DOVER, Del. (AP) Democratic Gov. John Carney is proposing to increase Delaware's operating budget by almost 4 percent next fiscal year, boosting spending to more than $4.6 billion.

The budget proposal unveiled recently for the fiscal year starting July 1 includes a 2 percent pay raise for state employees, who also received pay raises last year and the year before.

"I imagine this will be a topic of discussion," state budget director Michael Jackson said before Carney unveiled his spending plan.

In addition to the pay raise, which would cost taxpayers $29.3 million, Carney's proposed operating budget includes $36.5 million in new spending to address school enrollment growth.

Carney also is proposing a record capital budget of $892.8 million for construction, maintenance, technology, equipment, economic development and environmental projects. That total includes $367.6 million for transportation infrastructure and expands on the record $863 million that lawmakers approved last year for the current capital budget.

Carney's spending proposal includes $50 million in new spending for clean water initiatives, $50 million for economic development, and $50 million to build and renovate schools in Wilmington.

"The priorities for this next year are the same — invest in our economy, in our schools, in quality of life," Carney said.

At the same time, the governor is proposing to add more than $35 million to an existing $126 million cushion of unspent funds that could help stabilize the state budget if revenue projections fall.

The reserve funds are in addition to the state's constitutionally mandated "rainy day" fund, which totals more than $250 million and is intended to be used only to address unanticipated budget deficits. It has never been tapped.

The final part of Carney's proposed budget package is $55 million in grant funding for nonprofit organizations, community groups and volunteer fire companies, an amount equal to the current grant-in-aid budget.

Legislative budget writers will begin meeting soon to hear spending requests from state agencies and advocacy groups.

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