Nonprofit leaders are bracing for cuts in government funding, and state agencies are preparing to get much less money than expected for construction and infrastructure improvements.
Over the past several months, the Delaware Economic and Financial Advisory Council has repeatedly lowered projections for how much the state will take in from taxes, particularly personal and corporate income taxes.
Now lawmakers have 40 percent less to spend on grant-in-aid to nonprofit organizations and capital projects than they thought they’d have in January when Gov. Jack Markell released his recommended budget.
Those two areas get funded after the state operating budget, which was completed earlier this month.
When the dust settled, only $41.6 million was left. Markell had budgeted $31.3 million for capital improvements and $43 million for nonprofits.
That means there is $32.6 million less to spend than previously thought in the next fiscal year, which starts July 1.
It’s not yet certain what is on the chopping block, especially those who are concerned about helping the poor. That could mean less funding for such things as helping the poor, keeping waterways clean, helping community centers and farmland preservation.
Rep. Melanie George Smith, D-Bear, who co-chairs the budget-writing Joint Finance Committee, sent a letter to members of the Delaware Alliance for Nonprofit Advancement this week alerting them to the possibility of reductions. “While I am opposed to across-the-board cuts, the Joint Finance Committee will need to make further difficult decisions in order to achieve a constitutionally-mandated balanced budget by the end of June,” Smith wrote.
Grant-in-aid money goes to a wide range of organizations, from educational groups to volunteer fire companies to the Girl Scouts.
Sheila Bravo, president and chief executive officer of the Delaware Alliance for Nonprofit Advancement, which represents 300 organizations, said many nonprofit groups that receive state funds have been aware for some time that there could be cuts and have done what they can to prepare.
She said the economic recession has meant there is more demand than ever for the services nonprofits provide even as the funding they get remains flat or declines.
“The concern is always that even a relatively small percentage decrease would have to reduce the ability to serve the needs of the community,” Bravo said. “In some cases, they may have to lay people off.”
George Krupanski, president of the Boys & Girls Clubs of Delaware, said his organization provides after-school education and recreation for kids in troubled neighborhoods, keeping them off the streets at a time when cities like Wilmington are trying to battle gun crime.
“Some of our parents believe the only safe place they have for their children is a Boys & Girls Club,” said Krupanski, whose organization receives grant-in-aid funding. “It’s a very tight year for the state, and I know our legislators are really working hard to try and find a way to resolve this with the least negative impact. But I’m concerned about our programs and the services we provide, particularly for the kids and the seniors.”
Many other state governments also have cut back on payments to nonprofits in the years after the recession, said Rick Cohen, of the National Council of Nonprofits, which has about 25,000 members.
“While the country is technically out of the recession, state and local governments are still seeing a lot of budgetary trouble,” Cohen said. “One of the most frequent places we’re seeing them turn to is the nonprofit sector.”
The problem, Cohen said, is tough economic times are the times when demand for the services nonprofits provide is highest.
“It’s a double whammy,” he said.
Joanne McGeoch, with the Delaware Nature Society, said grant-in-aid money pays for outreach and education programs, particularly for low-income communities where people couldn’t normally afford them.
One program the state money pays for is the watershed stewardship program, where residents are trained in monitoring water quality in their area.
“It’s an essential source of funding for us,” McGeoch said. “As a nonprofit, we rely on generous contributions from individuals and foundations, but grant-in-aid has become integral to us.”
Bond Bill Committee Chair Quinton Johnson, D-Middletown, said more work needs to be done before his committee knows how much cash it will have to spend on capital projects. The budget for road and bridge improvements appears to be in good shape because lawmakers raised a bevy of motor-vehicle taxes and fees last year, he said.
The state will still be able to issue bonds for things like new schools in districts that passed referendums.
But it will be tough to find money for things like open space preservation, drainage projects and building renovations, Johnson said.
“Unfortunately, we’re kind of accustomed to this,” Johnson said.
There are a couple of ways the state could find extra money to blunt the reductions.
While there is $6 million set aside to implement the Wilmington Education Improvement Commission’s school redistricting plan, that legislation is highly controversial and has not passed yet. If it fails, the money would go back into the budget.
State officials are also seeking to refinance some bond debt, which could save the state about $5 million to $7 million, budget director Brian Maxwell said.