Why Should Delaware Care?
Nonprofits and local government officials are awaiting news of federal funding cuts, which could lead to a loss of services for Delawareans or the prospect of higher taxes to make up for them. One of the few confirmations so far is the loss of housing discrimination prevention efforts.
Delaware nonprofits and New Castle County officials are reeling after the Trump administration abruptly slashed hundreds of thousands of dollars in fair housing funding. And some fear more cuts will be on the horizon.
In February, the U.S. Department of Housing and Urban Development (HUD) immediately terminated Delaware Community Legal Aid Society’s grant to enforce fair housing law in the state. HUD ended the grant at the direction of the recently created Department of Government Efficiency (DOGE), which is led by the world’s richest man, Elon Musk.
HUD informed the Delaware Community Legal Aid Society of the decision in a Feb.27 email. Nearly $900,000 dedicated to enforcing fair housing law in Delaware was immediately gone.
“It was shocking,” said Sarah Rhine, managing attorney of CLASI’s Housing Unit.
The Delaware nonprofit was not alone. DOGE cut grants to over 60 fair housing groups nationwide — equating to about $30 million in cancellations.
HUD ended CLASI’s Fair Housing Initiative Program grant “because it no longer effectuates the program goals or agency priorities,” according to the nonprofit. The three-year grant disbursed $425,000 per year — comprising nearly 4% of CLASI’s annual budget.
The cancellation cut off the only organization in Delaware conducting private enforcement of federal fair housing laws, which protect residents from discrimination in housing related transactions. CLASI has had to stop taking any new fair housing cases as a result of the cut.
In 2022, over 33,000 fair housing complaints were filed — the highest number recorded since reports began being released, according to the National Fair Housing Alliance. Private nonprofit fair housing organizations, such as CLASI, processed nearly 75% of the complaints, compared to HUD and the Department of Justice.
The organization has been funded by HUD’s Fair Housing Initiatives Program since 2004 and have handled 163 fair housing-related cases in their current grant year, which ran from June 2024 through February 2025.
CLASI currently has 80 open fair housing cases and 3 full-time staff members whose work was being supported by the HUD fair housing grant, according to the organization. Earlier this month, fair housing advocates filed a lawsuit against HUD and DOGE, asking the court to stop the grant terminations.
NCC fears deeper housing cuts
In New Castle County, officials have also expressed worries that more HUD funding cuts could be on the way.
Deep cuts to Housing and Urban Development (HUD) funding and Section 8 housing grants are the “biggest concern” of the New Castle County Finance Committee. Earlier this month, Councilmember David Carter reviewed a National Association of Counties policy report that outlined the potential threats.
Carter said the Trump Administration is creating “dizzying and disruptive change” for counties like New Castle.
“They could literally stop our HUD funding for housing here,” he said — New Castle County receives $9.6 million in annual housing assistance from federal sources.
Affordable housing advocates and lenders for housing also reacted to the NACO guidance.
“Cuts to funding and staff for federal agencies that administer housing programs, along with the cancellation of related contracts, would severely reduce affordable housing options and critical community services across America, with far-reaching consequences for our financial markets and the overall economy. Cuts at HUD, USDA, and Treasury would directly harm millions of low-income families,” the National Association of Affordable Housing Lenders said in a statement.
The New Castle County finance members expressed considerable concern about repealing diversity, equity and inclusion (DE&I) efforts. The Trump administration is calling for, “Terminating all equity-related grants,” Carter reported, adding “You must certify that you do not support DE&I efforts with this money.”
“What is going to happen with Section 8 boundaries? Is that where we are going to see significant conditioning for approval?” Carter mused. “That’s how it looks— like they’re going to try and meet the objectives of the DEI memo by withholding funds. I think we need to be proactive, and work on these grants and the county will need to really have a plan of action” to fund municipal services.
Carter, who serves on the NACO policy leadership, said the national association is also lobbying the Trump administration to take the threat of taxing municipal bonds off the table. That exemption underpins the ability for counties, cities, towns and school districts to borrow money at lower rates.
As Congressional Republicans seek to raise $2 trillion in budget cuts or new revenue to pave the way for a new tax cut and spending package though, they are considering eliminating the federal tax exclusion for interest earned on municipal bonds. That could raise an estimated $365 billion for the federal revenues, but it could also cost state, local and municipal governments about $823 million, because it will increase bond costs by 2.1%, Carter said.
