Wilmington officials say federal grant freeze has not stopped current awards but threatens future appropriations

Wilmington — City staff told the Finance and Economic Development Committee on Monday that, while most federal grants and reimbursements are still flowing now, the city faces an uncertain future if federal agencies reduce staffing, rescind unspent awards, or if Congress changes appropriations.

The most immediate takeaway, Deputy Chief of Staff Stephanie Merkler said, is: "So far the funds have been flowing." She warned, however, that the situation is "completely unprecedented" and said the city is preparing for multiple contingencies.

Why it matters: The city relies on federal grant dollars across housing, water and sewer capital projects, food programs, emergency management and other services. If appropriations, reimbursements or agency operations change, the city could face revenue timing problems, program cuts, or the need to shift costs into the general fund.

Key details reported to the committee

- Real Estate and Housing: Department staff reported an FY25 HUD allotment of about $3.9 million and reported $5.6 million spent in FY24 (reported via the city's federal spending report). Staff said those grants are currently being reimbursed but noted many department positions are funded at least partly by federal dollars. Director Bob Weir told the committee: "We'd have to keep a skeleton crew because there are certain requirements that we have to inspect work in place and inspect projects that are in place, but would be greatly reduced."

- Parks and Recreation food program: The city spent about $1.2 million in FY24 and budgeted $1.3 million in FY25 for USDA-funded meal programs. Staff said most program workers are limited-service or temporary hires paid from grant funds; without federal support the city would need to decide whether to continue the program with general fund dollars.

- Public works and SRF funding: Staff reported about $10 million in State Revolving Fund (SRF) activity in 2024 and said the city expects substantial capital spending in coming years. State partners have confirmed SRF reimbursements will continue, but officials warned the city would lose principal-forgiveness opportunities if those programs change and would have to slow projects or use conventional loans.

- Transportation / Riverfront East: Merkler told the committee that the Federal Highway Administration has "stopped meeting with us" regarding a $17 million RAISE grant for South Wilmington / Riverfront East, citing "current federal guidance." City staff said the office administering that grant has not told the city the funds are rescinded, only that meetings have been suspended.

- Emergency management and police: Small federal grants (for example, the Emergency Management Performance Grant paid through FEMA/DEMA and smaller public-safety grants) remain reimbursed, but staff said the loss of those grants would shift costs to the general fund.

- ARPA funds: Merkler said American Rescue Plan Act (ARPA) funds are already in the city's bank account and "definitely not impacted by the federal funding freeze" because they are obligated under contract; the city reported about $9 million unspent in ARPA allocations and said those funds are under contract for specific projects.

City planning and next steps

City staff told the committee they are preparing contingency plans by department, will track reimbursement timing closely, and will send the council a written breakdown of affected grants, staffing impacts and projected fiscal effects. Merkler and department directors encouraged council members to consider which programs—if any—the city would want to fund from the general fund should federal support be reduced or end.

The committee did not take formal votes on grants during the meeting; staff said several resolutions and budget decisions will come to the council during the upcoming budget cycle.