‘Cruelty and indifference’: Delaware’s $400M budget shortfall could impact services for low-income residents

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Delaware is facing a $400 million budget shortfall over the next three years due to federal funding cuts from the massive tax bill Republicans in Congress passed earlier this year.

The Delaware Economic and Financial Advisory Council lowered its projection for state revenue for the current fiscal year by nearly $99 million. Its forecast for the following year that starts July 2026 fell by almost $47 million. A dip in expected revenue from corporate income tax is contributing significantly to the dim overall picture.

The council set its spending limit for the FY 2027 budget this week at $6.73 billion. The group meets frequently throughout the year to update revenue numbers before lawmakers pass a budget by the end of June.

Senate Majority Leader Bryan Townsend said state revenue is expected to drop because of the corporate giveaways in the federal tax bill. He said less revenue means less funding for services helping the state’s most vulnerable residents.

“The hardest hit Delawarean is getting hit even harder by what I think fundamentally is cruelty and indifference at the federal level,” he said. “So we need to figure out what we can do to step up here and try and minimize any harm and really any despair that people feel based on what’s going on in Washington.”

State House and Senate Democrats say they plan to pass legislation to change Delaware tax code so it no longer mirrors federal law allowing tax breaks for corporations, which includes large retroactive deductions.

Gov. Matt Meyer said in a statement that he plans to work with legislators in a bipartisan manner on “a simple, responsible fix that protects the state’s budget and keeps Delaware competitive.”

The federal tax bill also zeroed out what was annual money to states for beach replenishment. Meyer sent a letter to President Donald Trump this week asking for those federal cuts to be restored.

Senate Republicans said in a statement that federal tax policy is not to blame for Delaware’s woes.

“What’s hurting Delaware isn’t federal reform, it’s runaway spending and misguided state policy,” they wrote. “When government tries to provide everything, it replaces opportunity with dependency. Real progress doesn’t come from bureaucracy, it comes from empowering people to work, create, and build a better life for their families.”

The financial impact of the ‘One Big Beautiful Bill’ on state programs

According to the Delaware Healthcare Association, this summer’s massive tax bill will cut $4 billion in funding to the First State over the next 10 years. The bill’s new work requirements for Medicaid recipients aged 19-64 who are covered through the Affordable Care Act Medicaid expansion could result in over 50,000 Delawareans losing their Medicaid coverage and more than 30,000 becoming uninsured.

The new law also makes the largest cut to the Supplemental Nutrition Assistance Program, or SNAP, in U.S. history. For the first time, older Americans between the ages of 55 and 64 and parents without children under age 14 who don’t have a work-limiting disability will be subject to work requirements. While the federal government previously paid for 50% of the administrative costs, the federal share will drop to 25% beginning in October 2026.

Delaware distributes more than $20 million in monthly SNAP food benefits to about 60,000 Delaware households. But SNAP recipients will be forced to survive without food assistance next month, due to the government shutdown.

“Households who were approved for food benefits on or after Oct. 17, 2025, will receive benefits for October,” a spokesperson for the Delaware Division of Social Services said in a statement. “However, further benefits will be on hold until the federal government re-opens and funds are approved by Congress for distribution to states.”

Delaware Democratic Congresswoman Sarah McBride said the lack of funding for food assistance is a choice by the Trump administration.

“They have chosen to call these programs ‘Democrat programs,’ and they believe that they are punishing people who they presume didn’t vote for them in the last election,” she said. “That’s no way to govern a country and it’s no way to serve constituents.”

Sens. Chris Coons and Lisa Blunt Rochester, along with dozens of other Democratic senators, sent a letter Thursday to Brooke Rollins, secretary for the U.S. Department of Agriculture, asking her to use legal authority to release November’s food stamp funding. The senators pointed to her legal ability to use contingency funding to pay out benefits. The administration has already used its discretion to transfer money to the federal supplemental nutrition program for women, infants and children, known as WIC.

“Any halt in SNAP funding will have devastating impacts for program beneficiaries, increasing food insecurity and undermining family budgets,” they wrote. “Given the critical importance of SNAP benefits, the USDA must take all steps possible to ensure that families do not go hungry.”

Blue states targeted during government shutdown

The government has been shut down for about three weeks. The U.S. House of Representatives passed a Republican spending bill along party lines, but Senate Republicans need Democratic votes to approve the measure.

Delaware’s congressional delegation has stood firm along with the majority of their colleagues in both chambers to withhold their votes to fund the government until Republicans agree to restore health care funding in the short-term budget bill. Republicans control both chambers of Congress and the White House.

Since the shutdown started, the Trump administration pulled $7.56 billion in U.S. Department of Energy funding to hundreds of renewable energy projects in mostly blue states, including New Jersey and Delaware, in apparent retaliation.

The administration has also “paused” over $11 billion in water infrastructure projects to 12 Democrat-led states, including Delaware, New Jersey and Maryland.

McBride said she was concerned that if Democrats and Republicans reach a compromise on a spending bill, Republicans will rescind some of the funding, as it did earlier this year, at the administration’s request.

“Republicans in the majority in the Senate and the House have ceded their constitutional authority and responsibilities to the White House,” she said. “They are acting as total yes men to this administration.”

The state of Delaware has launched a new online page with resources to help Delaware residents during the government shutdown.

Lawmakers will get their next report on revenue estimates in December.