The Districts Dime

Latest Revenue Forecast Triggers Tax Cuts for 2016

October 6th, 2015 | by Wes Rivers

The District’s revenues are growing, but none of the new funds will be available to fund needed services like schools or housing.  Instead, based on the budget passed by the DC Council this summer, every dollar of $38 million in projected revenue increases will go toward income tax cuts for middle- and upper-income residents and for DC businesses starting in 2016. The problem with this plan is that tax cuts will take place before we know if there is enough money for next year to cover the costs of basic city services like schools and health care or affordable housing.

Under the timeline laid out in the FY 2016 budget, any increase in projected revenue collections between February 2015 and September 2015 projections would result in automatic implementation of tax cuts recommended by the Tax Revision Commission. The September revenue forecast from the DC Chief Financial Officer, released last week, reflects a $38 million increase over the baseline estimate from February (the same as the revenue projection from June). See this chart book for how DC’s tax triggers work.

That means $38 million will go to the following tax cuts (see the full Tax Commission list here):

  • A reduction in the income tax rate for income between $40,000 and $60,000 to 6.5 percent ($14.2 million). This helps not only middle-income households, but higher-income households as well, who will pay the lower rate on this portion of their income.
  • A reduction in the income tax rate for income between $350,000 and $1 million, from 8.95 percent to 8.75 percent ($4.7 million).
  • A reduction of the corporate and unincorporated business franchise income tax rate to 9.2 percent ($9.7 million).

Devoting all the revenue growth to tax cuts is problematic because DC may need some revenue growth just to cover the expanding cost of basic services, for things like rising health care costs, growing school enrollment, and Metro needs. In addition, $100 million in services in the fiscal year 2016 budget were funded with one-time sources, including $50 million devoted to the Housing Production Trust Fund. This means that DC will have to find new money to fill big gaps to keep services going next year. Lastly, there may be unexpected expenses, like a lawsuit, and using all new revenues for tax cuts would leave the city without a cushion.

This approach is notably different and riskier than the policy it replaced, which was to make tax cut decisions in February each year, closer to when the next budget must be put together. By February, the mayor and Council have a clearer picture of both the city’s revenues and spending needs for the coming year, allowing for better decisions about how much to devote to tax cuts and how much to keep for schools, housing, and other needs.

The mayor and DC Council should consider slowing down future tax triggers over the next year so that we do not hamstring the ability to fund programs in FY 2017 and beyond. This could mean only allowing a portion of revenue growth in 2016 to go toward tax cuts.

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Helping Unemployed DC Workers Stay Afloat

October 2nd, 2015 | by Ed Lazere

The DC Council took an important step last week to strengthen the safety net for workers, with a proposal to increase unemployment benefits for the first time in a decade. DC’s maximum unemployment benefit has been stuck at just $359 a week since 2005, despite the city’s sharply rising costs of living. The new legislative proposal would increase the maximum weekly benefit and then make sure it is adjusted for inflation each year, along with other changes to help unemployed workers. These are important steps to keep workers from falling into a financial crisis when they lose a job. Strengthening unemployment benefits helps businesses, too, by supporting consumer spending.

Workers qualify for Unemployment Insurance when they lose a job through no fault of their own – such as when their employer downsizes or reorganizes its stUnemployment Benefitsaffing. Workers can get benefits for up to 26 weeks and must be looking for work to get this help. In DC, benefits replace half of a worker’s former wages, but only up to a maximum weekly amount.

Despite the importance of unemployment insurance, DC’s benefits have been neglected for a decade. The maximum weekly benefit of $359 has not been adjusted since 2005 – and would be about $100 a month higher today if it had been adjusted for inflation every year. The maximum DC benefit is lower than in Virginia and Maryland, and in fact, lower than in a majority of states. DC’s benefits work out to just about $1,500 a month, a challenging amount for anyone to try to live on in the District.

The new proposal would help make up the lost ground. The maximum unemployment benefit would rise to $430 a week, matching Maryland’s benefits, and would be adjusted for inflation every year. The legislation also would ensure that all workers can get 26 weeks of help if needed. And it would make it easier for unemployed workers to take a part-time job while looking for a full-time job, by allowing them to keep more of their unemployment benefits. These increases would likely be possible without asking employers to pay higher taxes that fund the unemployment system. That’s because DC’s unemployment insurance fund is very healthy and has been running surpluses in recent years.

Strengthening unemployment benefits is important not only to the affected workers but also to the city as a whole. When workers lose a job and income, they have less to spend on rent or their mortgage, groceries, clothing, and other needs. That means that businesses also suffer when someone loses a job. When unemployment rises city-wide, such as in a recession, unemployment benefits help keep businesses afloat by making sure residents have money to spend.

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Strategies to Streamline Child Care Subsidy Eligibility

October 1st, 2015 | by Soumya Bhat

Many parents have trouble accessing DC’s child care assistance program, based on results of recent town hall meetings held by the DC government. The good news is that short- and long-term strategies are in the works to streamline the process.

Early ChildhoodThe District’s child care subsidy program helps low-income families by giving them vouchers to pay for care at licensed child care centers and homes. This kind of help is critical to ensuring that children get safe and high-quality care and that parents can go to work or job training. Without help, many could not afford child care costs in DC, which are the highest in the nation.

Unfortunately, the process of determining eligibility for child care subsidy is often described as challenging for parents and providers navigating the system. At a recent set of town halls hosted by the DC government, the community identified several problems with the program, including burdensome eligibility policies, unclear or outdated requirements, and frustrations over how to best communicate issues when they arise. Here is some of the feedback – and solutions – discussed at the town halls:

  • DC has only one Department of Human Services location to complete child care eligibility, and it is not Metro accessible. Until recently, the only place for families to apply for child care through DHS was the Child Care Services Division at 4001 South Capitol Street, SW. DC has since opened a second child care eligibility office at 1207 Taylor Street, NW.
  • It is difficult for parents to connect with someone to get child care questions answered. In response, DC’s Department of Human Services is taking steps to return calls within 24 hours and offer callers the option of leaving messages. An e-mail system will be set up for parents to make appointments with an eligibility worker.
  • It is not easy to access basic information about the child care subsidy program. In response, the District is updating relevant websites and will develop a user-friendly one-page fact sheet on how to apply and who to contact about the child care subsidy program.
  • Service seems to be limited to English speaking providers and parents. The Department of Human Services and the Office of the State Superintendent of Education responded by pledging to update all current materials and translate them into Spanish, Amharic, and French.
  • There is no “complaint line” for parents. In response, OSSE has created an e-mail account for parents and providers to voice their concerns (

DCFPI appreciates the city’s efforts to hold these town hall meetings and we look forward to seeing progress made on these fronts, both in the short- and long-term. As the town halls showed, there is much that needs to be done to make it easier for parents to get the child care assistance they need.

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Safety Concerns Need to Be Addressed in Family Shelter Plan

September 30th, 2015 | by Kate Coventry

Mayor Bowser’s decision earlier this year to replace the dilapidated DC General shelter for homeless families was widely praised. But it has raised concerns recently, because her plan for the new shelters would give families a single room for living and sleeping, rather than a full apartment as called for under current law.

dc general photo

DCFPI thinks this could work if key issues are addressed, particularly safety issues, and if the District has enough apartment-style units for families with special needs. We hope these concerns can be worked out through a new committee created by the Mayor to make design recommendations for the new shelters.
Replacing DC General is long overdue. The building is old and has constant problems with heating and cooling. It shelters too many families—up to 260 at one time—requiring greater security, including metal detectors, than a small shelter would. And it was never meant to be a shelter so it lacks sufficient spaces for activities like studying or parenting classes. The proposed shelters address these issues. They will be new or newly renovated and will house no more than 50 families. Each shelter will have a computer lab, study areas, and meeting space for classes and other activities.
While DC’s other family shelters consist of private apartments, the proposed shelters will primarily consist of a single private room per family, without kitchens, bathrooms, or separate bedrooms. Private rooms take up less space than apartments, allowing the District to shelter more families at each site.

But private rooms will require families to share bathrooms, posing safety concerns, particularly as many families have experienced trauma. Additionally some families have disabilities that require a private bathroom or cooking facilities to prepare special diets. and creating opportunities for conflict.

The Mayor has created an Interagency Council on Homelessness Committee on Design Guidelines for Emergency Housing for Families Experiencing Homelessness to create guidelines for the new shelters. DCFPI will serve on the committee, and we hope to work with other members—government leaders, providers, national homelessness experts, residents who have experienced homelessness, and other advocates—to address these concerns so we can move forward to replace DC General.

Kate Coventry is a DCFPI Policy Analyst and voting member of the Interagency Council on Homelessness.

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Affordable Housing Is Coming to the U Street Area Thanks to New Law

September 23rd, 2015 | by Ed Lazere and Claire Zippel

Legislation adopted last fall to turn city-owned land into mixed-income housing is already at work! Thanks to the new law, nearly one-third of the homes in a development at 965 Florida Avenue, NW will be affordable to residents struggling with DC’s incredibly high housing costs.

Yesterday the DC Council approved the disposition of land needed to move this project forward. We commend the Council for its support of this development, which will create over 100 affordable apartments in a rapidly developing neighborhood – without using tax dollars.

7.9.15 965 FL Ave Public Lands

Thirty percent of the apartments – 107 of 353 – will be affordable, following requirements of the Disposition of District Land for Affordable Housing Act adopted last fall. Twenty-seven apartments will be for residents with incomes below $29,000 for a family of three (30 percent of the Area Median Income) and 80 will be for residents with incomes under $49,000 for a family of three (50 percent of Area Median Income). The project will help singles and small families, as one-third of the apartments will have two bedrooms and the rest will be studios or one-bedroom units.

The 965 Florida Avenue project highlights the many benefits of the new law. The families that move in will have high-quality housing that is permanently affordable, Metro accessible, and close to job opportunities and neighborhood amenities. Without housing help, many low-income families now spend more than half their income on DC’s high and rising rents.

Importantly, no tax dollars will be spent on the affordable housing at 965 Florida Avenue, though it won’t be free. The developer will pay the city less than full market value for the land to offset the costs of setting rents at affordable levels. In effect, the land value – rather than tax dollars – will pay for the affordable housing. Even before this law, the District often sold its land at below-market levels in return for amenities such as affordable housing.

With low-cost private housing virtually non-existent in the District, and many neighborhoods like U Street rapidly developing, the District needs to pursue affordable housing in a variety of ways. As the 965 Florida Avenue project shows, the new law to build mixed-income housing on city-owned land is a key way we can meet this important goal.

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