DOVER, DE- Delaware could face a $400 million budget shortfall over the next three fiscal years, raising concerns among lawmakers about the state's financial stability and how to prevent major cuts to key programs.
The projected loss is tied to President Donald Trump's "One Big Beautiful Bill Act," a sweeping federal tax plan that includes major corporate tax breaks. The federal law automatically affects Delaware because the state's corporate tax code is linked to federal law.
Sen. Trey Paradee (D–17th District) says this projected millions of dollars of cuts could severely impact essential programs and services, including schools, healthcare, and other resources many Delawareans rely on.
"That would be pretty devastating to the state in terms of the impact on programs that are important to Delawareans, but also to education, to road construction, to things that affect everyone's daily lives."
Because Delaware’s tax code is tied to federal law, changes at the federal level have a direct impact on the state’s revenue.
Republican Sen. Eric Buckson (R–16th District) says that link could cause Delaware’s revenue to take a hit under the new federal changes.
"Based on how we count on and calculate revenue here in Delaware, that's going to create a deficit in revenue for us to spend on things throughout Delaware."
Paradee says he and other Democratic lawmakers are growing increasingly concerned about Delaware's link to federal tax law and are now calling for the "decoupling" of the state's corporate tax code from the federal system.
Paradee says it's becoming more likely lawmakers will need to reconvene before the end of the year — ahead of the regular January session — to act before the bill's provisions take effect on Jan. 1.
"In order to address certain tax implications for 2025, as well as 2026, we really need to convene before the end of the year."
Buckson says the federal tax changes were meant to drive investment and create jobs, but warns that Delaware should move carefully before making any sudden adjustments or calling a special legislative session.
"We have to ensure that if we're coming back, that whatever it is we're doing, that we understand the ripple effect and make sure that it doesn't hurt not just Delawareans, but corporations that register here and are benefiting Delawareans."
Buckson says now more than ever, the state should reexamine how it manages its existing funds and budget.
"In the face of this trying time, we have a decision to make — can we do things better? Is there a better way to identify revenue and spend it wisely? If we're going to have a drop-off, how do we manage that effectively?"
Lawmakers say discussions are underway about holding a special session, but nothing has been decided at this time.