Senate Approves Bill Codifying Delaware’s Fiscal Watchdog

Jennifer Antonik, Delaware Business Times

DOVER — Delaware lawmakers moved to cement the Delaware Economic and Financial Advisory Council (DEFAC), ending its decades-long existence by executive order.

The Senate voted unanimously to approve House Substitute 1 for House Bill 370 on Tuesday night.  Known as the DuPont-Cook Financial Responsibility Act, the bill seeks to codify the fiscal forecasting body that has guided Delaware budget decisions since 1977.

The measure will now head to Gov. Matt Meyer’s desk for consideration. A spokesperson for Meyer’s office declined to comment on the bill.

DEFAC’s revenue estimates have been foundational to Delaware’s budgeting process, helping set the spending guardrails that lawmakers and the governor use each fiscal year through deep analysis of the First State’s revenues, expenditures and everything in between.

Senate Pro Tempore David Sokola (D-Newark) called DEFAC a 50-year-old experiment that sought “to see if we could get something that gives us confidence in the revenue streams,” citing the more than two dozen revenue streams reviewed by the council at each meeting.

He said those reviews showcase important differences in state revenues that direct change in budgeting.

Questions swirled around the future of the panel when he removed now-former DEFAC Chair Michael Houghton earlier in the year in an effort to find “new blood” for the council following Houghton’s public questioning of state fiscal matters, drawing bipartisan concern from lawmakers and business observers alike. Lawmakers quickly moved quickly to draft, file and advance the bill between DEFAC’s March meeting and its next scheduled session on Monday.

The updated substitute bill preserves much of DEFAC’s existing structure while adding clearer governance rules.

Under the legislation, DEFAC would consist of between 25 and 34 members drawn from both the public and private sectors. The governor would appoint at least 12 members, while legislative leadership would appoint bipartisan representatives from both caucuses. Key state officials — including the finance secretary, state treasurer, transportation secretary, health secretary and budget officials — would serve as ex officio members.

The substitute version also adds provisions for selecting a DEFAC co-chair, allows designees for ex officio members, clarifies meeting procedures and sets an effective date of July 1 or upon enactment, whichever comes later.

One notable addition for employers and health care stakeholders is the formal establishment of the DEFAC Healthcare Spending Benchmark Subcommittee which has become increasingly important as Delaware grapples with rising health care costs and spending benchmarks.

The bill’s new name honors former Gov. Pete du Pont and former state finance secretary Charles Cook, two figures associated with Delaware’s modern fiscal framework.