The city and county are working on plans to offset potential federal funding cuts under the Trump Administration.
By Erica C. Barnett
Major changes to the way the federal government funds programs that shelter and house people experiencing homelessness could put most of Seattle’s homelessness system at risk at risk, and thousands of people living in the Seattle area could become homeless as soon as next year as the Trump Administration shifts homelessness funding from permanent housing to short-term shelter with new strings attached.
“This is another cruel policy choice intentionally designed by the Trump Regime to harm our most vulnerable community members, and once again local governments are being asked to step up to meet the moment,” Seattle City Councilmember Alexis Mercedes Rinck said last week.
The potential cuts come from changes to an annual funding process known as a Notice of Funding Opportunity, or NOFO, which is administered in Seattle by the King County Regional Homelessness Authority, acting as the Continuum of Care (CoC) for the Seattle region. (A spokesperson for the KCRHA did not respond to multiple requests for an interview, including phone calls and text messages, last week).
Currently, housing and shelter programs in Seattle and King County receive around $67 million of federal funding through this process, almost all of which—around $60 million—goes toward permanent housing. Of that amount, around $36 million, or 60 percent, pays for permanent supportive housing for people with disabling behavioral health conditions, such as severe addiction or mental illness, who need intensive case management and other services in order to stay stably housed.
Under the new rules, just 30 percent of federal funding can pay for permanent housing of any kind, including rental assistance; the rest must go toward short-term approaches like shelter and transitional housing. Assuming current funding levels, the new rules would provide less than $20 million for permanent housing, potentially putting thousands of people who are currently housed back on the street, including 4,500 in the Seattle area alone.
“This crisis should horrify and unite us,” said Alison Eisinger, director of the Seattle-King County Coalition on Homelessness. “[T]he ideologues are firmly embedded and the attempts to defund housing are even worse than feared.
In addition to reducing funding for housing in general, the new regulations stipulate that permanent supportive housing—a kind of service-rich long-term housing designed specifically for people whose disabling behavioral health conditions have made it impossible for them to retain housing on their own—should only be for people with physical disabilities and those who are elderly.
Downtown Emergency Service Center director Daniel Malone said says this change represents a complete misunderstanding of why permanent supportive housing exists, not to mention the needs of people with physical disabilities. DESC, which receives about $20 million a year in federal funding for its permanent supportive housing and rental assistance programs, stands to lose a quarter of its supportive housing budget because of the federal changes.
“The vast majority of people with physical disabilities don’t need what you would call ‘support’—they need physical accommodations,” like wheelchair ramps and grab bars, Malone said. Permanent supportive housing provides similar accommodations for behavioral health conditions. On-site behavioral health services “are what allows someone to be successful in retaining their housing, and this administration is turning that on its head,” Malone said.
At a webinar on the changes last week, two HUD representatives, both previously affiliated with Seattle’s right-wing Discovery Institute, reportedly alarmed participants with their ignorance about the purpose of permanent housing. One, Robert Marbut, is the head of the Interagehcy Council on Homelessness. During the first Trump administration, he advocated for forcibly moving homeless people to “campuses” on the outskirts of cities on the threat of arrest. The other, Caitlyn McKenney, worked briefly as a research fellow at the Discovery Institute after graduating college in 2022; she’s now a HUD policy advisor on homelessness.
During the webinar, Marbut and McKenney told reportedly housing and service providers from around the country that they could easily follow the new rules by simply converting their permanent housing units into short-term transitional housing with mandatory treatment that would quickly cure whatever behavioral health problems people have, such as lifelong addiction or schizophrenia.
“Instead of understanding that mental illness and substance use disorder are often lifelong disease processes, HUD is instructing communities to move stably housed people by the tens of thousands into transitional housing (with a two year maximum stay) and require them to work and accept treatment, despite much evidence that this is a failed approach,” Eisinger said.
Imposing treatment and work requirements on people with long-term disabilities is also impractical, since most housing projects receive funding from many sources (such as state Low-Income Housing Tax Credits) that are earmarked for permanent housing.
On top of all that, the Trump administration has repeatedly delayed the release of the NOFO, which was supposed to come out last summer, with final funding decisions by the end of 2025. The delay leaves housing and service providers with just two months to meet an end-of-year deadline to submit new applications under completely different rules; it also means that money for both new and existing programs won’t start flowing until later in the year, after funding for existing programs runs out.
“Homelessness is a current, large problem across the country, and they’re effectively doing something that will put federal homelessness dollars more or less on hold because they waited so long to come out with this,” Malone said.
Malone says HUD could fix the problem for this year by simply extending the existing contracts and letting providers spend the next six months coming up with new proposals before releasing another NOFO in the summer of 2026—something even Republican lawmakers, whose own districts stand to lose millions in federal funding under he new rules, have requested.
Local Solutions
It’s far from certain that the Seattle area will get the same amount of federal funding it has in the past, because the new rules penalize progressive policies adopted by most blue cities. Programs that operate on harm reduction principles, like those that allow people to use drugs on site, are no longer eligible for federal funding; those that include any kind of racial preference or explicitly acknowledge the existence of transgender people are also out. Organizations that check people’s immigration status get preferential treatment under the new rules.
Even if HUD agrees to delay its funding process until next year—a big “if,” given the Trump administration’s wrecking-ball approach to governance—the city, county, and state will need to come up with creative ways to address and offset the likely cuts. Last week, state and local leaders met to discuss options to fill the gap.
One (complex, but likely) option is to swap out funding for programs that currently rely on federal dollars, like permanent supportive housing, for programs that come closest to meeting the new criteria, like transitional housing, outreach, and shelter. The city, for example, might decide to pay for direct rental subsidies with local funds that previously paid for abstinence-based treatment, applying for federal dollars for the treatment program.
Lisa Daugaard, co-director of the nonprofit Purpose Dignity Action, whose CoLEAD program moved people living in state-owned rights-of-way into housing before the state defunded it earlier this year, said, “With care and a strategic approach, it’s likely that we can put together a strong application for comparable funding to what we currently receive, but it’s also clear that much of what we propose should be different from our region’s traditional Continuum of Care package.”
This option, which would have to take place on a tight timeline, would require nonprofits that have never applied for federal funding to get up to speed on the application process and apply for funds, knowing that if they don’t get picked, their current funders (the city, county, or both) might not be able to backfill the losses. For nonprofits, that scenario creates considerable risk, and it’s still unclear what incentives the city and county might offer to make it worth their while.
Since swapping is unlikely to close a potential gap on its own, the city and county are also working to create reserves, or contingency funds, in their 2026 budgets that could help keep programs going.
This week, King County Councilmember Teresa Mosqueda is introducing a budget amendment that asks incoming County Executive Girmay Zahilay to propose a supplemental budget by March that establishes a reserve to address any federal funding shortage. Although the amendment doesn’t require a specific dollar amount, it does note that the total gap is at least $36 million, and calls out three types of funding—new revenues, existing county budget reserves, and any funds left unspent at the end of 2025—as sources for the reserve.
“The Continuum of Care funding is the fabric of our safety net,” Mosqueda said. “It helps people not only stay housed, but get access to the critical services they need to stabilize people. If there are going to be impossible contingencies tied to federal dollars that make it hard to not only house people but meet their health needs, we need to step up to make sure that the Continuum of Care is truly a continuum.”
County Councilmember Jorge Barón, who is supporting Mosqueda’s amendment, said the county “should be advocating and doing whatever we can to have federal support in this area—we should not give up and assume all is lost—but at the same time, we need to be cognizant of the fact that there’s risks in this area and we should prepare to have contingency funds available if the worst outcomes do turn out to be true.”
Given limited funds, Barón said, the county opted not to add a lot of new spending in this year’s budget, and to use most of the proceeds from its new public safety sales tax, about $175 million, to address its own budget deficit and preserve funding for programs that would otherwise be cut—like the Salvation Army homeless shelter in SoDo, which started during COVID and relied on federal emergency funds.
That’s a sharp contrast to the city of Seattle, where, in an election-year swan song, Mayor Bruce Harrell piled tens of millions of dollars in new spending onto an already unsustainable budget that the council is currently in the process of padding further.
In addition to Harrell priorities like graffiti removal and police surveillance, the proposed budget included $8 million in one-time funds for new shelter, plus $4 million for a new Pioneer Square encampment resolution program that would be run jointly by the Downtown Seattle Association and Purpose Dignity Action.
“The Pioneer Square effort, which could later move to other neighborhoods if continued, would bring back the same model used in the Right of Way encampment resolution program, and JustCARE before that,” in advance of the FIFA World Cup games next year, Daugaard said.
But many advocates, including Eisinger and Rinck, argue that now is not the time to invest in new homelessness programs. “We should not be spending public dollars do something new before we have secured the housing that exists,” Eisinger said. “This is a crisis. In a crisis, you have to make hard decisions. I do not in any way, shape, or form believe that we should be putting money into a whole slew of new things during an authoritarian takeover.”
Last week, Rinck passed a budget amendment that prohibits the city from spending $11.1 million of the $11.8 million allocated to the new shelter beds and the Pioneer Square encampment resolution program until at least next year, when HUD releases the details of its 2026 grants. An amendment from Councilmember Bob Kettle removed $700,000 of the total to fund a quarter of the proposed encampment pilot, for which the PDA has already master-leased an apartment building. Combined with the $9 million Harrell’s budget set aside to address federal funding cuts, the money will bring the city’s total contingency fund to $20.4 million.
Arguing for her proposal on Friday, Rinck said it was important to “pause on expansions for the next couple of months until we resolve and understand the outcome” of the changes to federal funding requirements.
Council members who support sweeps, surveillance, and graffiti vigilance expressed outrage about federal funding cuts—Maritza Rivera, referring to Trump, said, “I just can’t understand why anyone would not want to house people, feed people, care for children, care for families”—but couldn’t seem to find a spare dime in other parts of the budget to help offset those federal cuts.
In fact, the council took proactive steps to prohibit the incoming Katie Wilson administration from using city funds to pay for needs like shelter and housing in the future. Rob Saka, who delivered his own high-volume diatribe against the Trump Administration, proposed an amendment prohibiting the new administration from repurposing funds dedicated to Harrell’s newly expanded encampment sweeps team on any other purpose. After several councilmembers delivered paeans to the team and its longtime advocate, outgoing deputy mayor Tiffany Washington, they passed Saka’s spending restriction on a 6-2 vote, with Rinck voting no and Dan Strauss abstaining.