The Districts Dime

The DC Council Should Override Mayor Gray’s Veto on the FY 2015 Budget

July 14th, 2014 |

Mayor Gray vetoed the fiscal year 2015 Budget Support Act on Friday, in part over concerns about changes to income and property taxes for seniors. Yet it is important to note that the budget adopted by the DC Council expands DC’s already substantial property tax relief mechanisms for seniors. The budget also makes substantial cuts in income taxes that will help all households, including most senior households.  The tax changes will raise taxes next year on some senior residents, as they lose special deductions, but the changes generally will be modest and will apply only in limited circumstances.  And even those affected households will face net tax reductions as the Council’s tax package is fully implemented.

DC Council Expanded Property Tax Relief for Seniors and Included Senior Renters

The District provides significant property tax relief for seniors.  Currently, senior homeowners with incomes below $125,000 receive a 50 percent reduction in their property tax bills.  These seniors pay far lower property taxes than others (see Figure).  The typical senior homeowner in DC paid $822 per year in property taxes in 2012-2013.  That is just one-third of the $2,513 paid by the typical non-senior homeowner in that same year.

The mayor’s budget proposed implementing Council-approved legislation to eliminate property taxes for certain senior homeowners. That, however, would have provided substantial new help to some homeowners but nothing to senior renters—even though lower-income senior renters are more likely than homeowners to have severe housing cost burdens. The Council ultimately voted to expand Schedule H, DC’s low-income property tax credit that applies to both renters and homeowners, rather than eliminating taxes for some homeowners.

Under the Council’s changes to schedule H, a senior with $30,000 of income and a property tax bill of $3,200 would get a 50 percent reduction followed by a Schedule H credit of $400, leaving net taxes of $1,200.  This is a 62 percent reduction from the original tax bill.

DC Council Changes to DC Income Tax Will More than Offset Any Modest Tax Increases When Fully Implemented

The tax package adopted by the Council includes a number of income tax changes that will benefit nearly all households, including a new middle-income tax bracket and substantial increases to the personal exemption and standard deduction.

The mayor’s veto letter raised concerns that the DC Council also eliminated a deduction of up to $3,000 of government pension income and a long-term care credit.  The D.C. Tax Revision Commission had recommended eliminating these to make the tax code more simple and in the context of broad-based tax reductions.

There are three important things to consider when reviewing these changes. 

First, when the DC Council’s tax package is fully implemented in 2019, any tax increases as a result of eliminating these deductions will be more than offset by other tax reductions.  A senior married couple earning $50,000 will see their taxes reduced by $600 when the Council’s tax package is fully implemented—even if both spouses currently claim the maximum pension and long-term care credit deductions. 

Second, even next year, it is likely that most seniors will see net income tax reductions.  Less than one-third of senior households claim the pension deduction and no more than 8 percent of senior households claim the long-term care credit.  In other words, most seniors will benefit from income tax reductions with no loss of current deductions.

For example, a married couple with $50,000 income that has not claimed the pensions or long-term care deductions will see taxes fall $255 next year.  A married couple with $100,000 of income from one spouse will see taxes fall $300.

Third, some seniors will see slight tax increases in 2015 if they have claimed the full pension and long-term care credit.  But the changes generally will be modest and temporary.

Some families that claim the pension and long-term deductions still will see tax cuts in 2015 as they lose these deductions, as a result of other tax changes.  Some other families will see modest tax increases next year, but net tax cuts as the Council package is fully implemented.

  • A married couple with $50,000 of income and one spouse who claims the pension and long-term care deductions will get a tax cut of $45 in 2015 (and an $810 tax cut in future years)
  • A married couple with $50,000 income would see their taxes go up by $165 — or 0.33 percent of income — if both spouses took the maximum pension and long-term care credit deductions turn.  As noted, this family will see a $600 tax cut over time.
  • A married couple with income of $100,000 would see their taxes go up by $840 — or 0.84 percent of income — if both spouses took the maximum pension and long-term care credit deductions and chose to split their income on their DC tax return.  When all tax cuts are fully implemented, this family will see a $114 tax cut.

These suggest that even in the rare situation of a family where two seniors claim these deductions fully, the tax increase in 2015 would be relatively modest.  And within a few years, further reductions in income taxes would leave even these families with net tax cuts.

In the end, because the final tax package will result in significant tax reductions, we urge the DC Council to vote to override Mayor Gray’s veto.  The tax increases that may result on small share of DC residents in the first year would be minimal and would help pay for the larger tax relief that will be available to nearly all residents when the tax package is fully implemented.

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The District Is Not Prepared to Shelter Families During the Next Hypothermia Season: A New Plan Is Needed

July 11th, 2014 | by Kate Coventry

The District announced this week that it had identified more than 450 apartments suitable for homeless families, as part of its “500 Families: 100 Days” effort. The good news that the city almost met its goal to find suitable housing is tempered, however, by the fact that the city moved only 55 to 60 families per month out of shelter, far short of the goal of 100 per month. At that rate, the DC General Shelter will be almost full at the start of the next hypothermia season, and the shelter system could be once again overwhelmed. Yet the fiscal year (FY) 2015 budget provides fewer resources for homeless families than this year.

Given the almost certainty of another shelter crisis, Mayor Gray should develop a new plan, with adequate funding, for how the city will shelter all families safely in the upcoming winter.

Since 2010, the number of families with children in emergency shelter during the annual count has grown from 326 to 907 (see Figure 1). It is reasonable to expect similarly large, if not larger, need for family shelter in FY 2015. But it isn’t clear how DC will safely shelter all families that need it.

Like last winter, the DC General shelter is likely to be nearly full when cold weather arrives. At the current exit rate, between 230 and 254 families will be in shelter on November 1, close to its full capacity of 289. Because families have a right to shelter when it is cold, the system is likely to be quickly overwhelmed again.    

Yet the Department of Human Services (DHS) could have fewer financial resources to meet the need. DHS will spend over $9 million on motels this year using federal carryover dollars, but those funds are not likely to be available in FY 2015. 

Beyond that, the DHS budget for FY 2015 contains no funding for motels and only funding for 150 families at DC General throughout the winter hypothermia season. This is not enough even to cover the costs of the approximately 254 units for the families who will already be in shelter at the start of the season. 

Without adequate planning and funding, the city is setting itself up for another homeless crisis next year. This could lead once again to conditions that are harmful to children and families, such as removing families from shelter any day that is not expected to fall below 32 degrees, when there is no right to shelter.

Rather than allowing this to happen, the mayor and DHS should develop a plan detailing how they will shelter all families safely in the upcoming winter. There is no excuse for failing to prepare.

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Maximizing DC’s Public Lands for Affordable Housing

July 10th, 2014 |

A DC Council committee voted this week to bolster a novel tool to get more affordable housing throughout the city. The bill would require developers to include affordable housing any time they buy land from the city for residential development. We urge the full Council to pass the legislation when it meets on Monday.

The Disposition of District Land for Affordable Housing Act of 2013, considered by the Committee on Economic Development, would allow DC land to be sold below market value to subsidize the costs of the affordable housing. This is a smart approach because it would use land value – rather than needing to use tax dollars – and because it would create mixed-income communities throughout DC. 

Photo by Ted Eytan:  wiki/Washington,_D.C.#mediaviewer/ File:The_Cairo_Building_in_Washington_DC.jpg

Photo by Ted Eytan: wiki/Washington,_D.C.#mediaviewer/ File:The_Cairo_Building_in_Washington_DC.jpg

  • How much affordable housing? 30 percent of the new housing would need to be affordable if it is built within a one-half mile of a metro stop, or one-quarter of a mile from a bus priority corridor or streetcar line. In other areas, 20 percent of the units would need to be affordable.
  • Affordable for whom? In housing built as rental, one-fourth of the low-cost units would be for residents making 30 percent or less of area median income (AMI) or $29,000 for a family of three.  The rest of the affordable units would be for residents making 50 percent of AMI, or $48,300 for a family of three.

In homeownership buildings, half of the affordable units would be for residents earning 50 percent of AMI and the other half would be for those earning 80 percent of AMI or $78,200 for a family of three.

A recent disposal of land at 5th and I Streets NW, in the bustling Mt. Vernon neighborhood, highlights why this bill is so critical. When DC put the property on the market, the land was valued at over $19 million—enough to create a substantial number of affordable housing units. The District did not require bidders to commit to affordable housing.

So it is not surprising that two of four qualifying bids offered no affordable housing beyond requirements that apply to housing built on private land (called Inclusionary Zoning). Another offered to make a modest $1 million contribution to the Housing Production Trust Fund which would build about 13 affordable units. The last developer, the one selected by the city, offered to build 100 affordable units but not in Mt. Vernon Square where residents could enjoy the development occurring there. The low-cost units could end up anywhere, such as in a neighborhood that is far from services, good schools, and job opportunities. 

That is why it make sense to set clear rules to ensure that all public land sales deliver a significant share of affordable housing. That is exactly what this bill would do and why the DC Council should vote yes on this bill Monday.

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Tax that Funds DC Health Link Will Keep Health Plans Affordable for All District Residents

July 9th, 2014 | by Wes Rivers

The District recently adopted a plan to finance its online health insurance exchange,, in a way that spreads costs 7-9-14 HBC f1among consumers and taxpayers broadly. Some insurers are challenging that plan, because the new tax covers health plans sold outside the exchange in addition to those sold through the exchange, but the new broad-based revenue stream makes sense. That’s because all insurers and consumers will benefit from the success of DC’s exchange, which has been lauded as a national model, and because other financing options would result in very high costs for affected consumers.  

The funding plan will assess, or tax, the premiums of all health insurance companies in the District, including companies operating inside and outside DC Health Link. The tax also will apply to 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. 
  • All health carriers will benefit from expanded access to health coverage through DC Health Link. As more residents have health insurance, their health outcomes are likely to improve, and health providers will see a reduction in uncompensated care costs, which have to be spread among those with insurance. This means that DC Health Link should reduce average health costs, which helps all insurers.
  • Insurers that sell indemnity or supplemental products outside of the exchange will benefit, because those supplemental plans are mostly sold to people who already have major medical coverage. As more residents have basic coverage, demand for supplemental coverage will increase.

These benefits are possible only if DC Health Link has the resources needed to operate the complex site and provide assistance to help individuals and businesses sign up. A broad-based tax makes that possible. If the exchange had to be funded solely through fees on plans sold on the exchange, the costs to consumers could be very high or could leave the exchange without the resources it needs.

DC’s exchange financing plan is a sustainable model that other states are also exploring. Colorado’s exchange board adopted a similar broad-based approach in addition to a user fee for people purchasing inside the exchange. All insurers, businesses, and individual consumers benefit from a well-functioning health exchange. DC’s funding stream recognizes these benefits and effectively spreads the costs. 

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Redeveloping the CCNV Shelter to Meets the Needs of Residents

July 8th, 2014 | by Kate Coventry

What will happen to the District’s largest homeless shelter – CCNV – when federal restrictions on its use end over the next seven years? A Task Force consulted with residents over the site’s possible redevelopment and concluded that it should continue to serve homeless residents, though with a new mix of affordable housing and emergency shelter on site or nearby. DCFPI served on the Task Force and supports its “Statement of Principles,” which will be discussed today at a DC Council hearing. We hope that the work of the Task Force will serve as the foundation for a shelter feasibility study that the District will undertake over the next year. 

7-8-14 ccnv F1

The District owns the shelter building (officially called the Federal City Shelter) which hosts five nonprofits that offer a wide range of services to as many as 1,300 individuals at any given time. One of those nonprofits, the Community for Creative Non-Violence, owns the adjacent parking lot. Both were given by the federal government with the requirement that they be used to serve the homeless. The requirement on the CCNV lot expires in 2021. Given the coming expiration and the extensive repairs needed, the DC Council convened a Task Force to consider possible redevelopment options. 

The Task Force held listening sessions with current residents and reviewed redevelopment projects in other jurisdictions. Given the large number of residents currently served, the Task Force stressed that the District should use the site to meet the needs of homeless residents, while recognizing that that it may not be feasible to serve the same number of people on site after the redevelopment.  

  • Affordable Housing: Residents overwhelmingly reported that their needs would be better met with housing, and this is backed by research showing that people who are homeless are better able to re-stabilize when placed quickly into housing. As a result, the Task Force recommends a mix of affordable housing, housing designed for the needs of youth under age 24, and permanent supportive housing (PSH). PSH combines affordable housing with intensive support services for individuals with significant behavioral and/or physical health problems.
  • Emergency Shelter: Most residents agreed that the site should still provide shelter or that shelter should be provided nearby, and so the Task Force recommends the inclusion of year-round 24-hour low barrier shelter beds and hypothermia shelter beds. Low barrier shelters are shelters with few or no requirements for entry, ensuring they are easily accessible to homeless residents.

DCFPI believes that the “Statement of Principles” provide a solid foundation for the feasibility study that will assess the needs of residents and outline possible redevelopment options. DCFPI recommends that the study continue to incorporate residents into the decision-making process. 

To see the entire testimony, click here.

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