Earlier this month, the Coalition for Nonprofit Housing and Economic Development (CNHED) launched a new campaign to improve affordable housing in the District.  The Continuum of Housing Campaign seeks to ensure all DC residents can have “decent, quality housing at a price they can afford.”  The continuum of housing includes the entire range of housing options, ranging from permanent supportive housing all the way up to homeownership. 

As part of the campaign launch, CNHED released a detailed report about the continuum of housing in the District and a video titled Housing for a Better Tomorrow that takes a look at the personal stories of DC residents and shows just why safe, decent, and quality affordable housing is so critical.

To learn more about the Continuum of Housing campaign and find out how you can be involved, click here. 

We want to flag a good article in last Sunday’s Washington Post Outlook section, just in case your summer weekend didn’t include a good perusing of the newspaper.  If it didn’t, you might have missed a great myth-busting job by Heidi Shierholz of the Economic Policy Institute.

Her topic? A favorite of ours: unemployment insurance.

In a nutshell, Shierholz explains why unemployment insurance is one of the best ways to stimulate the economy during a recession. The benefits paid help workers maintain some type of financial equilibrium after losing a job and income through no fault of their own. Though the payments often don’t replace an entire paycheck, the money helps families pay for housing, food, and other basic necessities so the jobless can focus on finding sustainable work and not just something that will pay a bill or two in desperate times.  That breathing room also gives laid-off workers the chance to pursue training and other skills that they might need in today’s job market. It’s an investment in human capital that pays off in the long run.

Read Shierholz’s story here.

Monday, July 26

Washington Interfaith Network’s Election Accountability Night, 7:30-9:30 PM, Asbury United Methodist Church (11th and K Streets NW)

Tuesday, July 27

Ward 6 Forum and Straw Poll, 6:30-8:45 PM, Eastern Market’s North Hall (7th and Carolina Streets SE)

Thursday, July 29

Ward 1 Councilmember Candidate Forum, 6-8:30 PM, 1200 U Street NW

Yesterday, DC’s Affordable Housing Alliance (which DCFPI is part of) and the Coalition of Housing and Homeless Organizations (COHHO) hosted a briefing for candidates to talk about some of the most critical issues facing residents in the District of Columbia — affordable housing and homelessness. 

The briefings included short presentations from AHA members on several issues including the Housing Production Trust Fund, Emergency Shelter, New Communities, and preservation of affordable housing, just to name a few.   As part of the briefing, AHA members developed several short issue briefs on each of the topics.  To read the issue briefs and learn more about some of the most critical affordable housing and homelessness issues in DC, click here.

Cross-posted from Defeat Poverty DC. 

We are often told how well D.C. has done during the economic downturn, especially in comparison with other states.  This is true, kinda.  When it comes to basic economic indicators such as job growth and home values, D.C. is ahead of the curve.  Employment is up 1.6% in the District since 2007, the official start of the Great Recession.  The average value of single family homes in D.C. is higher than the value of similar homes in the D.C. suburbs, and even in the U.S. generally.

But these good omens are only part of the story.  Job growth here is mainly due to hiring by the federal government.  Many private industries, including construction and personal services, have actually been losing large numbers of jobs.  Unemployment amongst D.C. residents remains above 10%, while other states have seen their unemployment rates fall.  For many in the District, life has been hard during the Recession.  Middle-class jobs that required a high school diploma or GED are disappearing.  And many unemployed residents do not have the skills to take on the type of jobs now being created.

So what can we do?  We can ask our candidates for Mayor, Council Chairman and City Council what they will do to help unemployed workers compete for 21^st-century jobs, including those in the health care, customer service and government sectors.  We can also ask them how they will make work pay and how they will make basic services affordable.  We need your help to keep the pressure on.  Join us at a candidate forum any night this month!

At a Monday forum on the DC Council Chairman and At-Large races, an important question arose from the audience: Why hasn’t the District enforced the Living Wage Act and First Source?  A recent DC Auditor’s report highlighted shortcomings in both programs, which were put in place to help make work pay in the District.

It is the kind of question being raised by supporters of Defeat Poverty DC, an effort this election season to ask candidates how they plan to address poverty in three basic areas: making work pay, making work possible, and making basic needs affordable.  One good place to start is to fully enforce laws already on the books, like the living wage and first source.

A little background: DC’s living wage, passed in 2006 as part of the Way to Work Act, requires contractors doing business with the District or those receiving taxpayer subsidies to pay workers a “living wage,” currently $12.10 an hour. Across the country, living wage laws are intended to make sure that taxpayer dollars are not spent to create poverty-wage jobs. One fact to keep in mind: A DC resident earning minimum wage has to work three full-time jobs to pay for a market-rate two bedroom apartment in the city.

First Source is a requirement that contractors make their best efforts to hire a majority of District residents for work on projects that receive public funding. Employers can find residents needing work through the First Source registry, which lists unemployed DC residents looking for work

In a May report, DC Auditor Deborah K. Nichols concluded that the District did not adequately monitor the first source program: record-keeping of first source agreements was incomplete, compliance monitoring was neglected, and the first source registry was not properly implemented.

The auditor also found residents who did get work were not being paid the living wage and that contractors were not in compliance with the living wage act.

The impact of not enforcing the living wage and first source hurts all residents, not just those looking for a decent paying job. By not hiring DC residents or not paying the living wage, paychecks unnecessarily travel out to the suburbs and the opportunity to inject more money into DC neighborhoods is lost.  These dollars are not likely spent in District businesses, so the city loses out even more.

Both Kwame Brown and Vincent Orange, two of the leading candidates for DC Council Chairman, said they would enforce the living wage act and first source if elected. Whatever the outcome, let’s hold them to that.

It’s in our best interest to do so.

The DC Council is on recess until September 15.

Thursday, July 22

DC Affordable Housing Alliance Candidate Briefing, 10:30 AM – 12 PM, 1200 U Street NW

Coming up next week…

July 29: Ward 1 Councilmember Candidate Forum, 6-8:30 PM, 1200 U Street NW, sponsored by DC Jobs Council, DC Jobs with Justice, Defeat Poverty DC, Empower DC, Fair Budget Coalition, Jews United for Justice, Washington Legal Clinic for the Homeless and Wider Opportunities for Women; childcare and accommodations, including sign language interpretation, provided upon request; please contact Ben at ben@empowerdc.org, 202-234-9119, ext. 4 by Friday, July 23

This is the District’s current open meetings law:

(a) All meetings (including hearings) of any department, agency, board, or commission of the District government, including meetings of the Council of the District of Columbia, at which official action of any kind is taken shall be open to the public.  No resolution, rule, act, regulation, or other official action shall be effective unless taken, made, or enacted at such meeting.

(b) A written transcript or a transcription shall be kept for all such meetings and shall be made available to the public during normal business hours of the District government.  Copies of such written transcripts or copies of such transcriptions shall be available, upon request, to the public at reasonable cost.

That’s it. Experts say it is one of the weakest— if not the weakest— open government laws in the country. In other states, such as neighboring Maryland, the law is construed so that all meetings of public bodies are open and accessible to the public except under certain exceptions outlined in the law.

Yet in the District, public bodies have been able to meet behind closed doors by saying that no “official action” or vote was taken. Away from public view, important public policy is deliberated and decisions are crystallized just up to the point of a vote. One of the best known examples are the DC Council’s breakfast meetings, which occur prior to legislative sessions. As was said by the Florida courts in the 1974 ruling, Town of Palm Beach vs. Gradison, “Rarely could there be any purpose to a nonpublic, pre-meeting conference except to conduct some part of the decisional process behind closed doors.” Recently reporters have been allowed to attend the breakfast meetings, but the public remains shut out.

On Monday, the DC Council’s Committee on Government Operations and the Environment held a hearing on a proposal to open wide the doors of District government. Bill 18-716, the “Open Government is Good Government Act of 2010,” would make it clear that the open meetings law should apply to the entire deliberative and decision-making process and not merely to the “official” meeting at which voting  or an “official action” is carried out.

The Open Government bill is needed to make public policy in our city more transparent and understandable, particularly in how we make our yearly budget. In previous years, the DC Council largely met behind closed doors in the critical days before the official budget vote to deliberate and discuss whether to increase or cut programs, lower or raise taxes, and make other big decisions that set the city’s spending plan for the upcoming year. By the time the Council met in official session to vote, minds were made up and votes were set. District residents and taxpayers had little knowledge of how these decisions that impacted their lives and checkbooks were made and no way to give input before the final vote.

This year, after being asked by DCFPI and other groups to make these deliberations open and subject to public scrutiny, DC Council Chairman Gray televised the hearings. This was a step forward, but under Bill 18-716 there would be no question that these meetings should be treated like any legislative session which the public is allowed to access and witness.

DCFPI and other groups, including the American Civil Liberties Union and the Open Government Coalition, testified Monday in favor of the Open Government bill and made suggestions on how to make the even bill stronger. Now that the bill has had a hearing, we urge Ward 3 Councilmember Mary Cheh, the chair of the government operations committee, to move the bill forward toward a full council vote soon.

A few weeks ago during the FY 2011 budget debate, fiscal austerity was the DC Council mantra.  Yet several items on today’s legislative agenda suggest that some legislators have already changed their tune. In fact, one of the bills being considered would spend millions of taxpayer dollars to subsidize future development over a portion of Interstate-395.

So how does the Council plan to pay for this big giveaway in these tough fiscal times?

They don’t. 

The sponsors are using a budget trick, which pushes the cost of the subsidy outside the required four-year financial plan period.  In other words, we don’t pay for it now but we pay for it later. This makes the bill much easier to pass, since it shows no immediate fiscal impact.  Yet the idea that the District does not have to identify funding for the legislation — simply because the cost occurs outside of a four year window — can lead to budget and policy decisions that are not fiscally responsible and don’t protect the city’s long-term fiscal health. 

In his evaluation of the bill, Chief Financial Officer Natwar Gandhi warned about the bad precedent this bill may set by designing legislation to push costs into the future, or what is known in budget parlance as the “out-years.” He said that this mechanism “will have a negative impact on the District’s financial strength into the future.”

We completely agree.

Bill 18-806, the Center Leg Freeway (Interstate 395) PILOT and Air Rights Disposition Act of 2010, exempts the from property taxes future development constructed above the I-395 freeway near Massachusetts Avenue NW, until major portions of the development are complete. (That’s what’s known as “air rights.”).  Instead, the bill proposes that the developers will make payments in lieu of taxes to the District based on the current value or sale price of the property, whichever is less.  The sale price of the property has not yet been settled.  The way the legislation is designed, the payments to the District are capped at the value of the property today.  In other words, the District will not be able to benefit from rising land values that will likely occur as the economy improves. 

Then, starting in FY 2014, the first year outside the financial plan window, the payments would be based on a new value determined by the Mayor.  The developers would also get a $5.4 million credit starting in FY 2015 and would make no payments between FY 2015 and the time a deck over I-395 is built.  It is estimated by the CFO that no payments will be received between FY 2015 and FY 2020, and that DC will lose out on approximately $12 million in property tax revenue it would have otherwise received. 

Beyond pushing the costs into the out-years, it also appears that major details, such as the sale price of the property, are still left to be worked out, making the true cost, and impact, of the legislation on the District’s finances unknown at this time. 

Passing this bill could start the District on a slippery slope.  Don’t believe us?  Well, just yesterday, the Committee on Finance and Revenue voted to mark-up a bill that would give businesses in Union Station a permanent tax break starting in FY 2016.  This will cost the District tens of millions of dollars.  Yet because the costs occur outside of the financial plan window, the bill officially has no fiscal impact. 

If the Council wants to pass legislation with such enormous out-year costs, particularly as the District’s finances are still fragile as we exit the recession, they should find a way to pay for it.

Hearings, a finance committee mark-up, and the last Legislative Meeting before the DC Council recesses for the summer:

Monday, July 12

10 AM, Mark-Up, Committee on Finance and Revenue, John A. Wilson Building, Room 120; agenda includes a series of tax abatement bills, including one for Union Station

10 AM, Hearing on United Medical Center, Committee on Health, John A. Wilson Building, Room 500

10 AM, Hearing on Open Government is Good Government Act of 2010, Committee on Goverment Operations and the Environment, John A. Wilson Building, Room 412

11 AM, Committee Meeting, Committee on Economic Development, John A. Wilson Building, Room 123; agenda includes five property disposition approval resolutions

1 PM, Public Oversight Roundtable, Committee on Human Services, John A. Wilson Building, Room 123; agenda includes contracts for independent living arrangements and group homes for children and youth

2 PM, Public Oversight Roundtable on Peaceholics’ Construction Project at 1300 Congress Street SE, Committee on Housing and Workforce Development, John A. Wilson Building, Room 120

Tuesday, July 13

10 AM, Committee of the Whole Meeting followed by a Legislative Meeting

Wednesday, July 14

10 AM, Public Roundtable on the Office of the Tenant Advocate’s Use of the Emergency Housing Fund and Efficient Administration of the Vacant Property Program, Committee on Public Services and Consumer Affairs, John A. Wilson Building, Room 412

Thursday, July 15

12-2 PM, Continuum of Housing Report Release and Campaign Kickoff, Center for Nonprofit Housing and Economic Development, 1200 U Street NW; lunch included, RSVP here.

The DC Council is on recess until September 15.

If you sat through the June 24^th hearing of the DC Council Finance Committee, you might have thought the city was flush with money.  The committee heard testimony on more than a dozen bills to give tax breaks to a variety of projects, from affordable housing developments, to a new diner, to 20-year tax breaks for businesses that locate near the Anacostia Metro Station.

DCFPI testified at the hearings and raised a number of concerns, though in most cases, the concerns were not about the projects themselves, many of which seem worthy.  Instead, we were troubled that these tax bills represent the continuation of an uncoordinated, ad hoc approach to economic development and affordable housing in DC.

The hearing also highlighted the importance of passing a bill that was introduced last year to require an analysis of the costs and benefits of every proposed tax break for economic development.

 While most of these bills are unlikely to be adopted and implemented any time soon — because in fact, the city has no money to spare — the issues are worth exploring.  Here’s what DCFPI said.

Tax Breaks for Emerging Businesses:  One of the bills would give a 3-year property tax exemption to the Capital City Diner, a new restaurant on Bladensburg Road, NE, in an area that has struggled economically.  The diner may indeed need help, but DCFPI’s testimony pointed out that there is no rationale for giving help to this business but not others that also may be struggling to get started.   DCFPI urged the Council to adopt the Exemptions and Abatements Information Requirements Act, which would require a financial analysis of proposed tax breaks and help ensure that the businesses most in need of help get it.   We also recommended that the city create a fund to help small or emerging businesses, allowing assistance to be provided in a more systematic and transparent way.

Tax Breaks to Encourage Development in Ward 8:  The DC Fiscal Policy Institute testified in opposition to a bill that would offer 20-year property tax and business income tax reductions to any business that locates in a district surrounding the Anacostia Metro station.  Reviews of similar efforts, like Enterprise Zones, finds that these kinds of incentives don’t tend to spur development that would not otherwise occur, yielding little gains in job creation or community investment.  We noted that the area would benefit more from a more targeted economic development plan.

Tax Breaks for Affordable Housing:  DCFPI testified that the District offers property tax breaks for affordable housing in a piecemeal, first-come, first-serve approach, and there is little analysis of whether the size of the tax break is related to the level of affordable housing in the project.  It would be far better for the city to create a pool of funds for affordable housing tax abatements and then award them competitively, which is similar to a suggestion made by the Coalition for Non-Profit Housing and Economic Development (CNHED).  The program could be run by the city’s Department of Housing and Community Development, which is best equipped to evaluate affordable housing projects ensure that the abatements are used most appropriately.

The Council’s Legislative Meeting has been rescheduled to next week, but there are still a number roundtables to keep an eye on this week:

Wednesday, July 7

11 AM, Public Oversight Roundtable on Rent Control, Committee on Housing and Workforce Development, John A. Wilson Building, Room 500

Following a 2 PM confirmation hearing, Public Oversight Roundtable on Community Services Block Grant, Committee on Human Services, John A. Wilson Building, Room 123

Thursday, July 8

10 AM, Joint Public Oversight Roundtable on Youth Mental Health Programs and Strategies, Committee on Health and Committee on Human Services, John A. Wilson Building, Room 500

11 AM, Joint Public Oversight Roundtable on Compliance with the Living Wage Act and First Source Act Requirements, Committee on Economic Development and Committee on Housing and Workforce Development, John A. Wilson Building, Room 412

The moment we have been waiting for has come! No, we’re not talking about Eclipse, the latest in the Twilight saga, or the lower temperatures….On Monday, Dr. Gandhi said the District’s revenue picture remains unchanged! That is good news, since almost every forecast in the past two years has shown things getting worse.  This means we can close the books, so to speak, on the Fiscal Year 2011 budget (at least until September, when Dr. Gandhi looks into the revenue crystal ball again).

So what happened?  Read on for a quick summary, but also check out the DC Fiscal Policy Institute’s budget summary report, which can be found at the DCFPI Budget Toolkit.

The DC Council approved a $6.2 billion local spending plan for FY 2011, adopting much of Mayor Fenty’s proposed budget but making some key restorations of funding that had been cut by the Mayor from programs that help low-and-moderate income residents. The Council rejected some of Fenty’s revenue-raising proposals —  for example, it eliminated a proposed 1 percent  tax on hospital patient revenue and substituted with a lower fee assessed by hospital beds  —  but largely kept the Mayor’s proposed fee increases, particularly higher fines for  vehicle  moving violations.  And the Council added a few revenue sources of its own, including applying DC’s 6 percent sales tax to soda and raising the property tax rate for vacant properties. .

Where did the money come from to restore cuts? Some was shifted within Council committees, but most was found during a last-minute scramble within the Committee of the Whole to identify available dollars.

Those key restorations include:

• Adult Job Training: The Council restored $4.6 million in local dollars cut from the mayor’s budget for workforce development training for adults. The money came from two sources: $2.5 million came from a pay-go capital shift to the operating budget. The additional $2.1 million came from a transfer of funds from the summer youth employment program.
• Captive Insurance: The Council’s Committee on Health restored approximately $7 million of the $8 million cut from the captive insurance program, which provides insurance for the city’s nonprofit medical clinics.
• Child Care: In the end, the Council restored $3.5 million of the $4 million cut from the city’s child care budget.
• Earned Income Tax Credit (EITC): The Council restored $1 million to maintain the District’s EITC at 40 percent of the federal credit. The EITC is one of the most effective anti-poverty programs, providing an incentive for low-income families to work by allowing them to keep more of their earnings.
• Grandparent Caregiver: Funding for the grandparent caregiver program, which gives cash assistance to grandparent guardians, was fully restored. The Council eliminated the mayor’s $2 million cut to the program.
• Local Rent Supplement Program: The Council put an additional $1 million to fund the District’s local rent supplement program. The monies will help approximately 75 low-income families acquire safe and affordable rental housing.

Unfortunately, not all programs were so lucky. The Council restored only $1 million of the $7 million cut from Interim Disability Assistance, a cash assistance program for residents with disabilities who are waiting for federal disability benefits to be approved. Often these residents have no other source of income.

The Council adopted several small tax changes but did not vote in favor of any major revenue increase, limiting its ability to find funds for programs without impacting funding for other programs. A proposal to create a new income tax bracket for households with taxable income above $350,000 was introduced in the form of an amendment to the budget on May 26, but the measure was rejected in an 8 to 5 vote.

The revenue additions included:

• Expansion of Sales Tax to Soda

The Council voted to make sugary drinks including non-diet soda subject to DC’s 6 percent sales tax. Previously beverages of this kind were exempt from the tax. The decision to tax soda at the retail level came after the Council opted not to consider a proposal from Ward 3 Council member Mary Cheh to tax sugary beverages higher at the wholesale level. Cheh wanted to use some of the funds for the DC Healthy Schools, a program to make meals served in DC public schools more nutritious and sustainable. Money was found elsewhere to fund DC Healthy Schools.

• Medical Marijuana

The Council also agreed to subject medical marijuana to DC’s 6 percent retail sales tax.

• Vacant Property Tax

The Council created a fourth property tax class for vacant properties. The rate will be 5 dollars for every 100 dollars of assessed value.

Just over three months ago, President Obama signed health care reform into law, under the Patient Protection and Affordable Care Act.  Earlier, DCFPI wrote that the District is charging ahead to implement many of the new provisions under health care reform, most notably an expansion of Medicaid coverage to thousands of DC residents.  Yet the expansion of Medicaid services is just the beginning of many critical changes to the health care system.

With that in mind, a group of organizations representing consumers and providers of health care services in DC, including DCFPI, sent a letter last week to Mayor Fenty, Councilmember Catania (At-large), and Councilmember Bowser (Ward 4) to put forth  a set of principles that should guide health care reform implementation in DC, with the shared goal of “building a comprehensive, simplified health care system in which no one is left without access to care and improving health outcomes for all District residents.”

The organizations, called the DC Coalition on Health Care Reform, urge the District to develop a health care system that gives consumers access to benefits through a single point of entry and that gives health care providers timely and reasonable payments for services.  To achieve these means, the Coalition proposed the following set of principles:

1. The District should have a coordinated policy development and implementation plan allowing for all affected District agencies and critical stakeholders to provide input.
2. The District should ensure that no one loses coverage as a result of health care reform implementation and that all individuals can access quality, affordable health care safely.
3. The District should streamline its eligibility rules and processes for public insurance and the Exchange; a new marketplace that will provide a more comprehensive, organized, and transparent point of entry for individuals to shop for, and purchase, health insurance.
4. Any money saved through the implementation of the Patient Protection and Affordable Care Act (PPACA) should be reinvested into the health care system.

All of these principles are explained in greater detail here.  Today, the Committee on Public Services and Consumer Affairs and the Committee on Health will hold a joint roundtable on health care reform implementation in DC.  We look forward to hearing how the District will move forward with health care reform while also addressing the principles outlined by the DC Coalition on Health Care Reform.

Yesterday, DC’s Chief Financial Officer issued a revenue forecast that showed no change to DC’s estimated revenue collections from the February 2010 estimate.  That is good news and means, for now, that DC doesn’t have to close another budget shortfall.  Yet, the forecast also stated that that economic recovery “is likely to be long and slow” and that “the economy still appears to be fragile.”

While a fragile and uncertain economic recovery are probably the biggest threat to DC’s finances, policymakers spent much of the budget season focused on another issue — the falling amount in DC’s savings account, otherwise known as DC’s fund balance.  This concern led to a provision in the FY 2011 budget to place all of DC’s future end-year surpluses into savings, rather than keeping them available for unforeseen budget problems.

Yet a recent DCFPI report finds most states have drawn down their fund balance to avoid severe budget cuts in the midst of one of the worst recessions in history.  DC’s fund balance actually is healthier than in 43 states.

This suggests that while building back up our savings account is an important goal, it does not need to be our top goal right now.  That’s why we think the recent proposal passed by the DC Council goes too far, too fast, and will tie up a significant amount of new future resources.  Specifically, it will put all end-year surpluses into two savings accounts until they reach at least $650 million.  That could be many, many years away and ties up a substantial amount of resources as DC’s finances are still fragile from the recession.

A portion of end-year surpluses (about $120 million) will go to an operating budget reserve so that can be used to respond to budget emergencies — like revenue shortfalls or spending pressures.  A much larger amount — $530 million —  will be built up over time in a “cash flow reserve” —  money  that will just sit in the fund balance to help meet the city’s cash flow needs that can never be touched.

Every dollar we put into a reserve is a dollar that can’t be used to invest in our city. That balance needs to be weighed carefully going forward.  DC’s most pressing fiscal problem is the large drop in tax collections that has led to a $500 million drop in revenues and cuts to many programs and services.  DC’s finances are likely to be fragile as it comes out of the recession, which means preserving resources for the budget should be the top priority right now.

Monday, June 28th

1 p.m., Committee on Housing and Workforce Development, hearing on bill  18-0734,  the “Subsidized Nonprofit Rental Unit Tax Exemption Act of 2010,” room 412.

Tuesday, June 29th

10 a.m., Committee of the Whole Meeting, the agenda can be found here.
11 a.m., 39th Legislative Meeting, the agenda can be found here.

Wednesday, June 30th

10 a.m., Committee on Housing and Workforce Development, hearing on bill 18-0650, the “District Resident Employment and Trade Stimulus Amendment Act of 2010,” room 500.

11 a.m., Committee on Public Services and Consumer Affairs & Committee on Health hearing on bill 18-792, the “Reasonable Health Insurance Rate-making and Reform Amendment Act of 2010,” and Implementation of Federal Health Care Reform in the District of Columbia

First, the good news: Over the past two months, unemployment in DC has fallen by a percentage point from 11.6 percent in March to 10.4 percent in May.

However, District’s unemployment rate remains worse than Maryland (7.2 percent) and Virginia (7.1 percent) and is greater than the national unemployment rate of 9.7 percent.  Certain areas of the District have been hit particularly hard by the economic downturn: more than one in four individuals seeking work in Ward 8 was unemployed in December 2009.

A new paper from DCFPI examines the characteristics of unemployed DC residents and finds that in the increase in DC’s unemployment rate from 2008 to 2009 fell most heavily on District residents least able to afford it.  For example:

• Wards 5, 7, and 8 had higher monthly average unemployment than the city as a whole in 2009.  In Ward 8, where unemployment is highest, the rate was 27 percent in 2009.  These three wards also had the highest percentage point increases in unemployment from 2008 to 2009.

• Nearly half of the DC residents who were unemployed in 2009 had previously worked in low-wage jobs.  About one-fifth of unemployed DC residents previously worked in sales or food preparation and service occupations, while another one quarter of unemployed residents formerly worked as janitors and maintenance workers, movers, security guards, or construction workers.  Those with lower levels of formal education also were more likely to be unemployed.

• The increase in unemployment affected certain groups of workers more than others, including those who were aged 18-24, were black, and had never been married.  While black workers make up 44 percent of the labor force, 71 percent of unemployed residents in 2009 were black.

The paper recommends that the District address its unemployment crisis by embracing two broad strategies: ensuring that unemployed residents have adequate income supports to avoid falling further into poverty and providing access to training they may need to reenter employment successfully.

The DC Fiscal Policy Institute is thrilled to have been honored this month as the recipient of the Healthy Families/Thriving Communities Collaborative Council’s 2010 Chairman’s Award.

(Eugene Kinlow, Chairman of the Collaboratives, Ed Lazere, Executive Director of DCFPI, and BB Otero, CEO of CentroNia, at the Award Ceremony)

The Collaborative Council provides support to six Healthy Families/Thriving Communities Collaboratives that operate across DC to help children and families “in communities facing intergenerational economic, social and safety challenges.”

BB Otero, the CEO of CentroNia and a board member of the Collaboratives Council, had many kind things to say about the DC Fiscal Policy Institute as she announced the award at the Collaborative Council’s annual dinner on June 14.  She said that DCFPI…

“…is an amazing champion for our most vulnerable residents.  Whether it’s work relating to unemployment, poverty, tax policy or housing, DCFPI understands the impact that public policy has on our community.”

“In a time of fractured politics, Ed Lazere and his team at DCFPI have high credibility with all with whom they work.  The Mayor and his staff, the Chief Financial Officer, Agency staff and staff and members of the City Council all look upon DCFPI’s work as honest and fair.  DCFPI is a valuable resource to the advocacy community…”

We at the DC Fiscal Policy Institute are touched by this praise.  We work hard every day to conduct “research that matters for the District of Columbia.”  Our goal is to analyze the DC budget and policy decisions to make sure that the needs of low-income DC residents are considered in these debates.  When a group that works directly to assist DC’s neediest families finds our work helpful, this is a great sign that we are on the right track.

Thanks so much to the Healthy Families/Thriving Communities Collaborative Council for this award.

Calling all organizations that serve low-income families with children — DC’s Department of Human Services (DHS) needs you!  This is a tremendous opportunity to let DHS know what you see as the greatest challenges faced by families on TANF — and to identify the kinds of services DHS should provide to help these families.

DHS is engaged in a redesign of its Temporary Assistance for Needy Families (TANF) Employment Program, focused on improving its contracts for job readiness services that expire at the end of October 2010 and will need to be re-designed and re-issued.  The District’s TANF Program provides job readiness training, supportive services, and cash assistance to more than 16,000 DC households with children.

To help identify changes that should be made to the TANF program, the agency has created a survey to collect information from organizations that serve TANF recipients.  The survey will be available online and in hardcopy form until June 30.  The agency is specifically looking for information from organizations that provide outreach and client engagement, life skills and goal setting, job search and placement, education and training in preparation for employment, work experience, subsidized employment, and program and job retention supports to TANF recipients.

Please consider taking a few minutes to complete the survey.  DCFPI and our partners at organizations across the city have been working hard to ensure that the District’s TANF program is more responsive to low-income families’ needs.  Providing your feedback will help to ensure that more DC TANF recipients can access the education, job training, and supportive services they need to support themselves and their families.

Monday June 21^st

Committee of the Whole, Public Roundtable on PR 18-927, “Compensation and working conditions collective bargaining agreement between the district of Columbia and the Washington Teachers’ union, American Federation of Teachers Local No. 6, AFL CIO Emergency Approval Resolution of 2010,” 10:00 AM, Room 500

Tuesday June 22^nd

Committee on Public Safety and the Judiciary, Public Roundtable on “Continuing Overtime and Pay Problems in the Fire and Emergency Medical Services Department”, 1:00 PM, Room 120

Wednesday June 23^rd

Committee on Housing and Workforce Development, Public Roundtable on, “The Workforce Investment Council and the District’s One Stops”, 1:00 PM, Room 412

Thursday June 24^th

Committee on Finance and Revenue, Public Hearing, 9am, room 412, on the following:

• Bill 18-198, the “Allen Chapel A.M.E. Senior Residential Rental Project Property Tax Exemption and Equitable Real Property Tax Relief Act of 2009″
• Bill 18-505, the “Wayne Place Senior Living Limited Partnership Real Property Tax Exemption Act of 2009″
• Bill 18-628, the “2300 Pennsylvania Avenue Southeast Redevelopment Project Real Property Limited Tax Exemption Act of 2009″
• Bill 18-649, the “Dance Place Development Tax Abatement Amendment Act of 2010″
• Bill 18-696, the “Israel Baptist Church Senior Residential Rental Project Property Tax Exemption and Equitable Real Property Relief Act of 2010″
• Bill 18-762, the “Capital City Diner Tax Exemption Amendment Act of 2010″
• Bill 18-776, the “Southwest Church of Christ Real Property Tax Relief and Exemption Act of 2010″
• Bill 18-827, the “Popular Point Business District Incentive Act of 2010″
• Bill 18-828, the 800 Kenilworth Avenue Northeast Redevelopment Project Real Project Limited Tax Abatement Assistance Act of 2010″
• Bill 18-836, the “Fiscal year 2011 Tax Revenue Anticipation Notes Act of 2010′
• Bill 18-837, the “Fiscal Year 2010 Tax Revenue Anticipation Notes Act of 2010″
• PR 18-954, the” Howard Theatre Redevelopment Project Great Streets Initiative Tax Increment Financing Act of 2010″

Friday June 25^th

Committee on Human Services, Public Roundtable on “Status of the District’s Low Barrier, Transitional and Permanent Support Housing Programs for Adults, Youth and Families who are Homeless,” 10:00 AM, Room 500

The title of the DC Council hearing last week sounded mind-numbingly dull —  “District Funded Affordable Homeownership Programs: Long-term Housing Affordability Restrictions.”  Yet the topic was anything but that.

The underlying question at the roundtable was this:  If the District helps a low- or moderate-income household become a first-time homebuyer, and the home then increases in value, can the owner at some point sell the home at market value and reap the full gain in equity?  Or should there be some limit on the sales price and a requirement to sell the home to another low-income first-time buyer?

DCFPI and others testified that resale price restrictions are important to preserving affordable housing opportunities in DC.  But some witnesses at the hearing argued that these restrictions deny low-income homebuyers the chance that others have to use their home to build wealth.  DCFPI responded that a balanced approach is possible — one that allows buyers to gain equity while still keeping the home affordable for the next buyer.

Our testimony made three key points:

• Affordable homeownership opportunities in the private market are dwindling. The number of DC homes valued at $250,000 or less fell by two-thirds over the last decade, according to a February DCFPI analysis.  It therefore is important for the city to preserve its investments in affordable housing by keeping homes affordable as long as possible.  Any program that ultimately allows the owner to sell the home at market rate means that gains in affordable housing ultimately will be lost.

• When a program makes the difference between staying a renter and becoming a homeowner, it’s reasonable to ask something of the owner in return.  Even if the owner remains in their home for a long time, asking them to pass on that benefit by selling their home to another low- or moderate-income family is legitimate.

• Families can gain equity from owning a home even if the sales price is restricted.  With a 3 percent cap on annual increases in the sales price, the buyer of a $225,000 home would gain $45,000 after 5 years and $213,000 after 15 years, according to a DCFPI analysis.  This includes equity gains from the rising sales price and principal payments, tax savings, and other factors.

While sales price restrictions by definition mean that families will gain less equity from owning a home than otherwise, well-designed programs can allow owners to build wealth.  Over time, these gains could be enough for many families to purchase a home without a subsidy – at which point they would benefit fully from any increase in home value.

Councilmember Michael Brown, who heads the Housing and Workforce Development Committee that held the roundtable, pledged to explore this issue further and make recommendations.  We are fully confident that this can lead to new policies that create long-term affordability in homeownership programs while also helping families live out the American dream.

Today, the DC Council will complete its work on the FY 2011 budget with its second vote on the Budget Support Act.  In honor of the end of the budget season, DCFPI has summarized the key changes the Council made to the Mayor’s proposed FY 2011 budget.  We plan to follow up with a longer budget wrap-up when all FY 2011 budget documents are available.

Monday, June 14^th

• 11:00 AM, Committee on  Human Services, Public Oversight Roundtable on: A Discussion on Abscondence and DYRS Youth in Community-Based Placements, room 412

• 1:00 PM, Committee on Public Services and Community Affairs, Public Hearing, room 500, on:

• “Saving D.C. Homes from Foreclosure Act of 2010”, Bill 18-0691.
• “Equal Access to Employment for All Act of 2010”, Bill 18-0720.

Tuesday, June 15^th

• 10am, Committee of the Whole meeting, agenda can be found here.
• 11am, 38^th Additional Legislative meeting, (no agenda currently published but the Council is expected to take the second vote on the FY 2011 Budget Support Act).

Wednesday June 16^th

• 11:30 AM, Committee on Housing and Workforce Development Public Oversight Roundtable, on the Fiscal Year 2010 Summer Youth Employment Program, room 120.

A few weeks ago, we brought you our markup roundup: a list of critical programs for low-income residents in DC that were proposed to be cut in the Mayor’s FY 2011 budget.  During the DC Council’s committee markups, funding for some of these programs (child care, Access to Justice) was restored, while cuts to others (homeless services, Interim Disability Assistance) were maintained.   

How did these programs fare through the Council’s final budget vote?  Take a look at our updated table to find out.

It was one of the most frequently mentioned phrases in the budget negotiations this year: Yes, we are talking about oft-cited, “fund balance.” Hang in there with us: We know it sounds wonkish and obscure, but it’s actually quite easy to understand and pretty important to know about.

So what is the “fund balance,” and why should you care about it?

Essentially the fund balance is the District’s savings account. And just like many of us have done during this tough economic downturn, the District has dipped into its savings to help make ends meet. That’s the right thing to do at this time, but the rate of depletion has raised concerns that we are draining our nest egg too much and entering a perilous financial situation. We agree that the District’s savings account needs to remain abundant and strong, but the current proposal to rebuild it may go too far, too fast and may be potentially harmful to our city’s recovery from the Great Recession.

Certainly, DC should start making plans now to rebuild our fund balance.  But the proposal included as part of the Fiscal Year 2011 budget goes too far and too fast — by tying up all available surplus money in the near future and building up our reserves to levels we have never seen. Moreover, much of this money will be put into a fund that cannot be touched for fiscal emergencies. In other words, we are putting every penny we do not spend into a fund that we can’t tap into for a crisis. This limits our ability to respond to ongoing budget needs at a time when the District’s finances remain fragile.

Keep in mind that nearly all states have drawn down their fund balances in response to the recent recession.  DC’s fund balance, in fact, will be higher as a share of our budget at the end of 2011than in 43 states. That’s worth repeating: More than four out of five states have a lower percentage of savings compared to their operating budget than the District. These figures show that DC is doing a pretty good job managing its finances in the middle of one of the worst recessions in history.

The fund balance should reflect its name: A balanced, reasonable approach to keep the District on sound financial footing. Unfortunately, the current proposal to rebuild it is extreme and severely limits the District’s ability to responsibly manage its money.

The current proposal would create two new reserves. The first would put all surplus money into a “cash flow” fund until it reaches nine percent of our budget, or roughly $530 million. This fund would not be available for fiscal emergencies, making it essentially untouchable. This reserve would be far more than the District has ever had for these purposes. The previous maximum was $175 million.

The other fund would be an operating reserve of $120 million and could be used for fiscal emergencies, like spending pressures.  But the operating reserve wouldn’t be built up until after the $530 million cash flow reserve was built up, and that could be years and years away.

Whatever financial management rules we choose today to build up our fund balance, we will very likely not be able to undo going forward without risking an unfavorable view by Wall Street.  It is crucial then, that the District chooses fiscal rules it can live by.  Building up reserves to over $650 million by using all future surpluses will take a number of years.  It would be more prudent for the District to set-aside a smaller share of end-year surpluses — such as 50 percent — and to lower the total amount of reserves to be in line with more historical use.  This can help ensure we remain fiscally responsible and have the flexibility to deal with our budget needs now, and in the future.

DCFPI put a paper out today that walks through DC’s fund balance, the current proposals to rebuild it, and our recommendations.  To read the full report, click here.

The Week Ahead….

Monday, June 7
10 am: Committee on Government Operations and the Environment, room 412 Bill 18-777, the “Open Government Act of 2010″
This bill would establish a District of Columbia open government office, amend the District of Columbia Administrative Procedure Act, require agencies to develop biennial transparency plans, expand lobbyist and financial disclosure, and to establish a budget and spending transparency web site.

Also at 10: Committee on Public Safety and the Judiciary, room 500 PR 18-768, Child Fatality Review Committee Tara Taylor Confirmation Resolution of 2010

Wednesday, June 9
10 am: Committee on Finance and Revenue, room 123
An agenda has not been circulated.

2 pm: Committee on Housing and Workforce Development, room 500 PR18-00860 the “Whitelaw Disposition Approval Resolution of 2010″

3 pm: Committee on Housing and Workforce Development, room 500 Roundtable discussion on: District Funded Affordable Homeownership Programs: Long-Term Housing Affordability Restrictions

For those who watched the DC Council’s budget vote on May 26, the need for greater transparency in the budget process might be obvious. For those who didn’t have the chance to watch, here’s a highlight reel:

• A final draft of the budget was not put together until 2 am the morning of the vote, because there is no Council rule requiring the final budget document to be made public in advance. So when council members arrived to decide our city’s spending for next year, they had not had time to thoroughly read the bill they were voting on.
• There was a last-minute scramble to find money for critical safety net programs that still remained on the chopping block. From the dais, council members expressed confusion about what had and had not been funded, and where the money was coming from.
• That confusion was highlighted most during the frenzied, now-you-see it-now-you-don’t-now-you-see-it again approach to funding the District’s streetcar program. Supporters of the streetcar program did not realize that nearly $50 million in funding had been cut from the budget until an hour before they were scheduled to vote. The approved cuts were later reversed.

There were a few positive advances: Chairman Gray decided to televise two days of budget negotiations after a coalition of groups, including DCFPI, sent a sign-on letter asking him to make all full-council budget meetings open to the public. Until last year, these important sessions— in which council members discuss revenue and spending reductions— had been held in private. Last year, Chairman Gray allowed only members of the press to witness certain parts of the negotiations.

The single-lens camera in the Chairman’s conference room this year did allow the public to hear some of the questions and answers council members had about the fiscal year 2011 budget. Yet virtual participation is not full participation. We remain supportive of the Chairman’s efforts to televise and record the proceedings for those who cannot attend, but we believe the public should be able to witness the discussions in person. That’s why we are very supportive of the Open Government is Good Government bill introduced by Ward 4 Councilmember Muriel Bowser, which would make any meeting with a quorum of council members open to the public. A hearing on the bill will be held next month.

Until the rules change, the natural tendency of the Council will be to make budget changes up until the last minute. A common-sense provision would be to have a two- or three-day review period in which a final draft of the budget is circulated to council members as well as the public. That way, members can choose to carefully read and examine the budget and craft written amendments if they feel changes are necessary. It also gives DC residents a chance to weigh in one last time on how their tax dollars will be spent.

After nearly three fun-filled years at the DC Fiscal Policy Institute, I will be leaving at the end of July.  The sad news for me is that I’ll be leaving a wonderful group of people and really interesting work.  The good news for you — or maybe one of your colleagues or friends — is that we now have a job opening at DCFPI!

Will you be DCFPI’s next Policy Analyst?  Here’s the job announcement.  I hope you’ll consider applying and that you’ll forward our announcement to anyone you think might be interested.

Let me share my favorite things about working at DCFPI:

You’ll Work with Great Analysts and Advocates: I can’t say enough good things about my colleagues at DCFPI — they’re smart, funny, bake delicious desserts, and have taught me how to analyze budgets and advocate effectively.  I’ve also learned so much from working with the talented analysts from our parent organization, the Center on Budget and Policy Priorities.  There is nothing like having experts literally down the hall to help you understand the intricacies of rainy day funds or food stamps categorical eligibility.  And some of my most memorable moments at DCFPI have come from working with DC’s thoughtful, committed local advocates.  The nonprofit and legal services staff I’ve had the privilege to work with continually remind me of why our budget advocacy matters.

Your Research Will Make a Difference: I was attracted to DCFPI by the promise that my research wouldn’t sit on a shelf – that instead, it would be used to improve opportunities for low-income DC residents.  And that definitely has been the case.  In my time at DCFPI, I’ve seen our research and advocacy expand access to food stamps, convince the DC Council to televise their closed-door budget meetings, and ensure that low-income parents receive better job training services.

There Is No “Typical Day”: From analyzing property tax data to testifying at budget hearings to responding to questions from the media to releasing a new report, there are endless opportunities at DCFPI to learn and grow professionally.   I have really enjoyed the challenges of carving my own path at DCFPI and doing things I never would have expected, like facilitating focus groups with TANF recipients or talking about food stamps on Channel 8.

The job announcement tells you everything you need to know about applying.  We look forward to seeing the resumes roll in.

Here is a look at what we are watching in the first post-budget week….

Tuesday, June 1^st

Committee of the Whole Meeting, 10 am, room 500.  The agenda can be found here.

Legislative Meeting, immediately following the COW meeting.  The agenda can be found here.

Wednesday, June 2^nd

Public Hearing on B18-715, the Predatory Pawnbroker Regulation Act of 2010 and B18-516, the Financial Protection Amendment Act of 2009.  Committee on Public Services and Consumer Affairs, 10 am, room 500.

Well, we no longer can say the vote on the DC budget is coming.  It has, in fact come and gone, with a good amount of last-minute drama.  Chairman Gray shared his final budget proposal early Wednesday morning, which the Council then considered and voted on at a hearing that started on Wednesday morning.

The good news:  In response to a huge amount of advocacy, the Council restored funding – mostly at the last minute — to a number of programs critical to vulnerable DC residents that were facing large cuts.  These programs include:  Grandparent Caregiver, Rapid Housing, EITC, and adult job training.  With the Council’s actions, these services will not be cut in 2011 (they won’t be increased, either).

Beyond these, the Council added $1 million to the Local Rent Supplement Program, which will help 75 very low-income households get safe and affordable housing.

The bad news:  The Council left in place many of the cuts that had been proposed by Mayor Fenty.  They added $1 million to offset a small part of a $7 million cut to Interim Disability Assistance, the cash assistance program for residents with disabilities who are waiting for federal disability benefits to be approved and often have no other source of income.  The Council did not find any funds for emergency rental assistance, which will be funded below the amount DC provided in 2008, before the recession pushed thousands of more families to the financial edge.  And support for homeless services, which was cut this year by about $4 million, will stay at that level, even as the city faces up to the fact that it is turning away some homeless families with children who have nowhere to go.

The DC Council had a spirited debate around raising income taxes, after Councilmember Jim Graham introduced an amendment to create a new tax bracket for households above $350,000 in taxable income.  That tax increase would have allowed all of the cuts to be restored.  But the Council rejected that proposal on an 8-5 vote, with Councilmembers Michael Brown, Harry Thomas, Tommy Wells, and Marion Barry joining Councilmember Graham.  Phil Mendelson voted no but suggested that tax increases may need to be revisited if the budget falls out of balance again.

The Council’s vote wasn’t a statement about raising taxes generally, because they in fact supported two tax increases that helped preserve services.  In April, Jack Evans and Muriel Bowser proposed setting a new property tax rate on vacant properties, and the final Council budget package included expanding DC’s sales tax to soda.  (The Council also supported expanding  the sales tax to medical marijuana, though there was no revenue estimate tied to that and so it was not used to fund specific programs.) 

Instead, the Council rejected the specific notion of an income tax increase on DC’s highest income households.  This is unfortunate, considering the fact that DC’s top tax rate now starts at $40,000, many states have set new tax rates on high-income households, and noted economists have endorsed this approach as a sound way to address budget shortfalls while limiting the impact on the economy.

At 10 am, the DC Council will begin a special legislative session to vote on next year’s budget.

Last night, DC Council Chairman Vincent C. Gray released his changes to Mayor Fenty’s budget. The Council restored some funding, but missing from the list was money for some critical programs that help DC families struggling to stay afloat during these tough economic times.  We hope the Chairman and council members reconsider before they vote. These programs include:

Rapid Housing: $1.1 million cut, eliminating the program
This program keeps kids with their parents when the risk of homelessness threatens to force children into the foster care system.  It also supports children aging out of foster care who have nowhere to go.  Every dollar invested in it saves four dollars in foster care costs that year.  Eliminating this program, which helps 150 families per year, will push children into the foster care system.

Grandparent Caregiver: $2 million cut
This program keeps children out of foster care by giving grandparents financial support to take care of grandchildren.  This $2 million cut means 250 grandparents will lose assistance.  Also, assistance to grandparents could be cut as much as $380 per month.   More children will be forced to enter the foster care system.

Emergency Rental Assistance: $1.3 million cut
This program helps low-income families stay in their homes and out of shelters by providing one-time assistance to pay overdue rent or a security deposit or first month’s rent..  The $1.3 million cut will put another 650 families at risk of homelessness.

Interim Disability Assistance: $6 million cut
IDA provides temporary cash assistance to poor adults with disabilities while they wait for months or even years for their application for federal Supplemental Security Income to be processed.  For most recipients it is the only source of financial support they receive besides food stamps during that time.  The Council has restored only $1 million to the IDA program, leaving a $6 million cut.  Every $1 million restored would provide benefits for 300 low-income adults with disabilities.

Homeless Services: $4 million cut
Family homelessness increased 37 percent in two years.  Last winter, 200 families were crammed into space suitable for only 135.  This month, the Department of Human Services has turned away homeless families with children who have absolutely no other place to go.  Yet the budget for homeless services was cut $4 million in 2010 and kept at that level for 2011.

Local Rent Supplement Program: $1 million cut
This program provides housing vouchers for very low income families.  Many families that benefit from this program were homeless prior to participating in it.  $2 million was cut from LSRP last year.  The Council has restored $1 million.  Restoring the remaining  $1 million would help 75 families get safe and affordable housing.

Tomorrow, DC Council Chairman Vincent Gray and his 12 council colleagues will unveil their priorities for the upcoming year by voting on the Fiscal Year 2011 budget. Right now, that agenda includes severe cuts to some very critical services that can help our city move forward out of this devastating recession. As of Tuesday morning, the Council’s proposal slashes more than $4 million from emergency rental assistance and two other programs that help families live in safe and decent housing, $2 million from grandparent caregivers, and $7 million from disabled residents who cannot work. (To see a complete list, click here.)

Is there still time to make a better budget? Yes—but the Council needs to hear from you TODAY. Calling and e-mailing your council members can make a difference. They need to hear that you support a fair and responsible budget. We’re happy to help with a list of council phone numbers and emails here.

DCFPI, along with dozens of local organizations and residents, supports the efforts of DC Council members Jim Graham (D-Ward 1) and Michael Brown (I-At-Large), who are urging their colleagues to support a high-earners’ tax to help fund these important programs. A high-earners’ tax would add critical revenue to our budget not just this year, but next year and beyond.

There have been several proposals of how to structure the tax, but let’s take one proposed to start at $350,000. Two important things to note: This means that the tax would apply to DC filers with taxable income (income minus tax deductions, tax credits, etc.) above $350,000. Also married couples can split income and file separately in DC, so it would apply to $350,000 of individual taxable income, not household income.

Why a high-income tax? Right now, a DC resident making $40,000 in taxable income pays the same tax rate of 8.5 percent as a DC resident making $1 million. What does that mean? According to experts, taxes take a much bigger chunk out of the paychecks of middle-class DC residents than millionaires. Here’s a few numbers: Those making $33,000 to $57,000 pay 10.5 percent of their income in tax. Those making above $250,000? About 7 percent.

That’s a big difference.

We all want the District of Columbia to be the world-class city that Mayor Fenty aspires toward. Yet the proposed budget the mayor sent to the Council cut funding to many of the programs that help our neighbors move toward that goal: Money to help grandparents provide a loving home for their grandchildren. Emergency rent money to keep DC families in safe housing and off the streets. Assistance to help disabled residents who cannot work from being destitute.

In speaking at an event last month, DC Council Chairman Vincent C. Gray said, “We’ve tried to protect the safety net programs as the top priority and we will continue to do that.”  We take the chairman at his word. The council has made some changes to the mayor’s budget to restore funding, and we know he will keep this top priority in mind over these next 24 hours to craft a fair and responsible budget for his colleagues to vote on tomorrow.

The recession has had a crushing impact not only on DC families, but on DC’s budget. The proposed budget for 2011 is $600 million lower than in 2008. These are tough times, in which our elected leaders need to be fiscally prudent and responsible. We need to keep our focus on long-term goals of moving toward recovery and helping all our residents get back on their feet. Haphazard budget cutting will not move us toward that goal. We need to keep key investments in areas such as health and housing to do that.

The first vote on the Fiscal Year 2011 Budget Request Act and the Budget Support Act is Wednesday. We will recap the discussions in our next blog post a little later this morning….

To put the budget in context, and remind councilmembers of the reason why our revenue has shrunk and why human services has increased during this time, we are publicizing a new report: The Recession is Creating Hardship for Many DC Residents.

There are growing signs that the recession is creating hardship for thousands of DC families.  With unemployment in the District of Columbia at the highest level in more than 30 years, incomes have fallen, and poverty has increased.  DC households are having trouble feeding their families and paying housing bills.  These issues are covered in a new analysis by the DC Fiscal Policy Institute. 

Despite increasing hardship, support has been cut for several services that that could help residents hurt by the recession — including emergency rent and utility assistance.  The Council has worked to restore some cuts, but many remain in place. The Council has the opportunity to restore more of these cuts, as it completes work on the FY 2011 budget.

The report highlights several measures of rising hardship.

• Housing and Homelessness:  8,400 households had their electricity shut off in 2009, an increase of 43 percent since 2007.  Homelessness among families with children jumped by 37 percent between 2008 and 2010.
• Hunger:  Two of five DC households with children said that they had difficulty affording enough food in 2009.  More residents are turning to school lunches, and the number of food stamp recipients has grown 30 percent since the start of 2008.  Demand for emergency food assistance has jumped, too. The Capital Area Food Bank reports that 88,400 people in the DC region now receive emergency food assistance each week from a food pantry, or soup kitchen– 19,000 more than four years ago.  Some soup kitchens, like SOME, have seen a 20 percent increase in visitors in recent years
• Child abuse and neglect:  The stresses associated with poverty are considered major contributing factor to child neglect.  The number of reported cases of child neglect has increased by one-third over the past two years, according to District figures. 

 The District has faced challenges responding to this rising need, because the recession also has left the city with fewer resources, as tax collections have fallen.  Many services have been frozen or even scaled back — for example, the District has closed two social service intake centers even though there has been a huge increase in demand, and homeless shelters have been over capacity all winter.

The FY 2011 budget does little to restores these services.  The budget proposed by Mayor Fenty included no increases in homeless services or energy assistance.  It called for cuts to some services that help families in crisis, including emergency rental aid, legal assistance for low-income residents — such as those facing eviction — and the “rapid housing” program that works to keep children from entering the foster care system.  The Council worked to restore legal services funding, but most other cuts remain.

This is tough news for residents struggling to survive the recession.  The budget is now in the hands of the DC Council, which today will start final deliberations on the FY 2011 budget and will holds a final vote on May 26.  Responding to the growing hardship many residents are experiencing should be at the top of the Council’s list.

It’s Day Two of budget talks down at the John A. Wilson Building. As we mentioned yesterday, Chairman Gray has allowed the public to view the meetings via television and Internet. (If you were having problems with audio yesterday, we suggest viewing the meeting here.) We at DCFPI consider it must-see-TV, and we hope you will tune in and offer feedback to members about their proposals.

A recap of yesterday: Councilmembers discussed actions taken in committee markups. At the end, Chairman Gray previewed today’s agenda, which will include discussions of revenue (including the high-income earners’ tax) and a proposal to make across-the-board cuts by either 3 or 1 1/2 percent.

We will provide a thorough recap of Day Two tomorrow! Stay tuned–and tune in!

It’s not exactly a revolution, but for DC government it is quite revolutionary: The DC Council’s budget deliberations, which in previous years have been held behind closed doors away from public view, will be televised today on Channel 13 live as well as streamed on the Internet. The meeting will start at 10 this morning. Room 123 of the John A. Wilson Building will show the hearings live for members of the public who wish to view them at City Hall.

Chairman Gray decided to televise the proceedings following a request from 40 organizations and citizens across the city, including DC Fiscal Policy Institute, to make the meetings open to the public. Last year, Gray allowed the press to view the proceedings. We are pleased Chairman Gray took this important step toward greater transparency in DC government.

Gray is one of seven co-sponsors of a bill currently before the council that would make any meeting in which a quorum of DC Councilmembers are present, such as the budget deliberations, open to the public by law. We hope the “Open Government is Good Government” bill, introduced by Councilmember Muriel Bowser, will have a hearing soon.

In today’s meeting, councilmembers will likely discuss programs they wish to restore money to that did not get addressed in committee markups as well as revenue proposals. Stay tuned for a summary and update tomorrow!

The District has balanced fourteen budgets in a row—and we will soon pass our fifteenth for FY 2011. The city has received an “A” from all three bond rating agencies for the last six years. Contrary to what some policymakers have suggested, these are not the same conditions that led to a federal takeover of our government in the mid-90s.

This is the cause our fiscal crunch.

DC has made major cuts in response to the recession. More than $600 million has been cut from DC’s budget since FY 2008 to help close budget gaps that have been created as revenues have fallen.  Nearly 3,000 DC government positions have been eliminated. Less than a year ago, the Mayor and Council approved $49 million in cuts to human services and low-income programs. The cuts included the closing of two of the District’s seven social service centers and the elimination of a dozen and a half staff positions. The Washington Post later reported days-long waits at social service centers for residents to get their applications for assistance processed. 

At least one councilmember has suggested that the District solve its budget crisis by implementing an additional three percent across-the-board cut to the city’s government. Yet such cuts could hurt us in the long run, by disinvesting in programs and services that will help us move toward recovery. Other cities and states  have realized this recession-driven crisis cannot be solved by blunt budget cutting. More than 30 states have taken a balanced approach by both raising taxes and cutting spending. They understand this is the responsible approach.

What we need to be concerned about is how best to position our city for recovery from this awful downturn. That requires both strengthening our tax collections and being judicious in our spending.

A few facts to keep in mind:

*At least 33 states have raised taxes on income, business, sales, alcohol, tobacco, motor vehicles, and gasoline to help mitigate the need for deep, destructive budget cuts.

*Noted economists have said that tax increases, especially targeted on high income households, are the preferable way to help balance a budget in recession because it has the smallest effect on spending in the local economy. 

*Preserving services that help residents keeps money flowing in the local economy  helps maintains public investments that are important to the city’s long-term well-being.

Research shows that states which raised taxes during the last recession actually experienced better-than-average economic growth post- recession than states that did not raise, or cut, taxes. 

The following proposals are responsible measures to deal with our current fiscal crisis and set up conditions for growth in the future.

Income Tax: Right now, the top 1 percent of earners in DC—those with income greater than $1.543 million—pay 6.4 percent of their income in taxes. Yet those who earn between $33,000 and $57,000 in income pay 10.5 percent. This disparity isn’t healthy for our city.

Raising income taxes on households earning more than $200,000 would apply only to only the top 5 percent of DC households. For 95 percent, there would be no tax increase. DC’s top income tax rate now starts at just $40,000 of taxable income.  Other states have found that high-income tax increases have proven to be effective ways to raise needed revenue, and the impact on migration has been negligible. The total revenue raised through the new rates would mean more than $40 million to protect DC’s schools, health care, and other vital public services.

Out-of-State Bonds: Only DC and Indiana exempt out-of-state bond holders from tax on their bond interest. There’s a simple reason. The exemption creates an incentive for residents to invest in infrastructure in San Francisco or Chicago, not DC.

Sales Tax: DC’s sales tax was created at a time when people spent most of their money on goods. That’s not true anymore. A recent study found that services—such as dog grooming, health clubs, and cleaning—have grown from 30 to 45 percent of personal household spending. And as that share grows, DC sales tax collections will continue to weaken unless we decide to tax what we actually buy.

Hard choices involve looking at both spending and revenue. The Council should consider both as they make their final deliberations on the FY 2011 budget.

It’s another busy week down at the Wilson Building as the DC Council decides how to shape the Fiscal Year 2011 budget.

First, a few words about last week. Each of the DC Council’s twelve committees met to recommend changes to the budgets of agencies that they oversee.  Known as “markups,” these meetings are the first public indication of the Council’s plans for the FY 2011 budget. We’ve highlighted some of the key changes made by the committees in the chart below. There is also a short list of proposals on revenue.

This week, the DC Council will likely meet behind closed doors to discuss the budget. DCFPI, along with 40 other organizations and individuals, have sent a letter to Chairman Gray asking him to make these meetings open to the public. The first meeting is scheduled for Wednesday.

Our “markup roundup” is below:

Revenue Proposals

Expanding the Sales Tax to Sports Tickets and Medical Marijuana: A proposal from the Committee on Libraries, Parks and Recreation would levy a tax on tickets to sporting events of 50 cents for tickets that cost $10.02-$25.01 and $1 for tickets that cost $25.02 or more.  (Tickets valued at $10.01 or below would be exempt from the tax, unless more than 10,000 people attend the event.)  The tax on ticket sales would be used to fund recreation programs.  The Committee on Health also proposed to extend the 6 percent sales tax to medical marijuana. 

Replacing a Proposed Tax on Hospitals with a Fee on Hospital Beds: The Committee on Health recommended rejecting the Mayor’s proposed 1 percent tax on hospital paient revenues and instead recommended a $1,500 assessment per licensed hospital bed.  The hospital bed assessment would raise an estimated $6.3 million, compared to the $25.3 million that would have been raised by the tax on hospital revenues.

Reintroducing a Vacant Property Tax: The Committee on Public Works and Consumer Affairs recommended the reestablishment of a 5 percent tax on vacant property and a vacant property registration fee of $250.  Properties actively listed for sale and rent, undergoing construction, facing economic hardship, pending predevelopment administrative review, and those subject to probate would be exempt from the tax.  Last year, the Council voted to increase the tax on vacant and blighted properties to 10 percent, but later reduced the tax to 5 percent and amended the law to exclude vacant properties. 

Elimination of the E911 Fee: The Committee on Public Safety and Justice recommended eliminating the mayor’s proposed E911 fee increase.

Today is the day! Council members need to hear from YOU and YOUR ORGANIZATION that YOU SUPPORT WAYS TO ADD REVENUE  to next year’s budget to preserve critical investments in our city and its future. Please send that message by calling and emailing the DC Council today.

WHY DO WE NEED TO ADD REVENUE?

As a result of the Great Recession, DC’s expected revenues have fallen by more than $1 billion.  The proposed budget from Mayor Fenty  makes painful reductions to child care, job training and help for our most vulnerable residents, as well as takes big hits to environmental programs, public safety, and public works.

A cuts-only approach will not move us toward recovery. We need a balanced approach that includes revenues to invest in our city and get us back to work and prosperity.

WHY DO YOU NEED TO CALL ON THURSDAY?

Some council members — but not all — have  expressed support for parts of a revenue package supported by the Fair Budget Coalition. We need you to contact the DC Council to ensure we have enough support for a budget passed with progressive revenue increases. These include proposals to:

• increase the income tax for the wealthiest.  Right now, DC residents making $40,000 a year and those who make $1 million pay the same income tax rate.  Increasing the rate on those making more than $200,000 a year would raise $40 million and impact less than 5 percent of households.
• end DC’s tax exemption for interest paid on out-of-state bonds.  Only DC and Indiana provide income tax breaks for residents that invest in other states’ infrastructure.  Eliminating this exemption would raise $17 million and give District residents an incentive to invest in DC’s roads and bridges.
• modernize the sales tax to include more services.  DC’s sales tax was created at a time when people spent more on goods than services. Today it’s the other way around. Adding more services to DC’s general sales tax — like pet grooming, health club memberships, and theater tickets — would raise more than $14 million.

WHAT YOU CAN DO

1. MOST IMPORTANT: Call or email DC Council Chairman Vincent C. Gray (202-724-8032, vgray@dccouncil.us) and At-Large DC Council member Kwame Brown (202-724- 8174, kbrown@dccouncil.us) Chairman Gray and Councilmember Brown have not announced their positions on these important revenue increases. Tell them you support adding revenue, and you want them to as well!  See sample message below.

2. Send a similar email to the full council at dccouncil@dccouncil.us

3. Follow up with a phone call to your Ward Councilmember (If you don’t have time to call, your emails/letters will still have an impact!). 

Sample Phone Message/Email

Dear Council member:

I want the DC Council to invest in our city by adding revenue to the Fiscal Year 2011 budget to avoid deep cuts to programs that help our residents and city recover from the recession.  I am concerned about budget cuts that raise taxes on low-income working families, cut funding for health care providers, make work harder to find by cutting child care and workforce development programs, AND _____. [PLEASE INSERT CUTS YOU ARE CONCERNED WITH AS WELL]

 I support sensible proposals that will make our tax system stronger and more fair while at the same time allow us to avoid budget cuts that hurt our neighbors and our community. I urge you to: increase the income for the wealthiest, end DC’s tax exemption for interest paid on out-of-state bonds, and modernize the sales tax to include more services .  (you can use supporting facts from above.)

Thank you!

Council members need to hear from YOU and YOUR ORGANIZATION that YOU SUPPORT WAYS TO ADD REVENUE to next year’s budget  to preserve critical investments in our city and its future.  

We need you to CALL AND EMAIL the DC Council on THURSDAY, MAY 13, to impact the upcoming budget vote.

WHY DO YOU NEED TO CALL ON THURSDAY?

Some council members —  but not all — have  expressed support for parts of a revenue package supported by the Fair Budget Coalition. We need you to contact the DC Council to ensure we have enough support for a budget passed with progressive revenue increases. These include proposals to:

• increase the income tax for the wealthiest.  Right now, DC residents making $40,000 a year and those who make $1 million pay the same income tax rate.  Increasing the rate on those making more than $200,000 a year would raise $40 million and impact less than 5 percent of households.
• end DC’s tax exemption for interest paid on out-of-state bonds.  Only DC and Indiana provide income tax breaks for residents that invest in other states’ infrastructure.  Eliminating this exemption would raise $17 million and give District residents an incentive to invest in DC’s roads and bridges.
• modernize the sales tax to include more services.  DC’s sales tax was created at a time when people spent more on goods than services. Today it’s the other way around. Adding more services to DC’s general sales tax — like pet grooming, health club memberships, and theater tickets — would raise more than $14 million.

WHAT YOU CAN DO

1.    MOST IMPORTANT: Call or email DC Council Chairman Vincent C. Gray (202-724-8032, vgray@dccouncil.us) and At-Large DC Council member Kwame Brown (202-724-8174, kbrown@dccouncil.us). Chairman Gray and Councilmember Brown have not announced their positions on these important revenue increases. Tell them you support adding revenue, and you want them to as well!  (See Sample Message below.)

2. Send a similar email to the full council at dccouncil@dccouncil.us

3. Follow up with a phone call to your Ward Councilmember (If you don’t have time to call, your emails/letters will still have an impact!). 

Sample Phone Message/Email

Dear Council member Brown:

I want the DC Council to invest in our city by adding revenue to the Fiscal Year 2011 budget to avoid deep cuts to programs that can help our residents and city recover from the recession.  I am concerned about budget cuts that raise taxes on low-income working families, cut funding for health care providers, make work harder to find by cutting child care and workforce development programs, AND _____. [PLEASE INSERT CUTS YOU ARE CONCERNED ABOUT]

 I support sensible proposals that will make our tax system fairer while that at the same time allow us to avoid budget cuts that hurt our neighbors and our community. I urge to you to: support an increase in the income for the wealthiest, end DC’s tax exemption for interest paid on out-of-state bonds, and modernize the sales tax to include more services.  (you can use supporting facts from above.)

Sincerely yours,

xx

Washington Post columnist Petula Dvorak agrees that adding revenue is the right approach: http://www.washingtonpost.com/wp-dyn/content/article/2010/05/10/AR2010051002404.html

DCFPI, along with the Fair Budget Coalition, will be sponoring a call-in day on Thursday, May 13, to urge the DC Council to include revenue increases in next year’s budget. We need your help to preserve money for child-care, job training, affordable housing and other important programs. Make your voice heard!

Here’s some helpful information on the event:

The DC Council will vote on the Fiscal Year 2011 budget in just two weeks.  Council members need to hear from YOU and YOUR ORGANIZATION that YOU SUPPORT WAYS TO ADD REVENUE to next year’s budget  to preserve critical investments in our city and its future.  

We need you to CALL AND EMAIL the DC Council on THURSDAY, MAY 13, to impact the upcoming budget vote.

WHY DO WE NEED TO ADD REVENUE?

As a result of  the Great Recession, DC’s expected revenues have fallen by more than $1 billion. This has resulted in significant cuts in affordable housing, workforce development, and child care at the very same time that DC residents struggle with record unemployment. The proposed budget from Mayor Fenty  makes painful reductions to child care, job training and help for our most vulnerable residents, as well as hits environmental programs, public safety, and public works.

A cuts-only approach will not move us toward recovery. We need a balanced approach that includes revenues to invest in our city and get us back to work and prosperity.

WHY DO YOU NEED TO CALL ON THURSDAY?

Some council members —  but not all — have  expressed support for parts of a revenue package supported by the Fair Budget Coalition. We need you to contact the DC Council to ensure we have enough support for a budget passed with progressive revenue increases. These include proposals to:

• increase the income tax for the wealthiest.  Right now, DC residents making $40,000 a year and those who make $1 million pay the same income tax rate.  Increasing the rate on those making more than $200,000 a year would raise $40 million and impact less than 5 percent of households.
• end DC’s tax exemption for interest paid on out-of-state bonds.  Only DC and Indiana provide income tax breaks for residents that invest in other states’ infrastructure.  Eliminating this exemption would raise $17 million and give District residents an incentive to invest in DC’s roads and bridges.
• modernize the sales tax to include more services.  DC’s sales tax was created at a time when people spent more on goods than services. Today it’s the other way around. Adding more services to DC’s general sales tax — like pet grooming, health club memberships, and theater tickets — would raise more than $14 million.

More information on who to call and what to say tomorrow!

The proposed Fiscal Year 2011 budget moves into the DC Council committee markup phase this week. All 12 committees will meet between Tuesday and Thursday in the DC Council chambers, Room 500.

Monday, May 10
No DC Council meetings scheduled.

Tuesday, May 11
DC Council Committee markups:
10 am, Committee of the Whole
1 pm, Committee on Libaries, Parks and Recreation
3 pm, Committee on Public Works and Consumer Affairs

Wednesday, May 12
DC Council committee markups:
10 am, Committee on Finance and Revenue
12 pm, Commitee on Housing and Workforce Development
2 pm, Committee on Health
4 pm, Committee on Aging, including Taxicab Commission

Thursday, May 13
DC Council committee markups:
10 am, Committee on Human Services
12 pm, Committee on Public Safety
2 pm, Committee on Government Operations and the Environment
4 pm, Committee on Economic Development
6 pm, Committee on Public Works

Friday, May 14
No meetings scheduled.

Mayor Fenty’s proposed FY 2011 budget would cut child care assistance for low-income working families by $4 million. On April 27, DCFPI joined Empower DC and other child care advocates to testify against the cut, because the reduction would make it harder to serve families needing child care and to improve the quality of care provided in DC.

This isn’t the first time the District’s child care subsidy program has been cut.  Since FY 2007, funding for child care in DC has fallen by nearly a quarter, or $27 million, after adjusting for inflation.

The Fenty administration claims that the most recent cuts are justified because fewer families are applying for child care vouchers.  But according to a 2008 study of the child care market in DC, nearly 10,000 children under age 3 across the city were on a waiting list with a child care provider.  (This includes both families with child care subsidies and families seeking market-rate child care.)  About 86 percent of child care centers have waiting lists. This suggests that some families might be discouraged from applying for vouchers because of the long wait to actually receive a child care spot.

The cut also would make it hard to address other shortcomings in DC’s child care program, particularly low reimbursement rates.  Stagnant rates have made it difficult for child care providers participating in the subsidy program to keep up with the demand for their services.  Since 2006, market rates for child care services at providers who don’t participate in the subsidy program have increased by 14 percent, while providers participating in the subsidy program haven’t received an increase in their reimbursement rate since 2004.  The market rate study concludes that low reimbursement rates create a risk that “more [child care] providers, particularly those with higher quality programs, may opt out of the system.”

And, indeed, we’ve seen a decline in the number of active, licensed providers operating in the District.  From 1998 to 2008, the number of active licensed family providers decreased from 193 to 162, and the number of active licensed centers decreased from 345 to 329, according to the market rate study.  Beyond affecting the number of providers, low reimbursement rates also make it hard for child care providers to invest in their staff and facilities in ways that improve the quality of care.

Child care vouchers make it possible for low-income families to find and keep a job and for children to learn in a safe and healthy environment.  Given the current challenges facing this program, now is not the time to scale it back.

In the past 24 hours, DC Councilmembers have been inundated with emails from local businesses and individuals, including many members of the DC yoga community, protesting a proposal to expand the sales tax to more services in DC.   Expanding the sales tax to a variety of services is one of several revenue-raising measures supported by DCFPI and more than three dozen other organizations to help restore cuts to core services. 

The District’s sales tax is a critical source of revenue, paying for more than one-fifth of the DC budget.  It supports recreation centers and afterschool programs and helps make sure our trash is picked up on time and our streets are clean.  It helps make DC a better place to live and do business. 

But the strength of our sales tax has declined.  The sales tax was designed to tax personal consumption, which when the tax was created, largely consisted of goods.  However, over the past 40 years, personal consumption increasingly has shifted toward services.  To address this, DC – like many other states — began extending its sales tax to more services.  But there are still many that are left out. 

This creates a whole host of unfair situations.  A person who buys a treadmill pays the sales tax while a person who buys a health club membership doesn’t.  A parent who buys diapers for their child does, but a parent who uses a diaper service doesn’t.  Businesses that sell mainly services enjoy a competitive advantage over those that sell goods. 

You pay tax on your yoga mat, your leggings, your water bottle — even a yoga DVD.  Why do you not pay a tax on a yoga class?

The proposal to expand the sales tax is not about singling out yoga studios or any other business for that matter.  Instead, the goal is to make sure the sales tax applies broadly to consumer purchases, strengthening the sales tax and eliminating favoritism that exists with some purchases taxed and others not.  Also, it’s hard to argue that yoga shouldn’t be taxed because it promotes health.  By that standard, the sales tax shouldn’t apply to books, either, because they promote literacy.  That logic leads us in the wrong direction, toward a weaker sales tax. 

While the impact on businesses certainly should be taken into account, both research and logic suggest customers are unlikely to take their business elsewhere when the sales tax is applied to locally-purchased services.  It seems unlikely that a DC resident would give up their favorite yoga class and travel miles out of the city to a non-DC studio just to avoid a few dollars a month in sales taxes.  At 6 percent, the sales tax charges themselves are quite nominal.  Dropping into a yoga class for $18?  With sales tax, you’d pay $19.08. 

Allowing our sales tax base to weaken further hurts the family- and business-friendly city we all are working hard to create. Particularly at a time when the District doesn’t have enough resources to preserve core services, expanding the sales tax base to cover more services makes sense.

Yet another victim of DC’s recession-led budget crisis: community health centers.

In an effort to save money, the Mayor’s proposed budget for FY 2011 would entirely restructure — and nearly defund — a fairly new and creative program that helps health centers get affordable medical malpractice insurance.  The move has the potential to put many of DC’s non-profit community health centers at risk for closure, or severely limit their ability to provide services to the community.

Malpractice insurance is a challenge for all health professionals, but especially for community health centers because many operate on a shoestring budget and rely in part on volunteer medical staff.  Finding medical malpractice insurance to cover volunteers can be nearly impossible.

Recognizing these difficulties, the District created the “captive insurance” program in 2008.  It provides a way for the city’s  non-profit community health care centers to pool their risk, cover their volunteers, and obtain medical malpractice insurance at a lower cost than they would find in the private market.

Under the FY 2011 budget, the District would stop providing insurance and instead provide small grants non-profits must apply for, and make them return them to the private marketplace to buy medical malpractice insurance.  The program would be cut by $8 million, leaving just $1 million for grants to support five to six community health care centers.

Many centers have concluded that this cut would force them to reduce services and could put some at risk of closure.  Malpractice insurance would be much more costly, and many insurance packages may not cover volunteers, leaving clinics that rely on volunteer medical providers possibly  without options for insurance or having to cut back on the services those volunteers provide.

Unfortunately, none of the health centers were consulted by the DC Government before the change was announced.  This is despite the fact that there is in place a captive insurance program advisory council that is made up of stakeholders, including at least one representative of the health center providers.

DC’s non-profit community health centers provide health care for many of the Districts’ uninsured and under-insured residents.  Without the care these health centers provide, many of these DC residents would wind up in the emergency rooms of hospitals, raising the costs of health care for everyone.  It is in the District’s best interest to work with these health centers on a program that allows them to obtain the insurance they need to continue operating, without compromising their ability to provide services to the community.

DCFPI, along with other members of the Fair Budget Coalition, believe in a balanced approach to financing our city’s needs in these tough economic times. We need to make sensible choices, which include key investments that will help us toward recovery and future growth.

That’s why we support a package of revenue increases to provide money for job training, child care, and other programs that make our neighbors productive. One proposal is the so-called millionaire’s tax, an increase in the income tax for D.C.’s high earners.

Want to know how it works, and why we should join about 10 other states who have recently implemented such a proposal?

Read DCFPI’s recently published paper on the high income tax!

Join DCFPI, the Fair Budget Coalition and many District residents today at the John A. Wilson Building as we urge the DC Council to support targeted and strategic revenue increases!

WHAT:  Rally to protest cuts to DC’s safety net services

WHEN:  11:30 – 12:15 May 5, 2010 

WHERE:        John A Wilson Building, 1350 Pennsylvania Ave NW

WHO: Speakers will include safety net service recipients; Peter Edelman, Georgetown Law; Robert Egger, DC Central Kitchen; Tommy Wells, DC Councilmember; and other Councilmembers who support protecting the City’s safety net services in the upcoming budget deliberations.

The Fiscal Year 2011 budget remains hot on the front burner this week. The DC Council continues with its budget oversight hearings….

Monday, May 3
9:30 am: Committee on Public Services and Consumer Affairs, budget oversight hearing, Room 412
Agencies under review:
Office of the People’s Council
Office of Tenant Advocate
Department of Consumer and Regulatory Affairs

10 am: Committee on Libraries, Parks, and Recreation, budget oversight hearing, Room 500
Agencies under review:
District of Columbia Public Libraries

4 pm: Hearing, Committee on Health, Room 123
B18-674: Medicaid Benefits Protection Amendment Act of 2010

Tuesday, May 4
10 am: DC Council Legislative Meeting, Room 500

Wednesday, May 5
10 am: Committee on Economic Development, Room 123
No agenda published

10 am: Committee on Human Services, budget oversight hearing, Room 412
Agencies under review:
Children and Youth Investment Trust

10 am: Committee on Housing and Workforce Development, budget oversight hearing, Room 500
Agencies under review:
District of Columbia Housing Authority
Department of Housing and Community Development

1 pm: Committee on Public Works and Transportation, budget oversight hearing, Room 120
Agencies under review:
Department of Public Works

Thursday, May 6
10 am: Committee on Economic Development, budget oversight hearing
Agencies under review:
Deputy Mayor for Planning and Economic Development

10am: Committee on Aging and Community Affairs, budget oversight hearing, Room 500
List of agencies:
Office on Aging
Office of Veterans Affairs
Office of Asian and Pacific Islander Affairs
Office of Community Affairs to include: Office of African Affairs; Office of GLBT Affairs; Commission on Women; Mayor’s Office of Community Relations and Services; Office of Women’s Policy and Initiatives: Youth Advisory Council.

Friday, May 7
10 am: Committee of the Whole, Room 500
Fiscal Year 2011 Budget Request Act and Budget Support Act of 2010

10am: Committee on Government Operations and the Environment, budget oversight hearing
Agencies under review:
Office of Disability Rights
Office of the Chief Technology Officer
Contract Appeals Board
Board of Elections and Ethics
Office of Campaign Finance
District of Columbia Retirement Board
Department of Human Resources

The recession that has had a crushing effect on DC’s finances now appears to be affecting services for people with disabilities, who make up 1 in 5 District residents.  Proposed cuts in the FY 2011 budget have the potential to add up to big reductions in services for DC residents with disabilities, including employment services, temporary cash assistance for poor residents with disabilities, and monitoring compliance with disability rights laws. 

Cutting Employment Programs for Residents with Disabilities:  The District’s Rehabilitative Services Administration (RSA) helps DC residents with disabilities obtain job training and employment.  The FY 2011 budget proposes to cut DC’s contribution by $2 million, which also could result in a loss of up to $2 million in future federal funds. 

The $2 million cut could result in fewer people receiving services and potentially, a waiting list. Additionally, unless RSA can obtain a federal exemption or find spending at other agencies to count toward its share, federal funds in 2012 will be cut by $2 million. RSA indicates it will use carry-over dollars from 2010 to prevent service reductions in 2011, but with disproportionately high unemployment among people with disabilities, it’s surprising that RSA will have any unspent funds in 2010.

Reducing Cash Assistance to Residents with Disabilities Who Cannot Work (Interim Disability Assistance): DC residents whose disabilities prevent them from working are eligible for a monthly Supplemental Security Income (SSI) benefit from the federal government.  However, it often takes several years for the federal government to approve SSI benefits, leaving applicants without any income during this period.  To fill this gap, the District (and 38 states including MD and VA) provides Interim Disability Assistance, a small monthly cash assistance benefit to pay for rent and other basic needs while they wait for SSI approval. 

The FY 2011 budget would cut IDA by $7 million, forcing the program to cap the number of individuals served at 1,500 per month — a reduction of nearly half.  It also would require the city to continue a waiting list that was established in June 2009.  Operating a waiting list for a program that provides support while residents are waiting for federal benefits to be approved defeats the purpose of IDA and likely will discourage individuals from applying for assistance.  Moreover, residents on the waiting list are left at risk of eviction and other hardship while they wait for their applications to be processed.

Decreasing Funds for Monitoring DC’s Compliance with Disability Rights Laws:  DC’s Office of Disability Rights (ODR) ensures that DC is complying with the Americans with Disabilities Act as well as other local and federal disability laws.  ODR’s budget for these activities is proposed to decrease by 11 percent, including reductions to funding for sign language interpretation services.

The affected services are critical to the quality of life for a large number of DC residents with disabilities and their families.  As the District wrestles with the impacts of the recession, preserving services such as these are critical to the wellbeing of DC residents now and into the future.

Yesterday, we introduced you to the Invest in DC campaign and a package of revenue enhancements that DC can use to help balance its FY 2011 budget.  We hope that you’ve taken a few minutes to sign onto the campaign as an individual or organization to urge the DC Council to include revenue increases as part of a balanced approach to the recession. 

Recently, we’ve fielded lots of good questions about the District’s revenues, like: How much revenue has DC lost during the recession?  Which programs are proposed to be cut in the FY 2011 budget?  Which services should we include in a sales tax expansion? 

To continue the conversation, we’ve created a new page on our website filled with revenue resources, including:

• A chart showing the decline in the District’s revenue during the recession
• A list of cuts to critical services for DC residents proposed in the Mayor’s FY 2011 budget
• Detailed information about each of our revenue proposals: increasing the income tax for the wealthiest, ending DC’s tax exemption for interest on out of state bonds, updating the sales tax to include more services, increasing the minimum tax on businesses, bringing parity to the alcohol tax, and tapping into DC’s “Rainy Day Fund”  

Check it out, and keep the revenue questions coming!

The economic recession has dealt us a big blow: Unemployment skyrocketed, assets such as homes and retirement plans shrunk in value, and all of a sudden it seemed a lot tougher to make ends meet. That’s true for you and me, and it’s true for the District as well, due to a sharp drop in tax revenue over the last three years. So now, when residents look to our city government for help and support due to the downturn, we don’t even have enough resources to meet our basic needs.

This is not the time, however, to cut back on investments that have improved DC’s quality of life.  In order to get through to better times ahead, we need to preserve the foundation that will get us there: affordable housing, public education, healthcare, and a safe and reliable transportation system.

It’s a tough challenge to put together a budget in this climate. It calls for a balanced approach that looks at ways to add resources to keep these critical investments in place. That’s why a coalition of DC taxpayers is asking the city council to support and approve a package of revenue proposals as part of the Fiscal Year 2011 budget.

Invest in DC is a group of DC labor leaders, religious organizations, social service advocates and plain ol’ District residents who are concerned about the wide array of cuts that have been made to emergency housing, job training, libraries, childcare and other critical services. DC’s latest budget proposal fails to make adequate investments in Metro, the circulatory system that keeps our city’s heart pumping.

These cuts hurt families struggling to stay afloat. And skimping on infrastructure jeopardizes DC’s ability to make the most of prosperity when it returns.

It is time to look to the future, and invest through new sources of revenue.  DC should join a majority of states that are taking a balanced approach to the recession — using reserve funds and strategically raising taxes— because they realize there is no single way to solve a problem this big.

Invest in DC supports a package of revenue enhancements that will:  

• Increase the income tax for the wealthiest.  Right now, DC residents making $40,000 a year and those who make $1 million pay the same income tax rate.  Increasing the rate on those making more than $200,000 a year would raise $40 million and impact less than 5 percent of households.
• End DC’s tax exemption for interest paid on out-of-state bonds.  Only DC and Indiana provide income tax breaks for residents that invest in other states’ infrastructure.  Eliminating this exemption would raise $10 million and help give District residents an incentive to invest in DC’s roads and bridges.
• Update the sales tax to include more services.  DC’s sales tax was created at a time when people spent more on goods than services. Today it’s the other way around. Adding more services to DC’s general sales tax — like pet grooming, health club memberships, and theater tickets — would raise more than $14 million.
• Increase the minimum tax on businesses.  Nearly two-thirds of DC businesses pay only $100 a year in taxes.  Increasing the minimum tax to $250 would raise $3 million or more.  
• Bring parity to the alcohol tax.  Alcohol consumed at a restaurant is taxed at 10 percent.  Bought at a store, it’s taxed at 9 percent.  Setting both rates at 10 percent would raise $3 million. 
• Tap into DC’s “Rainy Day Fund.”  The city has set aside almost $300 million in reserve funds for tough times, but overly restrictive federal rules keep that money off limits.  City leaders should work with Congress to ease these onerous rules.

We encourage you to sign on to the Invest in DC campaign at www.fairbudget.org, and call your council members to voice your support.

This budget season, tell them: “It’s best to invest!”

The DC Council continues its budget oversight hearings and DCFPI and the DC Alliance of Youth Advocates sponsor a budget briefing on the Children Youth Investment Trust Corporation. 

Monday, April 26

Department of Mental Health Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 412

Tuesday, April 27

Office of the State Superintendent for Education Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 412

Office of Public Education Facilities Modernization, 3 PM, John A. Wilson Building, Room 412

Wednesday, April 28

Office of the Chief Financial Officer Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 500

Thurdsay, April 29

Department of Healthcare Finance Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 500

Friday, April 30

DC Public Schools Budget Oversight Hearing (government witnesses only), 10 AM, John A. Wilson Building, Room 500

Children and Youth Investment Trust Corporation Budget Briefing, 4-5:30 PM, CIYTC Lobby Conference Room (1400 16th Street NW), RSVP to Info@dc-aya.org.  For additional information, contact Jennifer Leonard at Jennifer@dc-aya.org.

On Tuesday, the DC Council took a big step to help jobless DC residents get more assistance — a move that also will allow the District to receive critical federal dollars during these tough economic times.  It’s a clear win-win situation.

By a unanimous vote, the council approved Bill 18-455, “Unemployment Compensation Reform Act of 2009.” The bill makes several changes to the city’s unemployment insurance system, which will increase benefits for specific groups of jobless residents. The changes will give: 

• More Assistance for Workers with Children and other Dependents:  Jobless workers receiving unemployment compensation will get an additional $15 weekly payment for each dependent relative, up to $50.
• More Assistance for Jobless Workers in Training. Unemployed workers who have exhausted regular unemployment benefits will be able to continue receiving benefits if they are enrolled in training for a high-demand occupation.
• Unemployment Assistance to Workers Who Leave their Jobs for Compelling Family Reasons. Workers who must leave their jobs due to a spousal relocation, to care for an ill family member, or to escape domestic violence are now eligible for unemployment compensation.

 
Adopting these changes allows the District to qualify for $18 million in federal stimulus funds, which will help cover the costs of the expansions. 

The new law also extends the amount of time jobless workers have to make an appeal when their application for unemployment benefits is denied, from 10 days to 15 days.

Unemployment insurance is one of the most effective economic stabilizers during a downturn, such as the current recession which pushed DC unemployment to a record-high of 12 percent at the end of last year. Unemployment compensation helps keeps jobless workers on their feet as they pursue training and work opportunities. Modernizing and broadening our unemployment compensation system will help our neighbors as well as our city remain steady as we work toward recovery.

The legislation passed this week is a permanent version of a bill passed on a temporary basis last fall.  All permanent bills in DC needs two votes by the Council, and the second vote on the unemployment bill will likely take place at the Council’s May 4 legislative session. The bill will then first move to Mayor Fenty’s desk for his signature, and then to Congress for final approval.

In the end, the bill is a win for everyone. Jobless workers will get the financial boost they need to keep paying bills and pursuing training as they look for work. And the District will collect $18 million in federal stimulus dollars for making our system better.

It is rare that tax incentives end up having the effect they are intended to.  The Earned Income Tax Credit — a tax benefit for the working poor — is one of them.  That’s why it is unfortunate that Mayor Fenty’s budget would scale back DC’s EITC by $1 million.  The amount may not be large, but the symbolism is huge. 

Since 2000, DC has had an Earned Income Tax Credit that piggybacks on the federal EITC.  The federal credit reduces taxes and increases the take-home pay of low-income workers, with the greatest benefits for working families with close to minimum-wage earnings.  The EITC is intended to help “make work pay” for low-wage workers, and there are numerous signs that it works incredibly well.  Studies have shown that the EITC has encouraged large numbers of single parents to leave welfare for work.  The EITC lifts more children out of poverty than any other single federal program. 

The EITC has been so successful that President Obama included an expansion of it in his stimulus package last year.

Twenty-three states and DC have created their own EITC to build on the strengths of the federal credit. DC’s EITC is set at 40 percent of the federal EITC.  It reaches nearly 50,000 DC households, mainly working poor residents in Wards 5, 7, and 8. 

Mayor Fenty’s proposed budget for FY 2011 would reduce the DC Earned Income Tax Credit to 39 percent of the federal credit.  While the immediate impact is relatively modest — a maximum of about $50 for a DC family with children — this proposal is significant for several reasons.  Most important, it would reduce the net income of residents who already face challenges meeting their basic needs. For these families, every dollar matters.

The DC EITC cut also would weaken a tax benefit that works effectively to reduce poverty and encourage work, and it would take money out of the DC economy.  Research shows that families use the EITC to pay for necessities, repair homes, maintain vehicles that are needed to commute to work, and in some cases, obtain additional education or training to boost their employability and earning power.  It’s money that gets pumped right back into the local economy.

Finally, the EITC cut for 2011 would make 2011 the second year in a row that the Mayor’s budget increased taxes on working poor residents.  The FY 2010 budget eliminated annual inflation increases in several deductions that largely benefit low- and moderate-income families — the standard deduction and personal exemption in the income tax and the property tax homestead deduction.  The 2010 budget and the proposed 2011 budget include no tax increases targeted on high-income families. 

The recession has battered DC’s finances, and the city needs more revenue to preserve services like health care and education.  But there are better ways to raise revenue and worse ways.

Cutting the DC EITC is one of the worst.

While many of the changes coming from national health care legislation will not be implemented for several years, the District is taking advantage of an opportunity to opt-in early to one key part.  The early opt-in will improve health care for thousands of DC residents while also helping the District save tens of millions of dollars in the near future. 

Under the new law, states are required to expand coverage in their Medicaid program by 2014 to residents with incomes below133 percent of the federal poverty line and to extend coverage to childless adults. (Medicaid provides health insurance to low-income residents and is jointly paid by the federal and state governments.)  Under current law, states and DC set their own Medicaid  income eligibility rules, and eligibility is limited to certain populations — mainly families with children, people with disabilities, and elderly residents.

The District is opting in early to this Medicaid expansion because the city already is serving thousands of residents under a locally funded program — the Health Care Alliance.  Moving Alliance participants into Medicaid would allow the city to get federal Medicaid funds to help pay for the care of these residents.

The District has been very aggressive in providing health care insurance for low-income residents who do not qualify for Medicaid, through the Health Care Alliance program.  Last week, officials announced that the District has the second lowest uninsured rate in the nation — 6.2 percent — and the lowest uninsured rate for kids — 3.2 percent.     

With many Alliance participants eligible for Medicaid under health care reform, DC will save tens of millions of dollars because the federal government pays 70 percent of DC’s Medicaid expenses.  The Alliance program, by contrast, is entirely paid for with local dollars.  It is estimated that about 35,000 to 40,000 DC residents will move from the Alliance program to Medicaid in FY 2011. 

This switch also will improve health services for DC residents, because Medicaid benefits generally are broader than benefits provided under the Alliance program.  In particular, the Alliance has poor access to mental health services, while Medicaid provides much better access.

DC’s net savings from health care reform are small in FY 2011, but that is largely because DC will still be sharing a portion of the costs of covering these individuals under Medicaid with the federal government, and may not be able to move residents into Medicaid until the middle of the year.  Therefore, more savings should be seen in FY 2012.  And by 2014, the federal government will be paying for 100 percent of the cost of covering these individuals in Medicaid. 

Health care reform will mean big changes in health care going forward.  For low-income DC residents and the District’s budget, the changes should result in better benefits and bigger savings.

Mayor Fenty released his Fiscal Year 2011 budget proposal earlier this month—and now the DC Fiscal Policy Institute helps you interpret the documents with the release of our FY 2011 Budget Toolkit!

Want to understand how Mayor Fenty proposes to close the $500 million budget gap?  Curious where the major cuts are in each agency? Interested in how the city’s safety net is impacted, and whether there are cuts to programs such as child care or affordable housing? 

Find answers to those questions in the DCFPI FY 2011 budget toolkit.       

Our budget toolkit is a handy guide to the proposed FY 2011 budget: what has been cut, what has been enhanced, and how you can be involved in the budget process.  The toolkit includes analyses of key budget and tax issues from DCFPI and links to important budget-related documents, including the schedule of DC Council budget hearings.  A spreadsheet showing year-to-year funding changes for DC agencies will be added soon.  

We’ll continue to update our analyses as we move through the budget process. 

Feel free to contact us via phone or email if you have questions. Good luck and we appreciate your interest in the District’s finances!

Monday, April 19

Department of Human Services Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 500

Tuesday, April 20

Committee of the Whole Meeting, 10 AM, John A. Wilson Building, Room 500

Community Budget Briefing on Housing hosted by Councilmember Michael Brown, 6:30-9 PM, Turkey Thicket Recreation Center (1100 Michigan Ave. NE)

Wednesday, April 21

Department of Health Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 500

Thursday, April 22

DC Public Schools Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 500

Department of Disability Services Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 412

Department of Child and Family Services Budget Oversight Hearing, 1 PM, John A. Wilson Building, Room 412

You may not think that a hearing on the Exemptions and Abatements Information Requirements Act would draw a big crowd.  But this week, a diverse group of organizations and residents — including the DC Fiscal Policy Institute — came out to testify in favor of this bill, which would require greater scrutiny when DC uses tax abatements to promote economic development.

The bill’s supporters included workforce development advocates, small businesses, civic organizations, national experts on responsible economic development, and just regular concerned residents. Even the Washington Post, which did not testify in person, was there in spirit.  The day of the hearing, the Post published an editorial supporting the bill.

So what’s the Exemptions and Abatements Information Requirements Act about?

In recent years, the District has subsidized a number of development projects through tax exemptions — often in the form of a 10-year, 100 percent property tax break — yet the city currently does not have a process to evaluate the merits of one tax abatement versus another.  The bill would require answers to two critical questions that should arise when an abatement is being considered:

• Is this tax subsidy necessary?   Under the proposed legislation, the DC Chief Financial Officer would analyze the finances for any development project seeking a tax abatement to see if it really needs city help to be viable.  The District already requires such an analysis for other economic development subsidies (Tax Increment Financing), but not for tax abatements.
• How would the District benefit?  The proposed legislation would require the project’s developer to detail the community benefits that would come from the development.  Many of the people who testified this week said that the most critical information to gather is the number of jobs that would be created, along with their expected wages and benefits.

In the end, the Exemptions and Abatements Information Requirements Act is really about improving the information available to policymakers and to the public when a tax abatement or exemption is being considered.  Who can be against that?  We look forward to quick DC Council action to move the bill forward.

The nation’s capital has always been a tale of two cities – affluent Washington, DC on the front page of the paper and the persistent poverty of the District of Columbia hidden in the Metro section.   Nothing illustrates this divide more starkly than DC being ranked by Portfolio.com as the second best city in the country for young people aged 18-34.  Among the factors Portfolio.com cited were the high percentage of young people with bachelor’s degrees, high average per capita income and the low regional unemployment rate.

Residents of the city’s poorest neighborhoods, Wards 5, 7 and 8, might be excused for being incredulous.  For them, the unemployment rate far exceeds the national average and the poverty rate is as high as 36 percent.  For the one in three children who are growing up poor in the District, the opportunity to graduate from college and earn a decent wage is very far away.

Consider this reality:

• 57 percent of 9^th graders will not graduate from high school and only 9 percent will graduate from college;
• The 27% unemployment rate in Ward 8 far outpaces the citywide rate of 12 percent;
• 1 in 5 adults in DC live in poverty, defined as a family of four living on less than $22,000 per year;
• Housing in DC is so expensive that a single parent with two children earning minimum wage ($8.25/hour) must work 135 hours per week just to afford a two-bedroom apartment.

 
The fact is that the long-term prospects for many children who grow up in the District are bleak.  Our young adults do not have the same foundation, support or opportunities as the young people described in Portfolio.com’s study.

As the local election season heats up, join CLC in urging the Mayor, DC council members and their challengers to articulate clear and actionable strategies to bridge this divide. Let’s push them to make it a priority to rewrite the tale of two cities.

A community hearing on the DC Public Schools budget will be held this Saturday, April 17 at 10 AM in Room 500 of the John A. Wilson Building (1350 Pennsylvania Avenue NW).  If you would like to testify, please contact Aretha Latta at 724-8196 or alatta@dccouncil.us.

Monday, April 12

Committee of the Whole Public Briefing on the Mayor’s Proposed FY 2011 Proposed Budget and Financial Plan, 10 AM, John A. Wilson Building, Room 500

Tuesday, April 13

Department of Human Services Budget Briefing, 10 AM-12 PM, 1200 U Street NW, Marsh Conference Room, RSVP to kerstetter@dcfpi.org

Department of Parks and Recreation Budget Oversight Hearing, 10 AM, John A. Wilson Building, Room 412

Department of Disability Services Budget Briefing, 4-6 PM, 1200 U Street NW, Marsh Conference Room, RSVP to kerstetter@dcfpi.org

Wednesday, April 14

Budget Oversight Hearings for Public Charter School Board (10 AM-2 PM), Deputy Mayor for Education (2-4 PM), and University of the District of Columbia (4 PM), John A. Wilson Building, Room 500

Committee on Finance and Revenue Public Hearing, 2 PM, John A. Wilson Building, Room 123; includes “Exemptions and Abatements Information Requirements Act of 2009″, Bill 18-0400 and other legislation.

Child and Family Services Agency Budget Briefing, 4-6 PM, Child and Family Services Agency, 441 4th Street, NW, Room 1114, Washington, DC 20001

Thursday, April 15

Department of Healthcare Finance Budget Briefing, 10-11:30, DC Primary Care Association, 1411 K St. NW, RSVP to Anastacia Arons at Aarons@dcpca.org by April 12, send questions to Jenny Reed at reed@dcfpi.org by April 12 

Department of Housing and Community Development and DC Housing Authority Budget Briefing, 12-2 PM, 1200 U St. NW, RSVP to http://cnhed.wufoo.com/forms/please-rsvp-to-cnheds-budget-briefing/

Department of Employment Services Budget Oversight Hearing, 2 PM, John A. Wilson Building, Room 412

Mayor Fenty’s FY 2011 budget includes approximately $100 million in additional revenue. The Great Recession has shrunken the city’s financial resources, and there is a need to find other sources of money to help fund critical services. However, the mayor took a no-new-tax pledge. So his proposals do not include major changes to the city’s big three revenue generators: the property, sales, and income tax.

So where does the money come from? More than a third of the proposed revenue enhancements comes from increases in driving and parking-related fees. Another third comes from two fees on the health industry, including a new 1 percent fee on patient billing for hospitals.

The mayor’s proposal also includes an increased E911 fee, a monthly fee on all phone lines in the city that helps support t he 911 system.. This proposal, which would increase the E911 fee by $0.39 per month and raise $7.1 million, has been proposed by the Mayor but removed from the budget by the DC Council in the past several years.

There is also a range of business-related fees, including increases on licenses and public space fees. Among the proposals, the mayor reduces a tax incentive package to help lure high technology companies to the city. Previous DCFPI analysis has shown that this extensive tax incentive package has done little to boost high-tech employment in the city. Scaling back worn-out tax breaks makes sense.

The 2011 budget marks the second year that the Mayor has proposed reducinged the DC Earned Income Tax Credit. We strongly urge the mayor to change his mind. Two years ago, the District increased the EITC — which creates a work incentive for those earning at or near the minimum wage — to 40 percent of the federal benefit. This proposal would scale back the credit to 39 percent, reducing critical dollars to lower-income working District families as they struggle through the downturn.
The basic revenue-raising categories include:

Driving and Parking Fees, $34.7 million

 Increased traffic fines, $28 million
The budget would authorize the increase of 71 different fines for motor vehicle moving infractions such as speeding, running a red light, running a stop sign, turning from the wrong lane, and passing a stopped school bus.

 Increased parking meter rates, $3.6 million
This would increase by $0.25 meters that currently charge $0.75 per hour.

 Increased residential parking permit fee, $1.2 million
Residential parking permits, which allow residents to park vehicles on neighborhood streets without restriction, will be raised from $15 to $25. The District’s current fee is lower than fees charged in Arlington County and Montgomery County. Alexandria charges $15 for the first vehicle registered at an address, $20 for the second, and $50 for the third.

Health Industry Fees, $33.6 million

 One percent patient revenue fee for hospitals, $25 millionThis would authorize the District to charge a general 1 percent tax on net patient revenue for hospitals, of which 90 percent would be used for healthcare-related expenditures. In addition, penalties would be imposed on hospitals that do not pay the fee on time.

 Two percent premium tax on HMOs for Medicaid receipts, $8.6 million
HMOs would pay taxes equal to 2 percent of their policy and membership fees as well as net premium receipts for DC Medicaid, the Healthy DC Program and the DC HealthCare Alliance, which had previously been exempted.

Business-Related Fees, $10 million, including:

 Steel plate fee for road construction, $3.1 million

 Increased building permit fee, $2.7 million

 Increased basic business license fee for technology, $750,000

Miscellaneous Fees, $12 million, including:

 E911 fee, $7.1 million
This fee, which has been proposed in prior budgets removed by the Council, would increase the E911 charge by $0.39 for both wireless and Centrex phone lines.

 Uniform 2% Insurance Premium Rate Fee, $1.8 million

Mayor Fenty announced a major part of his agenda for the upcoming year with the release last Thursday of his proposed Fiscal Year 2011 budget. Education is a clear priority, but other crucial programs and services that help residents took big hits. The mayor also maintained his no-new-taxes pledge, but proposed raising a large range of rates and fees on residents and businesses.

Certainly it’s a budget of tough choices. The coming year represents the third in a row that the District has faced a budget crisis as a result of the Great Recession, which has reduced the city’s fiscal resources at a time when a record number of residents are out of work and in need of assistance.

Overall, the mayor’s proposal spends $6.14 billion of local dollars, a 2.3 percent boost over FY 2010.

Isn’t that an increase? Not really. Much of this local spending is a replacement of federal stimulus dollars that were available for 2010, but will not be for 2011. Also there are certain parts of the budget that expanded, either due to the recession or otherwise, such as special education. When these areas are taken into account, funding for most services in the FY 2011 budget is less than the amount available for FY 2010. And it’s far smaller than the budget only three years ago.

So who benefits?

Local funding for education is $84 million higher in FY 2011, even after taking into account the federal stimulus money cliff. This includes a modest increase in local funds for DC Public Schools (this is offset by a loss of federal funds). Other increases are in charter schools and special education. Outside education, funding for Medicaid and related health care programs would grow in FY 2011 as a result of an increase in eligible residents due to the economic downturn.

So who doesn’t?

First, it’s important to note that the city’s budget has been cut in many areas for several years now. This year’s proposal maintains many of the cuts that have been made to programs since 2008. Additionally, rising expenditures in certain areas (such as special education tuition and transportation, Medicaid, and schools) have led to proposed additional cuts in other areas for FY 2011.

To address revenue shortfalls and increased expenditures, the Mayor’s proposed budget makes significant new cuts in a number of areas, including programs for low-income residents:
• Adult education and training would be reduced by nearly $7 million.
• Proposed child care vouchers for low-income working families are cut by $4 million, and a program to support grandparents caring for their grandchildren would be reduced by $2 million.
• The Department of Mental Health’s proposed budget represents a 12 percent decrease, including the elimination of 29 direct care positions.
• The Mayor’s budget also proposes to reduce funding for the Metropolitan Police Department, corrections, public works, and transportation.

Homeless services funding remains below FY 2009 levels, even as the number of homeless families has increased dramatically over the past year. Funding for programs to help low-income renters, such as the Local Rent Supplement Program and the Housing Production Trust Fund, remains down. Despite increasing demand for public benefits, staffing at the Department of Human Services’ service centers is not proposed to increase from FY 2010 levels.

Stay tuned tomorrow, when we discuss the mayor’s revenue proposals.

The Mayor’s proposed FY 2011 budget has just been released and many of you, undoubtedly, have a lot of questions.   The good news is that at least six DC agencies have agreed to hold public briefings on their proposed FY 2011 budgets.  These briefings are an opportunity for the public to hear from agency directors and agency staff about how programs and services will be impacted by the budget.  It also will be an opportunity for the public to ask questions.  All briefings are held before an agency’s budget oversight hearing will take place.

Below is a list of the locations, times, and dates for the scheduled budget briefings.  Please note that some briefings ask for an RSVP and questions to be submitted in advance.  That doesn’t mean you can’t ask questions at the briefing, but it helps give agency directors an idea of the types of questions people are interested in.

Department of Mental Health

April 8^th, 3-5pm

64 New York Avenue, N.E., 4^th Floor Conference Room

• Submit questions to Shannon Hall at shall@dcbha.org by April 7^th

Department of Human Services

April 13^th, 10am-12pm

True Reformer Building, 1200 U St. NW

• RSVP to Katie Kerstetter at kerstetter@dcfpi.org by April 11^th

Department of Disability Services

April 13^th, 4-6pm

True Reformer Building, 1200 U St. NW

• Submit questions to advocacy@arcdc.net by April 12^th

Child and Family Services Agency

April 14^th, 4-6pm

Child and Family Services Agency, 441 4th Street, NW, Room 1114, Washington, DC 20001

• Submit questions to Yolanda McPhail-McKinley at yolanda.mckinley@dc.gov by COB Friday, April 9^th

Department of Housing and Community Development and DC Housing Authority

April 15^th, 12-2pm

True Reformer Building, 1200 U St. NW

• RSVP to http://cnhed.wufoo.com/forms/please-rsvp-to-cnheds-budget-briefing/

Department of Health Care Finance

April 15^th, 10-11:30

DC Primary Care Association, 1411 K St. NW

• RSVP to Anastacia Arons at Aarons@dcpca.org by April 12^th
• Send questions to Jenny Reed at reed@dcfpi.org by April 12^th

The Mayor released his proposed FY 2011 budget last Thursday and the Council is on recess this week.  What better time to dive into those budget books to figure out how the programs you care about fared?  We’ve got an agency budget briefing this week to help you out and more briefings on the way next week.  Also, stay tuned today for DCFPI’s inital take on the Mayor’s proposed budget.  Happy budget season!

Thursday, April 8
Department of Mental Health Budget Briefing
3-5 PM
64 New York Avenue, N.E., 4^th Floor Conference Room
Submit your questions to Shannon Hall at shall@dcbha.org by April 7^th

The Mayor held a press conference on his proposed FY 2011 budget Thursday morning, but detailed budget materials were not made available until last night and some important budget information is still not available today.

DCFPI is hard at work digging into available budget documents and we will issue a short statement on the budget as soon as we are able, either today or Monday.

The Great Recession has had a great impact on the finances of our city, including how much money we can borrow now to pay for things later. Earlier this month, DC Chief Financial Officer Natwar Gandhi warned Mayor Fenty and the DC Council that the city is near its debt limit, and at risk of violating its cap on borrowing.

The District, just like a person or household, often borrows money to pay for big expenditures. In the city’s case, the purchases might be to build or modernize public school buildings, construct or refurbish roads, or pay for infrastructure around a new Target or Costco.

Yet as the nationwide mortgage crisis has illustrated, you don’t want to borrow more than you can afford to eventually and realistically repay.

The District has a mechanism in place to make sure the city doesn’t take on more debt than it can handle. It is known as the debt cap, and it mandates that the city’s debt payments cannot exceed more than 12 percent of its expenditures.

As the city’s budget shrinks during these tough times, the city’s ability to borrow declines as well. Job losses and falling house prices have translated into lower income, sales, and property tax collections, which in turn means our expenditures must drop as well. This has the effect of raising the city’s debt-to-expenditures ratio. In other words, now that we have less money to spend, our debt payments, which are largely repaying money borrowed from prior years, are growing as a share of the city’s budget and creating the risk that our debt cap will be exceeded.

In his letter, Gandhi explained that the city has taken measures to lower the debt ratio, largely by restructuring some of the city’s existing debt. This will allow the city to maintain current infrastructure development plans, but with little to no wiggle room. Gandhi noted that city leaders will need to pay close attention to this part of the budget. “I urge Mayor and Council to carefully evaluate the need for any and all proposed borrowing, including both for the core government functions funded…as well as for economic development projects, and to set priorities for what is the most critical to the needs of District residents,” Gandhi wrote in a March 16 letter.

We agree with Gandhi; the District needs to prioritize its borrowing for what is most urgently needed. There is no reason to panic, but city leaders need to be judicious about current and future plans. Can that school project be completed for less? Does that economic development project really need as much as it’s asking for?

As DC’s infrastructure budget becomes yet another victim of the Great Recession, these are really important questions to address.

It’s budget time.  This week brings the close of performance oversight hearings and the release of Mayor Fenty’s FY 2011 budget.  Here is what we are watching………..

Monday March 29^th

Committee of the Whole Performance Oversight Hearing on the Office of the State Superintendent of Education (OSSE)—government officials testimony
2pm
Room 500

Wednesday March 31^st

Committee of the Whole Public Hearing on B18-605, the “Pre-K Acceleration and Clarification Amendment Act of 2010”
10 am
Room 500

Thursday April 1^st

Mayor Fenty releases his FY 2011 Proposed Budget

Committee on Housing and Workforce Development Public Hearing on:
1. B18-0548, the “Rent Increase Amendment Act of 2009″
2. B18-0598, the “Tenant Organization Petition Standing Amendment Act of 2009″
10am
Room 500

Committee on Housing and Workforce Development Public Hearing on:
1. B18-0545, the “Keep D.C. Working Act of 2009″
2pm
Room 500

The recession is still hitting thousands of DC residents hard.  As the District deals with record unemployment levels, more and more residents are losing their jobs, are not able to find another one —  and many are likely falling into poverty as a result.

As part of the launch of a new public campaign, Defeat Poverty DC, DCFPI released a new paper that estimates how much poverty grew in 2009 by looking at measures that are closely tied to poverty status, particularly, food stamps caseloads and changes in employment.  (Official Census Bureau data to confirm the increase in poverty will be out later this year.).

Both unemployment and food stamp caseloads have skyrocketed in the District in the current recession.  In just two years, DC’s unemployment rate more than doubled and food stamp caseloads increased by nearly 30 percent.  These are signs that more and more DC families are experiencing hardship as many are unemployed, losing their incomes, and looking to programs — like food stamps— to help meet their basic needs.

Using the findings from the changes in the food stamps and unemployment, DCFPI estimates that:

• The poverty rate in the District increased from 16.9 percent in 2008 to 18.9 percent in 2009.  This means that an estimated 11,000 additional DC residents below poverty just last year — or below $21,800 for a family of four with two kids — and that over 106,000 DC residents lived in poverty in 2009.
• The increase in poverty is the largest year-to-year increase in the poverty rate in the District since 1995.

And the situation is likely to be worse in 2010.  Both the unemployment rate and food stamps caseloads increased throughout 2009, and the most recent unemployment and food stamps figures are far higher than the yearly averages we used to estimate the poverty rate for 2009.   In addition, national research shows that both poverty and unemployment take much longer to recover after a recession is officially over.  This means that is likely that poverty is higher than 19 percent in 2010 and that it may be years before the District sees poverty decline.

Join us for the launch of……

Defeat Poverty DC
Putting economic opportunity on the 2010 political agenda

What: Panel discussion, moderated by NBC News4 political reporter Tom Sherwood, and release of new report on growing poverty in DC during the recession.

When: March 24, 2010, 9:00 –10:30 a.m.

Where: The True Reformer Building,
Lankford Auditorium
1200 U Street, NW
Washington, D.C. 20009

Defeat Poverty DC is a new coalition of organizations and residents in the District of Columbia working to bring greater focus during the 2010 election season and beyond to the damaging effects of poverty on our entire city. The District’s long-term economic vitality depends on helping families obtain good jobs, affordable housing, and quality health care and child care.

The 2010 mayoral and city council elections give us a chance to have a serious discussion about what our city must do to make work possible for low-skilled DC residents; make work pay enough to support a family; and make basic needs like housing and health care affordable for all.

The event will include a lively panel discussion among local officials and community leaders about the need for the city’s elected officials to formulate clear policies for defeating poverty in DC. We need leaders who will make defeating poverty in our city a priority!

Refreshments will be served. Please RSVP to Tamanna Mansury atTamanna@thehatchergroup.com or 301-656-0348.

To learn more about Defeat Poverty DC, click here.

It’s the last week before the Mayor’s budget comes out and we’ve got a lot of great events we are following this week…….

Monday March 22^nd

Committee of the Whole Performance Oversight Hearing on the DC Public Schools — government officials’ testimony.
10am
Room 500

Wednesday March 24^th

Defeat Poverty DC Launch Event
9:00 –10:30 a.m.
The True Reformer Building, Lankford Auditorium
1200 U Street, NW
Washington, D.C. 20009

Committee on Housing and Workforce Development Performance Oversight Hearing on the Department of Housing and Community Development (re-scheduled from 3/19)
10am
Room 120

Committee of the Whole Performance Oversight Hearing on the Master Facilities Plan for the DC Public Schools
10am
Room 500

Thursday March 25^th

Committee on Economic Development Performance Oversight Hearing on the Deputy Mayor for Planning and Economic Development
10am
Room 412

Friday March 26^th

Fair Budget Coalition’s Issue Briefing on Housing
9:30-11am
Room 103 or 104

Last week, the US Commerce Department introduced a new “Supplemental Poverty Measure” to help better estimate the number of Americans who are poor.  As its name suggests, the new poverty measure will not replace the current poverty measure.  It also will not be used to determine eligibility for programs like Medicaid, food stamps, and TANF.

So, what’s the big deal?

For years, many of those who study poverty have called for an update to the way we measure economic deprivation.  What we regularly call “the poverty line” was developed in the 1960s and hasn’t changed since then (other than inflation adjustments).  The formula is simple:  it takes a low-cost food budget for families of different sizes and multiplies them by three, because 50 years ago, families spent about one-third of their income on food. 

It doesn’t take a poverty expert to see problems with measuring poverty this way.  For one, food no longer represents a third of most families’ budgets; housing costs are much more significant. Beyond that, the poverty measure doesn’t take into account taxes that a family pays, and it does not include the effect of benefits like food stamps, housing assistance, or health insurance – which means that officially these programs have no effect on poverty when of course they do.  Finally, the poverty measure is the same no matter where you live, even though the cost of living in DC is much higher than the cost of living in West Virginia.    

The Supplemental Poverty Measure corrects for many of these issues.  It includes the value of benefits like food stamps, the Earned Income Tax Credit, and housing assistance in a family’s resources.  And for the first time, it adjusts the poverty line for different areas based on the cost of living in a particular state. 

This means that when the Census publishes its annual poverty data this year, we’ll have a better picture of how DC’s policies for low-income residents are helping to reduce poverty.  And in the midst of record unemployment, that’s a big deal.

With DC’s unemployment rate at a record 12 percent – meaning 40,000 residents are out of work despite looking actively – efforts to increase employment in the city are desperately needed.  The DC Fiscal Policy Institute testified last week on proposed legislation intended to do just that – the Job Growth Incentive Act of 2010.  DCFPI’s director Ed Lazere praised the intent of the bill but raised concerns that it may not be the most effective way to increase employment opportunities, especially among those residents facing the greatest employment challenges.

The legislation would give a tax credit to businesses that increase their employment of DC residents by 10 or more workers before 2015.  The credit would equal roughly $1,500 per year for a new employee earning $50,000, and the business would receive the credit annually for five years.

DCFPI raised the following points in its testimony:

• Research suggests that business hiring decisions are driven largely by market factors and that tax incentives in most cases do not make the difference between not expanding and expanding a business’ employment base.  This means that the proposed DC tax credit largely would go to businesses that would have hired new workers, anyway.

• The Job Growth Incentive Act only provides a tax incentive for hiring DC residents, but it doesn’t necessarily require businesses to change their hiring practices to favor DC residents.  Currently, about one-third of jobs in the city are held by DC residents.  This means that on average, a business expanding by 30 workers or more would hire at least 10 DC residents —  and would qualify for the proposed tax credit without altering their behavior.

• Employers would receive the credit only for creating jobs with above-average wages.  While the intent of this provision is reasonable— to incentivize creation of good jobs — the DC residents facing the highest rates of unemployment tend to have lower skills and limited educations and thus would not quality for jobs at these wage levels.

If the District wishes to pursue job growth tax incentives, such incentives would be most effective if they were tied to jobs with family-supporting wages that are available to residents with limited job skills.  The credit could be tied to businesses that hire workers from DC’s unemployment rolls — potentially those that hire long-term unemployed residents — or to businesses that offer training to help prepare workers for jobs.

In the end, though, tax incentives often are a blunt instrument, particularly for a goal as complex as increasing employment opportunities for residents that may lack the skills needed for DC’s jobs.  As we have and others have pointed out, there is a large mismatch between the skills of DC residents and the skill demands of jobs being created here, and this is the greatest obstacle to increasing employment among DC residents.  This suggests that job creation efforts should focus on literacy, training and education, job counseling, and other efforts to help prepare residents for jobs.

Last Friday, Ed Lazere joined Kojo Nnamdi and Tom Sherwood on WAMU’s The Politics Hour, to discuss whether or not the District should be offering $25 million to Northrop Grumman to move its headquarters into the District.  Ed discussed how research shows that these tax breaks play a very minor role in companies’ decisions on where to locate, but can have a huge impact on the jurisdictions long-term vitality.  These tax breaks can actually hurt a jurisdictions’ ability to provide sound public infrastructure and a solidly educated workforce — factors that do play a big role in companies’ decisions on where to locate.

The District’s budget woes, including whether or DC should use its $284 million Rainy Day Fund, were also topics discussed on the show.  DCFPI recently released a paper on why DC should start working with Congress to address the onerous rules that make our Rainy Day Fund harder to tap for use in a recession that nearly any other states’.

To hear more about Northrop Grumman and DC’s budget woes, click here.  [The portion of the show with Ed begins at minute 29.]

On Monday, Councilmember Bowser (D, Ward 4) held a press conference to announce that she will be introducing a bill that to  improve the transparency of how government business is conducted.  DCFPI’s Executive Director, Ed Lazere, was there to speak in support of the legislation.

The Open Government is Good Government Act of 2010 would strengthen the District’s currently weak open meetings law, which states that meetings are only required to be open to the public when official action is being taken. Official action includes votes, rulemaking, resolution making or other official actions.

What’s the problem limiting open meetings this way?  Well, a lot of critical decisions that affect the public can be made before official action is taken.  Take for example, last summer’s closed door budget deliberations. The Council met for nearly a week to discuss serious budget cuts and tax increases.  Members of the media were allowed to attend, but the public was not.  The Council wasn’t required to hold an open meeting because they didn’t take a vote.  They did that the following week, with little debate.  Those decisions had significant impacts on DC residents and they should have had the option to see what decisions the Council was debating.

Councilmember Bowser’s bill would make any other meeting attended by a quorum of officials to be open to the public. (There would be exceptions for meetings that are discussing contract negotiations, collective bargaining negotiations and other sensitive discussions.)   This would mean that not only would the votes that change laws and policy in the District be open the public, but also the deliberations and decision making process by elected officials to reach those votes, would be more transparent.

To see a draft copy of the bill to be introduced, click here.

Up to 4,000 additional DC residents will be eligible for food stamp benefits beginning March 15, thanks to a policy option adopted by the DC Council that is being implemented this month by the Department of Human Services.  The option – known as “categorical eligibility”— will allow households with incomes up to 200 percent of the federal poverty line to access food stamps.  Previously, food stamps were limited to households with incomes below 130 percent of the federal poverty line (about $23,800 a month for a family of three). The new eligibility rules largely affect families with substantial child care or housing expenses. 

Now, more families will be able to access food assistance during a critical time when unemployment in the District has risen above 12 percent.  Expanding food stamp benefits also is one of the most effective ways to stimulate the DC economy because families tend to spend all of their benefits each month and tend to spend them locally.  Thanks to Councilmembers Michael Brown and Tommy Wells who championed this legislation. 

The last week of Council Performance Oversight Hearings, a Committee of the Whole meeting, and an extra Legislative session keep this week in March full of events we’re following…….

Monday March 15^th

Committee of the Whole Performance Oversight Hearing on the DC Public Schools
10am
Room 500
To testify, contact Aretha Latta at 724-8196 or e-mail alatta@dccoucil.us.

Committee on Economic Development Performance Oversight Hearing on the Deputy Mayor for Planning and Economic Development (Part 1)
10am-2pm
Room 412
To testify, contact Mitria Wilson at 727-6683 or e-mail mwilson@dccouncil.us.

Committee on Housing and Workforce Development Public Oversight Hearing on the Department of Employment Services [Note: only government witnesses will be testifying at this hearing.  The public was invited to testify at DOES’ March 5^th oversight hearing].
1pm
Room 412

Tuesday March 16^th

Committee of the Whole
10am
Room 500
A copy of the agenda can be found here

Items of interest:

• Bill 18-431, “OTO Hotel at Constitution Square Economic Development Act of 2010“

Additional Legislative Meeting
Following the Committee of the Whole meeting
Room 500
A list of emergency notices can be found here

Wednesday March 17^th

Committee on Economic Development Performance Oversight Hearing on the Deputy Mayor for Planning and Economic Development (Part 2)
10am
Room 500
To testify, contact Mitria Wilson at 727-6683 or e-mail mwilson@dccouncil.us.

Thursday March 18^th

Committee on Health Performance Oversight Hearing on the Department of Health
10am
Room 500
To testify, contact Jennifer Barry at 724-8170 or e-mail jbarry@dccouncil.us

Friday March 19^th

Committee on Housing and Workforce Development Public Oversight Hearing on the Department of Housing and Community Development
10am
Room 412
To testify contact Kilin Boardman-Schroyer at 727-8271 or email at kboardmanschroyer@dccouncil.us 

Steven Pearlstein, the Washington Post’s Pulitzer-prize winning business columnist, called the District’s offer of at least $25 million in tax breaks and other financial incentives to lure Northrop Grumman’s headquarters to the city “particularly loony.”

Research on these tax deals leads to a similar conclusion. Here’s what Professor Robert G. Lynch said in his report, Rethinking Growth Strategies: “Studies that examine why firms locate where they do show that state and local taxes play only a minor role in investment decisions and that lower taxes fail to generate a significant number of new jobs.”

Ever since Northrop announced its intention to move the Washington area, leaders in the District, Maryland, and Virginia have eagerly courted the defense contractor. Legislation currently before the DC Council would give Northrop $1.95 million per year in property tax abatements for 10 years— a total of $19.5 million— plus $5.5 million of taxpayer dollars for relocation costs. Plus, the company would also qualify for very large tax breaks under the city’s Net2000 legislation. This includes:

• No corporate income tax for 5 years, reduced rate after 5^th year
• Reduced capital gains taxes
• Sales tax exemptions on products the company sells
• A 10 percent wage credit (max. $5,000 per employee)
• Credits for company employees that relocate to DC
• Property tax abatement for 5 years on increases in property tax

What will the District get in return?

Northrop will employ 250 people within the District. It is presumed that a good number of those positions will be executives and staff relocating from the company’s current headquarters in Los Angeles.

Supporters have said the company will bring subcontractors. According to public documents, Northrop has approximately 30,000 employees in Virginia, 10,000 in Maryland and 600 in the District. How many subcontractors will come to support 250 workers?  The supporters have offered no concrete figures, even estimates, of this impact.

At a hearing on the legislation Monday, several District small business owners questioned why the District was so eager to give Northrop so much money for so few jobs. Their businesses, including Busboys and Poets and Chateau Animaux on Capitol Hill, employ scores of DC residents and have not gotten such treatment, they said.

They also questioned if the city had the $5.5 million slated in the bill to hand over to Northrop for relocation costs. Later in the hearing, John Ross of the Office of the Chief Financial Officer testified that a funding source had not been identified.

“The most fundamental problem is that many public officials appear to believe that they can influence the course of their state economies through incentives and subsidies to a degree far beyond anything supported by even the most optimistic evidence,” said professors Peter Fisher and Alan Peters of the University of Iowa in their paper, “The Failures of Economic Development Incentives.”  We need to begin by lowering their expectations about their ability to micromanage economic growth and making a case for a more sensible view of government— providing the foundations for growth through sound fiscal practices, quality public infrastructure, and good education systems…”

Or as Pearlstein says, “These testosterone-filled contests are never really about money so much as pride and ego and political bragging rights. By the time the competition ends, the benefits from winning have been pretty much bargained away and everyone comes off looking rather silly.”

Defeat Poverty DC:

Putting Economic Opportunity on the 2010 Political Agenda

Defeat Poverty DC is a new coalition of organizations and residents in the District of Columbia working to bring greater focus during the 2010 election season and beyond to the damaging effects of poverty on our entire city. The District’s long-term economic vitality depends on helping families obtain good jobs, affordable housing, and quality health care and child care.

The 2010 mayoral and city council elections give us a chance to have a serious discussion about what our city must do to make work possible for low-skilled DC residents; make work pay enough to support a family; and make basic needs like housing and health care affordable for all.

The event will include a lively panel discussion among local officials and community leaders about the need for the city’s elected officials to formulate clear policies for defeating poverty in DC. We need leaders who will make defeating poverty in our city a priority!

Refreshments will be served.
Please RSVP by March 19 to Tamanna Mansury at
Tamanna@thehatchergroup.com or 301-656-0348.

Defeat Poverty DC is a non-partisan initiative that is bringing together advocacy groups, business, labor, faith organizations and residents throughout the city. It is led by a steering committee made up of organizations with a long history of advocating for those in need: the Children’s Law Center, the Coalition for Nonprofit Housing and Economic Development, DC Appleseed, DC Fiscal Policy Institute, DC Hunger Solutions, the Moriah Fund, the Washington Area Women’s Foundations, and Wider Opportunities for Women.

March continues with a busy week of hearings, performance oversight hearings, and budget events.  Here is what we are watching this week……..

Monday March 8^th

What’s In Store for FY 2011? A forum on the District’s FY 2011 budget

9:30-11:30
Charles Sumner School, 1201 17^th St. NW

Speakers include:

–Ed Lazere, Executive Director, DC Fiscal Policy Institute
–Eric Goulet, Budget Director, Council of the District of Columbia
–Fitzroy Lee, Chief Economist, Office of the Chief Financial Officer
–Dawn Slonneger, Chief of Staff, Office of the Honorable Vincent C. Gray
–T.J. Sutcliffe, Director of Advocacy & Public Policy, The Arc of the District of Columbia

Public Hearing on B18-651, “The Global Security and Aerospace Industry Tax Abatement Act of 2010” a.k.a. the Northrop Grumman tax abatement bill.
10am, Committee on Finance and Revenue
Room 120

Wednesday March 10^th

Committee on Finance and Revenue public oversight hearing on the Office of the Chief Financial Officer
10am
Room 500
To testify contact Sarina Loy at sloy@dccouncil.us

Committee on Health public oversight hearing on the Department of Mental Health
10am
Room 412
To testify contact Jennifer Barry at jbarry@dccouncil.us

Thursday March 11^th

Committee on Human Services public oversight hearing on the Department of Disability Services
10am-1pm
Room 500
To testify contact Vivian McCarter at vmccarter@dccouncil.us

Committee on Human Services public oversight hearing on the Child and Family Services Agency
1pm
Room 500

To testify contact Vivian McCarter at vmccarter@dccouncil.us

Friday March 12^th

Fair Budget Coalition Public Briefing on Youth Issues
9:30-11am
Room 103 or 104 of the John A. Wilson Building

Public Hearing on:

• Bill 18-619, the “UNCF Tax Abatement and Relocation to the District Assistance Act of 2010,
• Bill 18-520, the “Shirley’s Place Equitable Real Property Tax Relief Act of 2009,
• Bill 18-669, the “SOME, Inc. Technical Amendments Act of 2010,
• Bill 18-658, the “District Job Growth Incentive Act of 2010,
• PR 18-748, the “American Society of Nephrology Revenue Bonds Project Approval Resolution of 2010″

10am, Committee on Finance and Revenue
Room 120

It seems hard to remember back to a time when the District was not dealing with huge million dollar budget shortfalls.  The recession that emerged with force in 2008 has continued to hammer state budgets throughout the nation, and the District hasn’t escaped unscathed. 

DC’s latest revenue forecast reminded us that our money problems are still getting worse.  It revealed a new $18 million drop in revenues for the current fiscal year, and a $50 million drop in revenues for FY 2011.  As we wrote about earlier, the decline in revenues and agency spending pressures have resulted in a $230 million budget gap this fiscal year, and a roughly $600 million gap for FY 2011. 

Just how far have our revenues fallen since the start of the recession?  Figure 1 shows that in June 2008, District revenues were predicted to increase through FY 2011 and beyond.  But then the recession hit, and DC’s tax collections dropped a whopping $500 million between 2008 and 2009.  And instead of growing steadily as expected before the recession, tax collections stalled and have yet to go back up to pre-recession levels.   Revenues for FY 2011 will be lower than in FY 2007, meaning that the District has lost out on nearly four years of economic growth. Ouch.  

(Figure 1 does not take into account the revenue raising measures the Mayor and Council have taken in the last few years.  But even when those increases are factored in, revenues in FY 2010 and FY 2011 still don’t eclipse FY 2008 revenue collections.) 

So what do we do?  There has been a lot of talk from the Mayor and Council about needing to examine our expenditures closely for savings.  But as we’ll talk about later this week, some of these cuts may actually turn out to cost us more than they save.  Any many of these cuts are hurting our most vulnerable residents. 

DC’s leaders haven’t given the same level of scrutiny on the revenue side.  Now would be a good time to take a serious look at the hundreds of millions of dollars in taxes lost each year by the District from credits, deductions and exemptions from taxes.  Many of these have been on the books for decades, with no one checking to see if they are still effective or needed.  As we’ve mentioned before, raising revenue should be part of the equation for a balanced approach to closing the budget shortfall. 

DC has been pretty heavily focused on cutting the budget.  But the data show that our budget woes are really from a revenue problem.

Mayor Fenty’s proposed budget for next year will be out in less a month.  We all know the outlook is pretty bleak, with the District facing an enormous revenue shortfall as a result of the recession.   The Mayor and Council face very difficult decisions over how to preserve important services such as education and health care.

Just how bad is the budget shortfall?  What has been cut already?  What revenue increases are being considered?  How can residents and organizations get involved to make a difference in the budget outcomes?

These important questions will be addressed at a forum this coming Monday, March 8, starting at 9:30 a.m. at the Charles Sumner School, 1201 17^th Street, NW.  (Registration and coffee start at 9:00.)

Speakers include:

–Ed Lazere, Executive Director, DC Fiscal Policy Institute
–Eric Goulet, Budget Director, Council of the District of Columbia
–Fitzroy Lee, Chief Economist, Office of the Chief Financial Officer
–Dawn Slonneger, Chief of Staff, Office of the Honorable Vincent C. Gray
–T.J. Sutcliffe, Director of Advocacy & Public Policy, The Arc of the District of Columbia

The event is sponsored by The Arc of DC, The DC Fiscal Policy Institute, The Fair Budget Coalition, and Think Twice Before You Slice, a project of the Center for Nonprofit Advancement and the Nonprofit  Roundtable of Greater Washington.

Please RSVP to Tina Marshall at marshall@cbpp.org or 202-408-1080.

This winter, the Fair Budget Coalition has sponsored a series of interactive Breakfast Briefings focusing on different issues affecting low-income DC residents.  The final three briefings were rescheduled and will be held over the next three Fridays, from 9:30-11:00 AM, at the John A. Wilson Building (1350 Pennsylvania Ave. NW).  Policymakers, staff, and members of the public are invited to attend.

Come learn from the experts about current issues in:

• Health – March 5th
• Youth – March 12
• Housing – March 26

Briefings will be held in Rooms 103 or 104 of the Wilson Building.  A light breakfast will be served.

At a time when District leaders are considering drastic cuts to programs and services, as the city faces a $200 million shortfall this year and $500 million next year, some DC councilmembers just voted to give Blockbuster and Waste Management Inc. founder Wayne Huizenga and his pals a big tax break.
You didn’t see this vote on the DC Council’s schedule? Neither did we.

Yet last Wednesday, the Council’s Committee on Finance and Revenue approved not just one tax break bill—for OTO Development, in which Huizenga is a primary investor—but also for another mixed-use project nearby at 3rd and H Streets NE. The bills may be considered by the full Council at Tuesday’s legislative session. We urge councilmembers to vote against the waiver to fast-track the legislation.

The Council’s actions are troubling for several reasons.

Certainly the economic downturn has impacted everyone, including real estate developers and investors. But at a time when city leaders are telling us to tighten our belts more than a few notches, and threatening to trim programs that help youngsters and our most vulnerable residents, should hotel and shopping mall investors like Huizenga be moved up to first in line for DC taxpayer dollars?

We—and we believe many of our fellow DC residents—have a different ranking of priorities.

The bills give tax abatements to Huizenga’s OTO Development for a hotel in Constitution Square in NoMa and to a large mixed-use project at 3rd and H Sts. NE. The H Street development would include 210 condos or apartments, a 250-270 space garage, and 42,000 square feet of retail, mostly occupied by a grocery store.

The thing is, both projects already are receiving financial help from the city. The H street development qualifies for the District’s supermarket tax breaks—including a 10-year property tax abatement. And the Constitution Square development is receiving $ 6 million in property tax breaks.

Why isn’t that enough?

But there’s another reason we are bothered by these bills. They were approved with little public notice. The vote of the Finance and Revenue Committee—known as the markup—did not appear in the Council’s schedule last week.

Tax breaks given selectively to individual developments shouldn’t occur without plenty of public scrutiny and examination. That’s why we support “The Exemptions and Abatements Information Act of 2009” introduced by Councilmember Michael Brown. This bill would require the District’s Chief Financial Officer to conduct a financial analysis of any tax abatement proposal, something that already occurs for some economic development programs, like tax increment financing.

Unlike the 20-plus development tax breaks considered last year by the Council, this bill has yet to have a hearing in front of the Committee on Finance and Revenue.

It’s time for the Council to take action on this bill, and we urge finance and revenue Chairman Jack Evans to hold a hearing soon.

March begins with a busy week of performance and oversight hearings and a Legislative session.  Here is what we are watching this week…….

Monday March 1^st

Starting at 9am:  Committee on Government Operations & the Environment performance oversight hearing on: Office of the Secretary, Office of Partnership & Grants, District Department of the Environment, Contract Appeals Board, and Executive Office of the Mayor
Room 500
Persons wishing to testify can contact Aukima Benjamin at abejamin@dccouncil.us

Tuesday March 2^nd

10am: Legislative Meeting
Room 500

Agenda items of interest:

• Real Property Reform Temporary Amendment Act of 2010 (B18-364)
• Healthy DC Equal Access Fund and Hospital Stabilization Act Temporary Act of 2010 (B18-643)
• Fiscal Year 2010 Balanced Budget and Spending Pressure Control Plan Temporary Act of 2010 (B18-647)
• Neighborhood Supermarket Tax Relief Clarification Act of 2009 (B18-44)
• OTO Hotel at Constitution Square Economic Development Act of 2009 (B18-431)
• Third and H Street, N.E. Economic Development Act of 2009 (B18-432)
• Energy Efficiency Financing Act of 2009 (B18-530)
• Certified Capital Companies Improvement Amendment Act of 2010 (B18-402)
• H Street NE Small Business Streetscape Construction Real Property Tax Deferral Emergency Act of 2010
• IHOP Restaurant #3221 Tax Exemption Clarification Emergency Amendment Act of 2010
• Reasonable Health Insurance Premium Increase Emergency Act of 2010

Thursday March 4^th

10am: Committee on Human Services performance oversight hearing on: Children & Youth Investment Trust
Room 412
Persons wishing to testify can contact Vivian McCarter at vmccarter@dccouncil.us

10am: Committee on Health performance and oversight hearing on: Department of Healthcare Finance
Room 500
Persons wishing to testify can contact Jennifer Barry at: jbarry@dccouncil.us

2pm: Committee on Human Services meeting on B18-0547, the “Adoption Reform Amendment Act of 2009”

Friday March 5^th

10am: Committee on Housing and Workforce Development performance oversight hearing on: Department of Employment Services
Room 500
Persons wishing to testify can contact Drew Hubbard at: dhubbard@dccouncil.us

10am: Committee of the Whole Performance Oversight hearing on: Office of the State Superintendent of Education
Room 412
Persons wishing to testify can contact Aretha Latta at alatta@dccouncil.us

Earlier this week, we talked about how the District found itself in a $200 million hole in the current fiscal year. The Mayor’s plan to close that gap is to restructure debt (a $50 million savings), take $100 million from a variety of special funds that are running surpluses, and reduce spending in 40 agencies by $99.4 million.

Is this the right approach?

Broadly, yes. Taking a balanced approach that involves both revenues and budget cuts makes sense. But there are questions about where the surplus funds come from, and the way the agency cuts were made is questionable.

DC’s budget includes too many small, specialized funds. Taking unspent funds from them may make sense, but it is really important to know which funds these monies are being pulled from. Many special purpose funds support critical District services such as workforce development training and repairs to apartment buildings to bring them up to code.

The $99 million of cuts are tied to agencies where current spending is below the approved budget. In other words, an agency that was under-spending in the first quarter of the year had its budget cut for the entire year. Sounds pretty good, right? An agency isn’t spending all of their funds so maybe they just don’t need all the money. Well, it turns out to not be that simple. A review of the cuts shows that in some cases the funding actually was very critical.

For example, $3 million was cut from the Department of Human Services budget, despite the fact that this agency has been overwhelmed with people that need the government’s help amid record unemployment in the District. Previous cuts have already forced the agency to close two front-line service centers and eliminate nearly 100 front-line positions. The cuts also include $6 million to the DC Department of Employment Services, which is likely to force the agency to eliminate a new adult training program. When one in eight DC residents is out of work, does it make sense to take money from programs that might help them get a job?

This raises the question of why the cuts were made this way. They don’t appear to reflect strategic policy choices. What is clear is that many of these cuts have real impacts for DC residents. Wouldn’t it be better for the Mayor to decide how to pare back services based on an established set of priorities?

These are important issues as DC continues to struggle with the worst recession in decades and as Mayor Fenty and the DC Council prepare to craft a new budget for next year. Of course, budget cuts will need to happen. The goal should be to make cuts as wisely as possible — maintaining programs to keep residents who’ve encountered turbulence during the recession at a cruising altitude along with preserving services most important to the city’s quality of life and long-term health.

April is known as the cruelest month, but February is turning out to be quite a doozy in the District—and that’s not even counting Snowmaggedon. We’re referring to this month’s news about the fiscal year 2010 and 2011 budgets, of course. Now more than ever, DC leaders need to take a tactical, balanced approach to funding our government.

Here’s why. Last Friday, DC Councilmembers heard about a $200 million shortfall for the current fiscal year, and Fenty administration plans to deal with it. In the next day or so, city leaders likely will hear more bad news from Chief Financial Officer Natwar Gandhi when he releases his quarterly revenue forecast. If conventional wisdom holds true, this will mean less money for the 2011 budget and the services and programs that rely on those dollars.

First things first, however: How did the city get $200 million in the hole this year?

Between $165 million and $185 million is overspending, according to City Administrator Neil Albert. (About $17 million is due to a revenue shortfall announced in December.) Several councilmembers asked whether these expenses could have been anticipated or reduced —a fair question, indeed.

In some cases the answer is pretty clearly “No.” About half of the projected $80 million deficit in human services is due to increased outlays for health care and unemployment compensation. Albert called it “recession-driven growth.” In other words, as DC residents have lost jobs and income like many Americans have during the Great Recession, they have turned to the government for help to meet their basic needs.

Yet other areas facing budget pressures are frustratingly familiar. Spending on special education — including tuition payments for DC students placed in private schools and related transportation — is running $43 million to $53 million over budget. This wasn’t recession-driven growth. Schooling and transporting DC’s special ed students are perennial budget busters. A detailed chart of the spending pressures is available here. The city’s failure to put processes in place to receive our full federal Medicaid reimbursement ( an expected $21 million this year) has been a longtime problem as well.

Some councilmembers asked if the so-called “spending pressures” resulted from unrealistic budgeting. This is where the mayor and council, as well as DC residents, need to consider our priorities and make tactical decisions. During a recession, government resources shrink due to declining tax revenue at the same time demand for some programs and services increases. Greater scrutiny will be needed in the upcoming budget round to make sure we authorize a level of services that we can afford —and raise revenues if needed to fund the services we want.

So what is Mayor Fenty’s plan? Albert presented a three-pronged approach to the $200 million shortfall: He said the city will restructure debt, which will save about $50 million; take about $100 million from dedicated revenues and put them toward the general fund; and reduce spending in about 40 agencies to a total of $99.4 million.

Albert said this “high level plan” is subject to changes, but basically the $99 million is made up of unfilled positions and unspent dollars. We’ll talk about solutions to the shortfall furtherin the blog tomorrow, so stay tuned for Part II.

It’s a busy week of DC department/agency oversight hearings. Remember, this is your chance to help shape next year’s budget by asking the important questions now! Let the Council hear your praise and concerns!

Monday, Feb. 22

10 am: Department of Youth Rehabilitation Services performance oversight hearing on Fiscal Year 2009-2010 budgets
Committee on Human Services, Chairman Tommy Wells
Room 412
Persons wishing to testify may contact Vivian McCarter, Committee on Human Services, at 724-8191 or e-mail vmccarter@dccouncil.us

Also at 10 am: University of the District of Columbia performance oversight hearing on Fiscal Year 2009-2010
Committee of the Whole, Chairman Vincent Gray
Room 500

3pm: Office of the Deputy Mayor for Education performance oversight hearing on Fiscal Year 2009-2010
Committee of the Whole, Chairman Vincent Gray
Room 500
Persons wishing to testify about the performance of these agencies may contact Aretha Latta at 724-8196 or e-mail alatta@dccouncil.us

Tuesday, Feb. 23

10am: Performance oversight hearings for: Office of Contracting and Procurement; Office of Employee Appeal; Public Employee Relations Board; Department of Human Resources
Committee on Government Operations and the Environment, Chairman Mary Cheh
Room 412
Persons wishing to testify may contact Aukima Benjamin at 724-8062 or e-mail abenjamin@dccouncil.us

Also at 10 am: Department of Parks and Recreation agency performance oversight hearing on Fiscal Year 2009-2010
Committee on Libraries, Parks and Recreation, Chairman Harry Thomas, Jr.
Room 500
Persons wishing to testify may contact Susan Nix at 724-8170 or e-mail snix@dccouncil.us

Wednesday, Feb. 24

Starting at 10 am: Performance Oversight Hearings in Committee on Aging and Community Affairs

10:00 am: Office on Aging
1:00 pm: Commission on Aging
1:30 pm: Commission on Human Rights
3:00 pm: Office of Community Affairs to include: Office of African Affairs; Office of GLBT Affairs; Commission of Women; Mayor’s Office of Community Relations and Services; Office of Women’s Policy and Initiatives; Youth Advisory Council

Persons wishing to testify about the performance of the Office on Aging, the Commission on Aging, or the Office of Community Affairs may contact Ed Fisher at 724-2110 or e-mail efisher@dccouncil.us.
Persons wishing to testify about the performance of the Office on Human Rights or the Commission on Human Rights may contact Victor Bonett, Committee Clerk at 741-2112 or e-mail vbonett@dccouncil.us

11:30 am: Office of Planning performance oversight hearing on Fiscal Year 2009-2010
Committee of the Whole, Chairman Vincent Gray
Room 500

3 pm: Office of Zoning performance oversight hearing on Fiscal Year 2009-2010
Committee of the Whole, Chairman Vincent Gray
Room 500
Persons wishing to testify about the performance of any of the foregoing agencies may contact Aretha Latta at 724-8196 or e-mail alatta@dccouncil.us

Thursday, Feb. 25

10 am: District of Columbia Housing Authority performance oversight hearing
2 pm: District of Columbia Housing Finance Agency
4 pm: Office of Ex-Offender Affairs
Committee on Housing and Workforce Development, Chairman Marion Barry
Room 500
Persons wishing to testify about the performance of any of the foregoing agencies may contact Drew Hubbard, Committee Clerk at 727-8230 or e-mail dhubbard@dccouncil.us

Also at 10 am: District of Columbia Public Libraries performance oversight hearing
Committee on Libraries, Parks and Recreation, Chairman Harry Thomas, Jr.
Room 412
Persons wishing to testify about the performance of the District of Columbia Public Libraries may contact Susan Nix at 724-8107 or e-mail snix@dccouncil.us

Friday, Feb. 26

10 am: District of Columbia Bicycle Advisory and Pedestrian Advisory Councils performance oversight hearing

11 am: District Department of Transportation performance oversight hearing
Committee on Public Works and Transportation, Chairman Jim Graham
Room 500
Persons wishing to testify about the performance of the foregoing agency may contact April Hawkins -Mason at 724-8195, or at ahawkinsmason@dccouncil.us

Also at 10 am: Office of Motion Picture and Television Development performance oversight hearing; Commission on Arts and Humanities performance oversight hearing
Committee on Economic Development, Chairman Kwame Brown
Room 412
Persons wishing to testify about the performance of any of the foregoing agencies may contact Mitria Wilson at 727-6683 or e-mail mwilson@dccouncil.us

It has been a tough budget year for DC’s Department of Human Services—and an equally difficult one for the residents it serves. The department’s budget was cut by $24 million this year, a reduction of 15 percent. Last week, Mayor Fenty ordered another $2.8 million cut to close a budget gap.

At Wednesday’s agency performance hearing, those numbers were put in context when the department’s director–as well as a number of public witnesses–explained that the cuts don’t just reduce the number of paper clips ordered but put a halt to critical services that improve the lives of our fellow Washingtonians.

At the same time the agency has been forced to tighten its belt, it has been overwhelmed with demand for its services. The Great Recession has forced many DC residents to apply for food stamps, health insurance and cash assistance. The lines to do so have been longer and more intimidating because the department closed two front-line service centers and eliminated nearly 100 eligibility determination positions to save money.

Think of it this way: If your local market had more customers calling and waiting in line, would it reduce its services and workforce?

Other examples were discussed Wednesday.  The recent $2.8 million cut appears to put in jeopardy plans to assist DC residents with disabilities. The Interim Disability Assistance (IDA) program provides a monthly cash benefit to individuals with disabilities who have applied for federal disability assistance and are waiting for their applications to be approved, a process that can sometimes take years. Because disability prevents these residents from working, IDA provides their only source of income to pay for rent and other basic necessities.

 The city stopped providing benefits for new IDA applicants last June, creating a waiting list of over 1,000 residents, according to Scott McNeilly of the Washington Legal Clinic for the Homeless. On Wednesday, Human Services Director Clarence Carter said the agency will not be able to help many of those currently on the wait list anytime soon because the city plans to cap the number of participants at 1,500 residents.

Maintaining a waitlist defeats the purpose of IDA, which is to assist residents temporarily while they are waiting for their federal application to be approved. It also threatens the long-term viability of the program because the federal government reimburses the city once an application for federal benefits is approved.  Those monies are used by DC to pay for subsequent IDA participants.

It can no longer be denied that budget cuts are affecting the ability of the Department of Human Services and other DC agencies to provide core services during these difficult economic times. As the District’s leaders struggle to address the worst economic crisis in decades, it does not make sense to make repeated cuts to agencies that provide front-line, essential assistance to our neighbors most affected by the downturn.

“Earmarks are like a narcotic drug,” said Washington attorney Robert Bennett, as he highlighted the major findings from his investigation into DC Council contracts and grants Tuesday. Among his recommendations, Bennett said the DC Council’s current practice of earmarking should be discontinued because it is “not a sound method for appropriating public funds.”

We strongly agree with Bennett’s conclusion.

In recent years, the non-competitive awards of public dollars to selected nongovernmental organizations—otherwise known as earmarks— have increased dramatically. A table on page 46 of the Bennett report shows there were only two earmarks totaling $1.25 million in fiscal year 2005. Four years later in fiscal year 2009, 154 earmarks were proposed, totaling $48 million .

DC Council Chairman Vincent Gray took steps to reform the process last year by making organizations meet certain criteria, but the Bennett report clearly shows stronger action is necessary. (The Council removed all earmarks from the fiscal year 2010 budget due not only to news accounts raising questions about certain organizations receiving funds but to close a large budget shortfall.)

Transparency and accountability are the cures for this budget ailment. The Bennett report homed in on the problem: “The informal method by which grantees are selected clearly does not ensure that public funds go to the best or the most effective organizations to deliver intended services.” Additionally, Bennett noted that members of the council seem to have a gentlemen’s agreement to refrain from questioning each other’s earmarks, further limiting accountability.

All that said, many of the groups who receive earmarks provide critical services and meet needs that the government does not. But the non-competitive nature of the grantmaking makes the process ripe for misuse of precious taxpayer dollars, and it generates a great deal of cynicism about DC government.

The Bennett report recommends the DC Council eliminate the non-competitive awarding of earmarks. Other jurisdictions, such as Montgomery County, have a competitive process to allocate public dollars to community organizations, and in the past we have urged Chairman Gray and his colleagues to use those as models for how to move forward.

Yet if the Council chooses not to follow this recommendation, Bennett urges greater reform and tighter oversight of the earmarking process. Among the recommendations:
• Eliminate the use of fiscal agents
• Require organizations to be incorporated for at least three years
• Have organizations document that they do not have a conflict of interest
• Cap total earmark funding in the budget

We urge the DC Council to quickly adopt Bennett’s recommendations to strengthen our budget process and ensure that taxpayer dollars are used to the greatest public benefit for all.

We’re back in full force from Snowmaggedon with important oversight hearings, including Wednesday’s agency oversight of the Department of Human Services and Friday’s oversight hearing on Fiscal Year 2010 budget pressures. Make your voice heard!

Tuesday, Feb. 16
10am, DC Council Committee of the Whole followed by legislative session, Room 500
Bills of Interest
•Bill 18-490, “Campbell Heights Residents Project Real Property Tax Exemption
Act of 2010″
•Bill 18-456, “Jubilee Housing Residential Rental Project Real Property Tax
Exemption Act of 2010″

Wednesday, Feb. 17
10 am, Department of Human Services Performance Oversight Hearing, Room 500
Persons wishing to testify may contact Vivian McCarter, Committee on Human Services, at 724-8191 or e-mail Vmccarter@dccouncil.us

10 am, Committee on Finance and Revenue Hearing (delayed from last Thursday)
•B18-050, the “Mixed – Income Housing Amendment Act of 2009″
This bill would amend an Act authorizing the sale of certain real estate in the District of Columbia no longer required for public purposes to provide for an affordable housing requirement as part of the disposition of certain real property; and to amend the Office of Property Management Establishment Act of 1998 to require the Office of Property Management to secure an affordable housing requirement as part of certain disposition of real property.
•B18-250, the “Senior Housing Modernization Grant Fund Act of 2009″
This bill would establish a Senior Citizens Housing Modernization Grant Fund and to authorize the Deputy Mayor for Economic Development to make grants from the Fund to qualified senior citizens who reside in an area affected by a planned unit development for repairs and improvements to their single family dwellings.
•B18-399, the “Pennsylvania Avenue-Minnesota Avenue S.E Eminent Domain Authorization Act of 2009″
This bill would authorize the Mayor to exercise eminent domain authority to acquire property in the area of the intersection of Pennsylvania Avenue and Minnesota Avenue, S.E.
According to the bill: ….The Pennsylvania Avenue-Minnesota Avenue S.E. Intersection Area is afflicted with buildings and improvements that are obsolete, dilapidated, and deteriorated to the point of being nuisances to the community, which also contribute to juvenile delinquency, poverty, and crime and have impeded the provision or expansion of safe,sanitary neighborhoods with thriving local businesses….
2pm, Committee on Government Operations and the Environment (delayed from last Thursday)
• Bill 18-572, the “Disposition of Property Formerly Designated as Federal Reservations 129, 130, and 299 Approval Act of 2009″
This bill will approve the disposition of real property owned by the District of Columbia and formerly designated as federal reservations 129, 130, and 299 to 1333 M Street, SE, LLC. http://www.capitolriverfront.org/go/1333-m-st

Thursday, Feb. 18
10 am, Committee of the Whole, Agency Performance Oversight Hearing, Room 412
10:00 a.m. – 11:00 a.m. – Metropolitan Washington Airports Authority
11:00 a.m. – 11:30 a.m. – Metropolitan Council of Governments
11:30 a.m. – 12:00 p.m. – Office of the District of Columbia Auditor
12:00 p.m. – 1:30 p.m. -Office of Labor Relations and Collective Bargaining
1:30 p.m. – 2:30 p.m. – Office of Cable Television and Telecommunications
2:30 p.m. – 3:00 p.m. – Public Access Corporation
3:00 p.m. – End – Office of the Chief Financial Officer’s Office of Budget and Planning( To include the Following budget line-items): Debt Service, Wilson Building, Workforce Investment, Non-Departmental , Cash Reserves, Master Equipment Lease/ Purchase Program, Pay-As-Your-Go Capital Fund, and District Retiree Health Contribution
Persons wishing to testify about the performance of any of the foregoing agencies may contact Aretha Latta at 724-8196 or e-mail alatta@dccouncil.us

10am, Committee on Aging and Community Affairs, Agency Performance Oversight Hearings for Fiscal Year 2009
10:00 a.m. – 11:00 a.m. – Office of the Advisory Neighborhood Commission
11:00 a.m. – 12:30 p.m. – Office of Veterans Affairs
12:30 p.m. – 1:00 p.m. – Serve DC
1:00 p.m. – 2:00 p.m. – Office of Asian and Pacific Islander Affairs
2:00 p.m. – 2:30 p.m. – Commission on Latino Community Development
2:30 p.m. – 3:30 p.m. – Office of Latino Affairs

Friday, Feb. 19
10am, Public Oversight Hearing on the Fiscal Year 2010 Budget Spending Pressures, Room 500

DC’s Earned Income Tax Campaign helps low-income families prepare and file their taxes for free. That’s right, free. Families that earned less than $42,000 and individuals that earned less than $22,000 last year can go to any of the Campaign’s five tax prep sites to get their taxes done and filed for free by IRS-certified preparers. Last year, the campaign helped low-income families file 6,000 returns and receive $9 million in credits and refunds.

Tax time can be very critical for many low-income working families. That’s because many earn so little —despite working full-time, year-round—that they are eligible for tax credits. Tax credits can provide a significant boost to a family’s income by lowering the taxes they have to pay or by providing a refund. The Earned Income Tax Credit (EITC) is one of the most important tax benefits for low-income working families. The EITC is available as a federal tax credit and also as a state tax credit in DC and 24 states. DC’s EITC, which is 40 percent of the federal EITC, is the highest state-level EITCs in the nation.

Because the tax returns families are filing now are based on last year’s income, the EITC can provide tax refunds to unemployed families that worked at some point last year but lost their jobs. In that way, filing a tax return may help families weather the recession.

And while the campaign helped so many low-income families file their taxes last year, there are still many families who are eligible for the credit and who are not claiming it. In fact, DCFPI estimated that between 7,000 and 11,000 people were eligible for the federal EITC—which must be claimed in order to claim DC’s EITC—but did not claim it. This means that outreach to low-income communities is crucial. So please, pass the word about the free tax preparation services for DC’s low-income families. More information about DC’s Earned Income Tax Credit Campaign, and how you can be involved, can be found here.

The District is facing a total budget shortfall of more than $800 million in FY 2010 and  FY 2011, according to new estimates from DC’s Chief Financial Officer.  Falling tax revenue, expiring stimulus funding, and agency “spending pressures” are combining to make this another tough budget year for the city.  Here are the challenges DC is facing, by the numbers.  

Total shortfall for FY 2010: $223 million

    According to the CFO’s December revenue forecast, the District faces a revenue shortfall of $17 million, meaning that DC will collect $17 million less in taxes than it projected this year. 

    In addition to the revenue shortfall, nearly a dozen District agencies are reporting that they will exceed their budgets in FY 2010.  These “spending pressures” are estimated to total $206 million and reflect both an increased demand for services and expected savings that have not been realized.  Some of these spending pressures are quite large, as in the case of DC Public Schools, where spending on special education tuition and transportation is predicted to exceed its budget by at least $43 million. 

   The large amount of spending pressures for FY 2010 raises the question about whether the FY 2010 budget reflected unrealistic assumptions about agencies’ ability to operate with shrinking budgets.  In the case of the Fire and Emergency Medical Services Department, the freezing of approximately 110 positions contributed to the department overspending its overtime budget by $5 million.  The funding allotted for some agencies in the FY 2010 budget, such as the Department of Youth Rehabilitation Services, is the same amount that was budgeted in FY 2008.     

Total shortfall for FY 2011 $514 million

    The picture doesn’t get any better in FY 2011.  The CFO’s December revenue forecast predicted a shortfall of $104 million in District revenues in FY 2011.  Much of the stimulus funding that DC used to help close its budget last year will be expiring at the end of FY 2010. 

    At the same time that revenues are falling, budget needs are increasing.  The difference between the amount of revenue the District expects to collect and the amount that it will need to continue services at their current level equals a $514 million shortfall for FY 2011.  Much of this shortfall can be attributed to expiring funding stimulus funding, spending pressures from FY 2010, and increased costs for special education tuition and transportation.  President Obama’s budget could provide DC with more than $100 million to help narrow this gap.

Closing the Budget Gap

    To close a gap this large, the Mayor and Council should pursue a balanced approach that includes revenue increases and the use of reserves, in addition to budget cuts.  The Mayor already has ordered $99 million in spending cuts for FY 2010.  These cuts impact agencies like the Department of Human Services that already have experienced significant cuts and are struggling to meet the rising demand for their services.  Without identifying additional resources, it will be impossible to maintain support for education, health care, and other services residents rely upon. 

In the midst of talk about increased spending pressures and large budget shortfalls, there is some good news: President Obama released his proposed FY 2011 budget last week, with over $100 million in new funding for DC.

Many of the President’s proposals would help low- and moderate-income District residents weather the ongoing recession. Some programs represent extensions of funding included in the American Reinvestment and Recovery Act of 2009 and apply to DC and all states. Other funding has been proposed to aid existing local programs, such as DC’s Housing First program and HIV/AIDS treatment efforts.

While Congress still needs to approve the funding, here’s what could be available to DC in FY 2011.

• $77 million in additional Medicaid funding: As part of last year’s stimulus act, the federal government provided extra Medicaid funding to states to help them manage their unprecedented budget shortfalls. The President’s proposal would extend the extra Medicaid funding for an additional six months, providing a much-needed boost to DC’s budget.

• $46 million in additional TANF Emergency Contingency Funding: The President’s 2011 budget would make DC eligible for $46 million to help it meet the rising need for cash and employment assistance through the Temporary Assistance for Needy Families (TANF) program. The District already has applied for a similar amount that was made available through 2010 under the Recovery Act. The President’s budget also provides additional funding for another TANF fund to help states address rising demand for services.

• $20 million for education reform: DC again is poised to receive additional funding from the federal government to support its school reform efforts. According to reporting by the Washington Post, the funds would support a data system to track student progress and the implementation of a weekend school program. The President’s proposed budget for DC also includes $23 million for public schools, $20 million for public charter schools, and $9 million to phase out DC’s private school voucher program.

• $10 million for DC’s Housing First program: This year, the federal government provided $17 million to help DC house chronically homeless residents. The $10 million proposed for FY 2011 would help create about 240 units of housing, which would be targeted primarily to serve chronically homeless veterans, according to the Washington Post article.

• $5 million for HIV/AIDS counseling, testing, treatment, and outreach: The DC Department of Health would receive the funding to serve residents in areas of the District that are deemed to be high-risk and high-poverty.

Didn’t get your Washington Post delivered Saturday morning due to Snowmaggedon?

We don’t want you to miss the Post’s coverage of our new report, “Nowhere to Go: As DC Housing Costs Rise, Residents Are Left With Fewer Affordable Housing Options.”

Read the Washington Post coverage of the report.

Our review of Census Bureau data shows that since 2000, rents have grown faster in the District of Columbia than in most major cities and have outpaced the incomes of most DC households. Combined with sharply rising home values and the conversion of many rental units to condominiums, a growing number of DC residents are faced with housing affordability problems.

According to the report:

• DC’s low-cost rental stock has shrunk by more than one-third since 2000. The number of rental units with rent and utility costs of $750 or less fell from 69,000 in 2000 to 45,000 in 2007.
• The number of DC homes valued at $250,000 or less fell from 58,000 to 15,000 between 2000 and 2007.
• Nearly 100,000 DC households–or two of five–spent more than 30 percent of income on housing in 2007, exceeding the federal housing affordability standard.

Read the entire report.

Like the U.S. Postal Service, neither rain nor snow, heat nor gloom of night, Snowpocalypse nor Snowmaggedon, DCFPI always has our eye on the DC budget…..

Here’s what we’re looking at the snowy week of February 8 to 12

Monday, Feb. 8
• 10 am: Roundtable on United Medical Center (Canceled Due To Weather),
Room 500

Thursday, Feb. 11
•10am: Hearing on B18-572, “Disposition of Property Formerly Designated as Federal Reservations 129, 130 and 299 Approval Act of 2009”
Committee on the Environment and Government Operations, Room 412

This bill will approve the disposition of real property owned by the District of Columbia and formerly designated as federal reservations 129, 130, and 299 to 1333 M Street, SE, LLC. http://www.capitolriverfront.org/go/1333-m-st

•2 pm: Hearing on three bills in the Committee on Economic Development

B18-050, “Mixed-Income Housing Amendment Act of 2009”
This bill would amend an Act authorizing the sale of certain real estate in the District of Columbia no longer required for public purposes to provide for an affordable housing requirement as part of the disposition of certain real property; and to amend the Office of Property Management Establishment Act of 1998 to require the Office of Property Management to secure an affordable housing requirement as part of certain disposition of real property.

B18-250, “Senior Housing Modernization Grant Fund Act of 2009”
This bill would establish a Senior Citizens Housing Modernization Grant Fund and to authorize the Deputy Mayor for Economic Development to make grants from the Fund to qualified senior citizens who reside in an area affected by a planned unit development for repairs and improvements to their single family dwellings.

B18-399, “Pennsylvania Avenue-Minnesota Avenue SE Eminent Domain Authorization Act of 2009”
This bill would authorize the Mayor to exercise eminent domain authority to acquire property in the area of the intersection of Pennsylvania Avenue and Minnesota Avenue, S.E.

According to the bill: ….The Pennsylvania Avenue-Minnesota Avenue S.E. Intersection Area is afflicted with buildings and improvements that are obsolete, dilapidated, and deteriorated to the point of being nuisances to the community, which also contribute to juvenile delinquency, poverty, and crime and have impeded the provision or expansion of safe,sanitary neighborhoods with thriving local businesses….

Online websites such as Priceline, Expedia and Travelocity offer bargains for travelers. But they’re not such a good deal for the District and other hospitality-focused cities and states. That’s because when you reserve a hotel room through these online travel companies, they avoid paying a share of the state and local taxes sales taxes they owe on the rooms they book, thereby depriving local jurisdictions of this revenue.

The District has taken action to stop this unfair practice. The DC Council took a step this week to join other cities and states eager to collect their share of hotel taxes from online travel companies. With the recession continuing to batter the city’s finances, this move came none too soon.

How does this tax avoidance scheme work? Let’s say you’re willing to spend $200 a night. If you book a room directly with a hotel, you’ll pay the local hotel tax on $200. But that’s not true for the online travel companies. Since they pay a discounted rate for the room—let’s say they pay $150 but charge you $200—they only pay tax on three-quarters of the total room rate. They pocket the $50 difference as a broker’s fee and do not pay taxes on it.

Many states and cities argue that the tax should apply to the online retail price of the room, and that the online companies owe tax on the so-called “broker’s fee.” New York, for example, has passed laws to make clear that taxes are due on the full room charge paid by the consumer. Some others are suing the online travel sites for back taxes.

The Fenty Administration has not taken legal action, but this week the DC Council took an important step to make sure we at least collect full hotel taxes going forward. A bill to do that was introduced by Council members Michael Brown (I-At-Large), Jack Evans (D-Ward 2), and Kwame Brown (D-At-Large) on February 2, and six other members co-sponsored the legislation.

This is a good step for the District. DC’s heavy reliance on tourism makes it especially important that we collect all the hotel taxes due to us.

Like savvy shoppers, DC needs to get the best hotel deal it can.

Join DCFPI at

Creating a Stronger Workforce in the District: Helping More Families Move from Welfare to Work

Forum sponsored by the Fair Budget Coalition
Friday, February 5, 9:30 – 11:00 AM
John A. Wilson Building, 1st Floor

DC’s Temporary Assistance to Needy Families (TANF) program provides cash assistance, job training, and supportive services to 16,000 low-income families with children, including one in three District children. However, too often families don’t receive the assistance they need to transition successfully from welfare to work. Learn more about the opportunities and barriers faced by low-income families in DC, and what can be done during the current recession to help more families successfully prepare to enter the workforce.

Featured Speakers:

• Yaida Ford, Legal Aid Society of the District of Columbia
• Katie Kerstetter, DC Fiscal Policy Institute
• Halona Agouda, Wider Opportunities for Women
• Jeff Carter, DC LEARNs
• Marina Streznewski, DC Jobs Council
• Emily Appel, Capital Area Asset Builders

Here’s what’s on tap for the week of February 1 to 5

Tuesday, Feb. 2: DC Council legislative session, Room 500, 10 am

Bills of Interest

• Real Property Tax Reform Emergency Amendment Act of 2010
• Woodridge Neighborhood Development Tax Relief Emergency Act of 2010

Friday, Feb. 5: Committee of the Whole Briefing on the FY 2009 Comprehensive Annual Financial Report (CAFR), Room 500, 10 am

A look ahead…..

Monday, Feb. 8: Roundtable on United Medical Center, Room 500, 10 am

Nothing says the start of budget season like the release of the schedule for the agency performance oversight hearings and budget oversight hearings from the Council.  The hearings are an excellent opportunity for the public to raise questions, concerns, or suggestions for a particular program or agency.  They also provide a chance for the public to learn more about how an agency’s budget will be spent and what the agency plans to focus on in the coming year.

The full list of performance oversight hearings can be found here, and the full list of budget oversight hearings can be found here.  The Council’s website will list the schedules starting on Friday.  A word of caution: these schedules often change, so please check the Council’s website for any updates or changes to hearing dates.

Below are some highlights from the budget schedule:

February 17^th to March 19^th — Agency Performance Oversight Hearings

April 1^st — Mayor Fenty releases his proposed budget

April 12^th — Committee of the Whole briefing on the Mayor’s budget

April 13^th to May 7^th — Agency Budget Oversight Hearings

May 11^th to May 13^th — Committee Mark-Ups

May 25^th — Council votes on the FY 2011 budget

More than 600,000 people on Tuesday made it known that they want to raise taxes to preserve critical government services. No, it wasn’t in DC, but we hope that the District’s elected officials take notice.

The voters of Oregon approved by referendum two bills that endorsed a balanced approach to budgeting. Measure 66 raised income taxes on families with incomes above $250,000, and individuals with incomes above $150,000. Measure 67 increased taxes on certain corporations. The bills directed legislators to put the money toward education, health-care, and other important public assets.

The vote demonstrated that many Americans understand the need to raise revenue in these difficult economic times and disagree with an all-cuts, slash-and-burn method to make state and local government work.
We hope Mayor Fenty and DC Councilmembers take note of what happened in Oregon. The District also faces a challenging budget for next year, and we believe many voters in our city agree with our West Coast brethren.

DCFPI supports similar measures to balance the District’s budget. A bill is currently being considered by the DC Council to raise income taxes on households earning above $500,000, and DCFPI supports other revenue-raising measures as well. (If you want to learn more, join DCFPI and the Fair Budget Coalition at a forum tomorrow at 9:30 in Room 120 at the John A. Wilson Building.)

A balanced approach to budgeting involves new revenue, not just cuts. Oregon voters recognized that deep cuts would diminish the quality of life in the Pacific Northwest and slow down recovery from the Great Recession. That’s true for DC as well.