As Delaware approaches the start of the 2026 legislative session, several political and federal policy developments are emerging that could directly affect nonprofits and the communities they serve. State fiscal uncertainty, new budget projections, uncertainty surrounding federal housing policy, and ongoing disputes over food assistance all underscore the importance of nonprofit engagement in the months ahead.
DEFAC Projections for December and Delaware’s Financial Outlook
In November, the General Assembly held a special session to address “decoupling” from the federal tax code to reverse what the Delaware Economic and Financial Advisory Council (DEFAC) projected to be a $400 million shortfall over the next three years.
This led to the passage of HB 255, which stops Delaware from automatically following federal tax rules on immediate write-offs for research and development and other business expenses, including retroactive tax benefits. DEFAC met again on December 15 and projected that Delaware would recapture nearly $328 million over those three years, an overall reduction in tax revenue of $72 million.
The changes leave the state spending limit for fiscal 2027 at just under $7.1 billion. This is up $365 million from the October projections and is about $517 million more than the current year’s budget. This month’s forecast is a significant one as these DEFAC projections will be used to draft the Governor’s Recommended Budget for fiscal 2027 that Governor Meyer will unveil in January.
Federal Housing Policy Puts Stability at Risk
The U.S. Department of Housing and Urban Development (HUD) temporarily withdrew its proposed rules for the federal Continuum of Care (CoC) homelessness program after significant backlash and lawsuits from states, local governments, and nonprofit providers.
The proposed funding rules would have made major changes to how homelessness funds could be used. This would have moved money away from long-term housing with support services toward other housing models. Critics argue that these changes conflict with what research shows works and could disrupt services for people already housed or receiving support.
Due to legal challenges and growing uncertainty, HUD paused the rules and said it plans to revise and reissue it at a later date. In the meantime, communities and nonprofits that rely on this funding are left waiting, especially given that many current grants are close to ending. Until HUD releases updated guidance, providers do not know what future funding rules will be or when decisions will be made.
SNAP Uncertainty Raises Food Insecurity Concerns
The Trump Administration says it will withhold federal funding for the Supplemental Nutrition Assistance Program (SNAP) from states that do not share personal information about people who receive food assistance, including Social Security numbers and immigration status.
The administration says it needs this data to prevent fraud and protect the program. However, many state leaders and advocates say states already check eligibility carefully and that the new request goes beyond what federal law requires.
Democratic governors and attorneys general have pushed back, saying the request raises serious privacy and legal concerns. They also warn it could make eligible families afraid to apply for food assistance. More than 20 states, including Delaware, have filed or said they plan to file lawsuits to stop the policy.
Federal officials have said the policy may affect administrative funding rather than food benefits. Advocates warn that any loss of funding could disrupt state programs and hurt vulnerable families.
Legislative Session Begins in January
Delaware’s legislative session begins in January and runs through June 30. The General Assembly will return for regular session on Tuesday, January 13, 2026. Throughout the off-season, DANA’s Public Policy team has been meeting with legislators to educate them on nonprofit issues and build relationships. During session, DANA will monitor legislation and regulations affecting nonprofits and advocate on behalf of the sector.
DANA’s Upcoming Events
In February, DANA will host its 2026 Delaware Annual Budget Update, an essential briefing for nonprofit leaders seeking timely, practical insight into the state’s evolving fiscal landscape and what it means for Delaware’s nonprofit sector. This year’s program will include: a high-level overview of the Governor’s Recommended fiscal 2027 budget priorities and key considerations for nonprofits, and a federal update from Jessica Mendieta, of the National Council of Nonprofits, focused on federal developments and implications for nonprofits at the state and local level. This event will be on Monday, February 2 at 9:00 AM via Zoom. Registration is available here.
Throughout the legislative session, DANA will continue holding the bi-weekly Public Policy Community of Practice as well as engage in sub-sector advocacy days, themed days for nonprofits to go to Legislative Hall and advocate for nonprofits. We hold sub-sector advocacy days for a range of issues including housing, Health and Social Services, and others. The next Community of Practice will be held on Friday, January 9 at 10:00 AM via Zoom. The first Subsector Advocacy Event will be on Wednesday, March 11. To register for future Public Policy Communities of Practice, follow this link.
If you have any questions or would like to stay connected to our Public Policy mailing list reach out to James Bush, at [email protected].