel. It’s a slow turn,” she said.
Smith said some legislators think across-the-board cuts are the fairest way to reduce grants-in-aid, but she would rather cut programs that aren’t producing results. “I’m not a big fan of across-the-board cuts. It’s really not that simple. If we were going to make cuts, I want to make them where they should be made. We can redirect it to the programs that are actually working,” she said.
A member of the audience asked if even purchase-of-care, the state’s payment to child care centers that provide service for poor children, would be at risk.
“It would be too simplistic to say everything’s on the table, although, really, everything is,” Smith said.
She encouraged nonprofits to come to joint finance committee hearings and add to the discussion.