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DOVER, Del. (AP) — Democratic Gov. John Carney wants to increase the state operating budget by 3.5 percent next year, an election year proposal that includes pay raises for teachers and other state employees, more money for infrastructure projects, and the restoration of cuts in grant funding to nonprofit organizations.

In addition to a $4.25 billion operating budget, Carney on Thursday proposed a $677.5 million capital budget for construction projects that includes $100 million in additional funding. Most of that new funding would come from surplus cash, part of an estimated $170 million in unencumbered funds that would be carried over from this year.

“We’re putting as much of that into the capital improvements as possible,” said budget director Mike Jackson, noting that administration officials are wary of incorporating one-time surplus funds into the ongoing operating budget.

Carney’s proposal for fiscal 2019, which starts July 1, also includes $41.7 million in grant funding for nonprofit organizations, community groups and volunteer fire companies, a powerful political constituency in Delaware. Those groups saw a 20 percent reduction in funding this year as part of a compromise that ended a budget stalemate between Democratic and Republican lawmakers that sent last year’s legislative session into overtime.

Carney’s proposal also calls for restoring full funding for farmland preservation and open space preservation programs, whose respective $10 million annual allocations are mandated by state law but are routinely raided by lawmakers to balance the budget.

Carney’s latest spending plan comes after his own repeated warnings and those of other state officials that Delaware’s government needs to be put on a more sustainable fiscal path.

In campaigning for office in 2016, Carney called for a complete “budget reset,” saying the state needs to take a hard look at both spending and the various revenue sources that feed general fund coffers.

Current financial projections show annual spending growth outpacing annual revenue growth at an ever-increasing rate over the next few years.

“The more the operating budget grows, the more difficult the challenge will be in the out years,” Jackson said.

Nevertheless, Carney said he believes that 3.5 percent annual budget growth is “sustainable.”

“It’s not going to be sustainable if we don’t keep our eye on both the revenue and expenditure side,” acknowledged Carney, who failed to persuade lawmakers to raise personal income taxes last year. Lawmakers instead settled on raising the corporate franchise tax and boosting taxes on home sales, alcohol and cigarettes.

Officials said those tax increases helped contribute to the surplus funds they say will be available to spend next year. Carney said his biggest challenge will be trying to persuade lawmakers not to grow spending by more than his proposed 3.5 percent.

His budget proposal includes a 2 percent pay raise for public school teachers and a $1,000 pay increase for other state employees.

Other new spending includes:

— $21 million to meet increased school enrollment, mostly for special education students

— $17.2 million for state employee pensions

— $12.6 million in additional funding for subsidized child care and efforts to improve the quality of that care

— $10 million for higher prison guard salaries

— $7 million for school transportation.

— $6 million for schools serving large percentages of low-income students and English language learners.