The Districts Dime

Making DC’s Tax System Fair: Progress in the 2015 Budget

April 11th, 2014 | by Ed Lazere

Most DC residents — like most Americans — agree that income tax rates should be graduated by income. Low-income households should pay the lowest rate, so that there is an incentive to work and they can support their basic needs. This kind of progressive approach also means tax rates get higher as incomes rise and as the ability to meet basic needs gets easier. Given the high cost of living in the District, using the tax system to help residents make ends meet is very important.

There is good tax news in Mayor Gray’s proposed fiscal year 2015 budget, including two steps to make DC’s income tax more progressive. Following recommendations of the DC Tax Revision Commission, the budget would lower the income tax rate on moderate income residents and keep an income tax bracket for very high-income residents that otherwise would soon expire.

Unfortunately, however, the proposed budget leaves the Commission’s most targeted income tax cut recommendations on a wish list. In other words, 4-10-14-income-tax-blog-f1there’s room for more progress.

Right now, DC residents who make $40,000 and those who make $350,000 pay the same rate tax rate. Putting moderate-income families in the same bracket as higher-income households contributes to middle-income residents facing substantial tax liabilities as a share of their income — among the highest in the nation, in fact. To address this, the Tax Commission recommended cutting the tax rate for middle incomes — and the FY 2015 budget takes a step in that direction. It would cut income taxes from 8.5 percent to 7.5 percent on income between $40,000 and $60,000, saving a single person $200 and a two-earner family up to $400. The commission recommended dropping the rate to 6.5 percent.

Mayor Gray’s budget also adopts the Tax Revision Commission recommendation to maintain a top income tax rate for residents with taxable incomes above $350,000 rather than letting it expire in 2016 as under current law. The proposed budget would also keep the current top rate at 8.95 percent and not lower it. Maintaining the top rate would generate millions in revenue to support public services and reduce taxes for middle- and lower-income families.

What about help for our lowest-income families? The Council has a chance to help to improve upon the mayor’s proposal by expanding the Earned Income Tax Credit for workers without children or raising the standard deduction or personal exemption. This would help make work pay and help our most vulnerable families meet basic needs. You can read more about the Commission’s recommendation here.

As the Council works to refine next year’s budget, DCFPI will be looking for more progress on recommendations to reduce income taxes for residents who need help to make ends meet in the District.

To print a copy of today’s blog, click here.

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Stay the Course: Fund DC Health Link!

April 10th, 2014 | by Wes Rivers

The District’s online health insurance exchange,, has been lauded as a national model among state exchanges. But success doesn’t come cheap, and as federal start-up grants for Obamacare expire, the District needs a local, sustainable revenue source to fund operations and continue to help consumers get covered. DCFPI supports a proposal to implement a broad-based tax on health insurance to cover this important need for our community. 

Today, DCFPI policy analyst Wes Rivers testified before the DC Council on the exchange. DC Health Link has enrolled 40,000 people in plans since October. If the marketplace is to continue its success and expand to more residents and small businesses, it needs adequate and sustainable revenues for the future. Here is what policy analyst Wes Rivers had to say: 

DC Health Link’s proposed budget makes several critical that will help consumers navigate the new system and sign up for coverage.  

  • $5 million to maintain the call center, a critical component of consumer support in the District. In the first enrollment period, the call center fielded 86,000 calls for assistance.
  • $2 million to support case workers and front line staff at Department of Human Services’ offices. DHS sees a lot of Medicaid enrollees and, due to staffing and resource constraints, has had problems with long wait-times, delayed processing of applications, and even improper termination of benefits.
  • $1.4 million in consumer outreach and education, including the funding of two Navigator positions. Navigators perform the same functions as the in-person assisters currently helping residents through the application and enrollment process. DCFPI recommends monitoring the demand for in-person assistance through the next open enrollment period. If federal grant money may expire at the end of the year and demand is high, more local funding for in-person assistance programs will be needed.

DCFPI also supports funding DC Health Link’s operations through a sustainable, local funding source. The proposal is to assess, or tax, the premiums of all health insurance companies in the District, including companies operating inside and outside DC Health Link, Managed Care Organizations, and companies that sell supplemental products like disability or long-term care insurance. The broad-based assessment is logical because: 

  • A broad assessment will keep costs to individuals and small businesses as low as possible. Insurance carriers will pass on the assessment costs to consumers in the form of higher premiums, but if the assessment is broad, each individual premium will be affected minimally.
  • Consumers and small businesses benefit from a fully funded exchange – including a strong network of consumer assistance and a high-functioning IT system.
  • A fully funded exchange will be able to ensure consumer protections for plans sold on DC Health Link. For example, data collection regarding health plans’ provider networks would allow the Authority to improve consumer access to primary care doctors and specialists. 

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Holding New Communities Accountable To the Community

April 9th, 2014 | by Jessica Fulton

Making the District an affordable place to live is perhaps our city’s biggest public policy challenge, and a key to our future. The New Communities Initiative, an effort to transform four DC neighborhoods with large public housing complexes into vibrant mixed-income communities, has the potential to be a critical way to preserve affordable housing in a rapidly gentrifying city. 

Yet the eight-year old initiative has moved very slowly and has raised concerns in the affected communities – Northwest One, Park Morton, Lincoln Heights and Barry Farm. There are ways to make the initiative more transparent and responsive, and DCFPI Outreach Director Jessica Fulton presented several of these recommendations in testimony to the DC Council today. A copy of her full testimony can be found here.

Recently revealed information on New Communities – a great improvement in transparency around the initiative – shows that New Communities has not been true to its key commitments: building first before tearing any housing down, offering one-for-one replacement of low-cost housing, mixed income development, and the opportunity to stay while the community was transforming.    

The Office of the Deputy Mayor for Planning and Economic Development has the opportunity in the coming fiscal year to reassure residents that it maintains commitment to New Communities. 

DCFPI’s recommendations include: 

  • Increase transparency. Recently, the Deputy Mayor rolled out a website to keep stakeholders up-to-date on New Communities projects. Moving forward, the mayor’s office should build on this by improving direct communication with stakeholders, to keep them aware of updates and setbacks in the development process.
  • Revisit New Communities Initiative master plans. New Communities projects at Barry Farm, and Lincoln Heights/Richardson Dwellings are facing more challenges than Northwest One, suggesting that the District may need to make a larger investment in either rehabilitating or redeveloping housing in these communities.
  • Consider the implications of delayed redevelopment. New Communities sites were selected for redevelopment because they represent some of the most distressed public housing in the District. DC should consider improving the dilapidated public housing stock on a faster timeline if the full New Communities redevelopment plans remain uncertain. 

The Gray Administration has made considerable progress in increasing transparency of New Communities in the past year. Yet this increased transparency has led to many more questions about the viability of the New Communities plan. By using the next fiscal year to continue to make progress in planning and using those plans to guide further actions, the Deputy Mayor’s office can bring more success to the project.

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Testimony of Jessica Fulton, Outreach Director, At the Public Hearing on the FY 2015 Budget of The Office of the Deputy Mayor for Planning and Economic Development

April 9th, 2014 |

Chairman Bowser and members of the Economic Development Committee, thank you for the opportunity to testify today. My name is Jessica Fulton and I am the Outreach Director at the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on how policies impact low- and moderate- income families. 

I am here today to testify on the Fiscal Year 2015 budget and goals of the New Communities Initiative, headed by the Deputy Mayor for Planning and Economic Development (DMPED). The program aims to revitalize four public housing sites in DC, Barry Farm, Northwest One, Park Morton, and Lincoln Heights/Richardson Dwellings, while adhering to principles minimizing displacement and increasing neighborhood sustainability. 

The sites selected for the New Communities Initiative contain some of the most distressed public housing in the District, and several are in neighborhoods where affordable housing faces the risk of being lost due to redevelopment and gentrification.  New Communities is an effort to transform these four neighborhoods into vibrant mixed-income communities without displacing current residents. Yet the initiative has moved very slowly –making no progress at all in some sites – raising concerns in the affected communities. 

In the coming year, the Office of the Deputy Mayor for Planning and Economic Development has the opportunity to revise its plans and re-enforce its commitment to the initiative. 

Continuing to Increase Transparency Needed to Keep New Communities on Track

Over the past year, the Deputy Mayor has made a number of improvements to transparency in the New Communities Initiative, including creating a position to oversee the entire project and give stakeholders a place to direct questions. In addition, the recent rollout of the New Communities website is a vital resource. Over the next fiscal year, the Deputy Mayor’s office should continue to use these tools to keep stakeholders aware of updates and setbacks in the development process. 

Revisiting New Communities Initiative Plans Is Needed to Create More Viable Projects 

It has become clear that some of the New Communities sites may not be viable fit for this kind of redevelopment. At Barry Farm, Lincoln Heights, and Richardson Dwellings, few or no market-rate units are being produced which suggests that private developers have little interest in developing in these neighborhoods. Thus, it may be time to consider alternative development plans with a greater investment from the District to rehab current units or to finance new housing. I was recently included in a conversation with several housing professionals to evaluate the progress of the New Communities Initiative. This is exactly the kind of analysis needed to ensure that New Communities residents in particular and District residents as a whole are involved in an effective process. And, this kind of analysis should inform New Communities work moving forward. 

DC Should Consider the Implications of Delayed Redevelopment 

Currently, several of the New Communities projects are behind schedule. As the redevelopment timeline drags on, DC should consider other steps to improve the dilapidated public housing stock occupied by residents at New Communities sites. 

The sites included in the project were included because they represented housing in the worst condition in the District. And, because of the lack of progress in the sites, families have had to remain in dilapidated housing far longer than expected. If evaluation suggests that redevelopment will be significantly delayed, DMPED should work with the DC Housing Authority to make the necessary improvements to the New Communities properties. 

The New Communities Initiative has made considerable progress in increasing transparency in the past year. Yet this increased transparency has led to many more questions about the viability of the New Communities plan. By using the next fiscal year to continue to make progress in planning and using those plans to guide further actions, the Deputy Mayor’s office can bring more success to the project. 

I appreciate your time, and I’m open to answering any questions you may have.  

To print a copy of the full testimony, click here.


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Longer School Days in the FY 2015 Budget

April 8th, 2014 | by Soumya Bhat

School districts around the country are experimenting with lengthening the school day or school year to help close achievement gaps. DC Public 4-8-14-LongerSchoolDays-f1Schools (DCPS) Chancellor Kaya Henderson is trying out this approach, too, as part of the city’s effort to lift the 40 lowest-performing schools by 2017. Citing improved test scores from a recent pilot program at some DCPS schools, the proposed fiscal year 2015 budget includes $5.7 million to expand the strategy to half the school system. 

Extending the school day holds promise, but DCPS should complement existing programs and carefully evaluate outcomes to make sure those resources are used as effectively as possible. 

Nine DCPS schools currently offer the extended day program – five elementary schools, one education campus, two middle schools, and one high school. According to the proposed FY 2015 budget, a total of 52 schools, or half the DCPS system, will receive $100,000 more to offer students an extra four hours of instructional time each week. However, one exception – Dunbar Senior High School – is slated to receive almost $600,000 for extended school day. The budget and related documents do not explain why Dunbar would get so much more than other schools. 

How that extra time will be used will be key to its success. Research shows that struggling students can greatly benefit from engaging, individualized learning experiences, including those offered through afterschool and summer programs. But simply adding more of the same curriculum offered during the school day won’t necessarily make a difference in student achievement and could result in student fatigue. A good system-wide strategy should take into account what types of programs already exist, in and out of school hours, offer complementary programming, and assess the costs of implementation. In addition, teachers and parents need to be included in these changes so that they are fully aware and supportive. 

The DC Fiscal Policy Institute looks forward to following the expansion of longer school days to improve outcomes in high-poverty schools, and hopes that this will be undertaken in a thorough and thoughtful way. 

Stay tuned to more from the District’s Dime on the FY 2015 budget!

To print a copy of today’s blog, click here.


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