IN THIS ISSUE

• Lawmakers Continue Efforts to Limit Federal Immigration Enforcement in Delaware
• Audit Shows Continuing Issues with State's Unemployment Insurance Trust Fund
• Bill Seeking to Raise $150 Million by Hiking Business Fees Advances
• Debate Continues Over Proposal to Ban Credit Card Fee on Tips
• Bill Seeks to Curtail High-Tech Car Theft

Lawmakers Continue Efforts to Limit Federal Immigration Enforcement in Delaware

Last October, the U.S. Justice Department designated Delaware as a "sanctuary jurisdiction" based on "actions and policies that materially impede the enforcement of federal immigration statutes and regulations." Since then, Delaware House and Senate Democrats have worked to double down on that status.

On Thursday, the House of Representatives passed two bills intended to further limit U.S. Immigration and Customs Enforcement (ICE) activity in the First State.


The first bill, House Substitute 2 for House Bill 94 (as amended), sponsored by House Majority Leader Kerri Evelyn Harris (D-Dover East), restricts Delaware law enforcement officers from directly participating with ICE agents conducting civil immigration enforcement at certain sites, including healthcare facilities, colleges or universities, places of worship, public and private schools, and daycare centers. The bill passed 27 to 14, along party lines.

The second bill approved by the House and sent to the Senate was House Substitute 2 for House Bill 151, a measure that seeks to prohibit state and local officials from entering into any agreements with privately operated detention facilities. Prime sponsor of the legislation, State Rep. Mara Gorman (D-Newark), introduced the first version of the measure last May.

ICE reportedly contracts with private detention facilities in more than two-dozen states, using them to house approximately 80% of its immigration law violators during processing.

While HS 2 for HB 151 would not entirely close the door to private detention centers operating in Delaware under contract to the federal government, it would make it more difficult for them to do so. If enacted, the law would not apply to Dover Air Force Base, which is under federal jurisdiction.

Also on Thursday, three new House bills related to ICE operations were filed.

House Bill 368 would prohibit holding any person solely based on an immigration detainer or a civil immigration warrant. It would largely bar any Delaware law enforcement agency from cooperating with federal immigration authorities to enforce civil immigration law.

House Bill 366 seeks to ban local, state, and federal law-enforcement officers from wearing facial coverings such as balaclavas, ski masks, or tactical masks that obscure the face. The measure includes exceptions for undercover operations and exigent circumstances. House Bill 367 would require all law enforcement officers to display identification while performing enforcement duties, with limited exceptions. Both measures are sponsored by Rep. Gorman.

ICE agents often obscure their identities during enforcement operations. As noted in a recently updated NOLO article: "In July 2025, acting ICE Director Todd Lyons told CBS News that he wasn’t a proponent of agents wearing masks, but he would allow it to keep ICE agents and their families safe." Some ICE agents have had their personal information and photos of their homes and families posted online without their permission -- a practice called “doxxing” -- as a means of harassment and intimidation.

HB 366, HB 367, and HB 368 are pending action in the House Judiciary Committee.

Audit Shows Continuing Issues with State's Unemployment Insurance Trust Fund

An annual audit continues to report problems with the management and accountability of the state's Unemployment Insurance Trust Fund.

Thousands of Delaware employers contribute to this fund, which pays out unemployment benefits to Delawareans every week. While the fund's assets vary, it typically has a balance of several hundred million dollars. The Delaware Department of Labor manages the fund, with federal funds contributing to its administration.

Red flags about the fund have been flying for several years.

Three years ago, a staffer was found to have embezzled over $180,000. (The Delaware Coalition for Open Government has published a complete timeline of the crime and its fallout.)

Two years ago, an independent auditor, CliftonLarsonAllen LLP (CLA), determined the fund was "not auditable" for Fiscal Year 2023, a situation that has persisted since then.

A March 2024 report by the Delaware State Auditor revealed multiple weaknesses and procedural issues with the fund dating back to 2021, with the wheels coming off in 2023. Among the issues leading to the decline were antiquated, siloed systems, a unique fiscal structure that prevented oversight, and a failure to commit to corrective actions.

Under federal law, the State of Delaware is required to have an independent audit conducted of its administration of federal assistance programs. The latest audit was released earlier this week. In Fiscal Year 2025, the state administered over $4.1 billion in federal funding across 18 major programs.

The report continued to find problems with the Department of Labor and the Unemployment Insurance Trust Fund. While the independent auditor recognized that the department has made progress, it noted that it still could not confirm that the fund's account balances "are fairly stated...due to a pervasive lack of internal controls over the accounting and financial reporting process."

The auditor says "enhanced controls" have been implemented and are in operation, but provided no timeline for when those fixes would yield results in the form of verifiable accounting.

Bill Seeking to Raise

$150 Million by Hiking Business Fees Advances

A bill to increase a host of fees imposed on businesses incorporated in Delaware, collectively raising more than $150 million in new annual income for the state, cleared the House Administration Committee this week.

Sponsored by House Democratic Leader Kerri Evelyn Harris (D-Dover East) and Senate Democratic Leader Bryan Townsend (D-Newark, Bear), House Bill 400 would raise annual fees paid by Limited Liability Corporations and other "Alternative Entities," as well as the fees associated with various services provided by the Division of Corporations.

In an earlier statement justifying the proposal, Rep. Evelyn-Harris said the state is running short of funds and needs the money. "That means reviewing every revenue source and expenditure in our state with a fine-toothed comb, and making changes where they make sense and where they won’t hurt our residents and the businesses."

The State of Delaware gets more than a third of its annual revenue from income tied to its top national position as a business-friendly incorporation venue. The strength of the Court of Chancery, which adjudicates business lawsuits, has also been a draw for corporations to establish their legal residence here.

Committee member, State House Republican Leader Tim Dukes (R-Laurel), questioned the wisdom of imposing higher fees on corporations, noting the state's slipping standing in the business community and the rising threat posed by Texas and Nevada, which are actively trying to unseat Delaware as the premier incorporation destination.

Despite the objections, HB 400 was released from committee on a 3-2 vote along party lines.

The day before Wednesday's committee action, Newsmax posted an article lending credence to Rep. Dukes's concerns:

"A tsunami of corporate departures continues to hit Delaware as more than 60 public companies with a combined market cap of over $3 trillion have quit the state in the past two years alone. In just the past week, two significant public companies — FirstCash Holdings and GPGI Inc. — have announced plans to leave Delaware, underscoring what many analysts now describe as a corporate exodus.

FirstCash Holdings (NASDAQ: FCFS), a $9 billion market cap company, filed plans with shareholders to reincorporate in Texas. The move, the company said, is driven by a desire for 'more clarity and predictability' in legal matters, along with efforts to reduce 'opportunistic and frivolous litigation.'"

To many observers, the article accurately illustrated the problem of "DExit," the term coined for the recent corporate flight from Delaware.

While there are about 2.3 million businesses incorporated in Delaware, the lion's share of the state's revenue comes from a comparatively small number of high-value companies, like those that have recently chosen to incorporate in competing states.

A significant reduction in Delaware's corporate revenue stream, valued at $2.5 billion to $3 billion annually, would affect everyone, as elected officials would face a no-win dilemma: cut services to reduce spending or raise other taxes and fees to cover the lost income.

Debate Continues Over Proposal to Ban Credit Card Fee on Tips

Whenever someone uses a credit card to pay a bill, the credit card company charges a fee (typically bewteen 2% and 3% of the transaction cost) to process the payment. A controversial bill to change that in a single narrow instance has sparked a heated, ongoing debate between supporters and detractors.

House Bill 315 would prohibit credit card companies from charging processing fees on tips. It has been released from committee and is on the House Ready List, awaiting consideration of the chamber.

The Delaware Restaurant Association supports the passage of this bill. From the perspective of restaurant owners, they are currently paying processing fees on tips, which is money they do not receive as revenue. That is a high cost in an industry with extremely thin profit margins that has never fully recovered from the pandemic and continues to struggle.

"Every single day, restaurant owners are forced to watch thousands of dollars disappear in unnecessary fees on tips," stated a recent post from the Delaware Restaurant Association. "This isn’t just a small inconvenience—it’s money that should be supporting hardworking staff and the businesses that employ them."

Under Delaware law, restaurants cannot deduct transaction fees from their workers' tips.

The banking and credit card industries oppose the measure. Assuming a typical restaurant patron pays his bill with a credit card and adds a 20% tip, credit card companies would lose roughly one-sixth of their revenue on such transactions if the bill were signed into law.

The Electronic Payments Coalition (EPC), a trade group representing the institutions and networks that form the backbone of the nation’s electronic payments system, has launched a public lobbying campaign to pressure lawmakers to withdraw their support. At the moment, the measure is unusually popular, with broad bipartisan backing. Thirty-eight of the legislature's 62 members are sponsoring or co-sponsoring the bill.

The coalition says enacting the law would require systemic changes to credit transaction networks and warned that credit card companies may bar the use of their cards to pay tips. One social media ad posted by the group said that if the proposal becomes law, "credit & debit cards may not work for tips—risking the incomes of tipped workers."

While similar proposals have reportedly been made in more than two dozen states, only one, Illinois, has enacted it.

Even there, the matter remains unsettled. The Illinois Bankers Association et al. is challenging the constitutionality of the law in an appeal before the U.S. Court of Appeals for the Seventh Circuit.

Bill Seeks to Curtail High-Tech Car Theft

Car thieves are increasingly using advanced technology to clone vehicle key fobs, a method particularly effective against newer models equipped with "push-to-start" ignition systems. 

State Rep. Jeff Hilovsky is co-sponsoring a new bipartisan bill authored by State Rep. Franklin Cooke (D-Wilmington South, New Castle) to crack down on this type of theft.

House Bill 351 would make it a crime to manufacture, sell, or possess a vehicle key programming device, or any other apparatus, or computer program intended to intercept a key fob signal, or electronically unlock or start a motor vehicle.

The bill banning the sale or use of "vehicle security circumvention technology" would not apply to lawful and reasonable actions, such as tasks performed by police officers, vehicle dealers and distributors, locksmiths, and repossession agencies.

First-time offenders would face a fine of up to $115 and 90 days in jail. Those committing subsequent offenses would face a maximum fine of $230 and 6 months behind bars.

The measure is pending consideration in the House Public Safety & Homeland Security Committee.