The Districts Dime

Tax Cut “Triggers” Are Limiting Our Ability to Fund Necessary Services and Should Be Modified

May 11th, 2016 | by Ilana Boivie

Tax cut “triggers” adopted last year are causing the city’s revenues to grow slower than any time in the last two decades, other than during recessions. This is affecting the ability to meet the demands of a growing city, such as rising school enrollment and increasing homelessness. As the Council prepares to vote on the DC budget, they should modify the triggers to balance tax cuts with the need for adequate revenues to meet important needs.

revenuesTax Cut Triggers Are Contributing to Historically Low Rates of Revenue Growth

Under the tax cut triggers, 100 percent of any increase in revenues from a growing economy, above revenue projections from the previous year, is devoted to a set of tax cuts recommended by the Tax Revision Commission.

The triggers are greatly restricting the District’s revenues. Revenues will grow no more than 1 percent per year every year from 2016 through 2020, adjusting for inflation. Even in the Great Recession, DC’s revenue growth did not stay this low for so long.

The impact of the tax triggers could last for years. The tax triggers resulted in nearly $50 million in tax cuts over the past year, and nearly $140 million in tax cuts remain to be triggered in the future.  (See chart below.)

Tax Cut Triggers Make It Hard to Keep Up with DC’s Growing Needs

growth in servicesDC’s revenues are projected to increase by just 3 percent per year for the foreseeable future (not adjusting for inflation), largely due to the tax triggers.[i]  Yet many needs that affect the city’s budget are growing faster than that:

  • Health Care. Medicaid enrollment has grown 4.5 percent per year over the last five years.[ii]
  • School Enrollment. Growing enrollment in DC public and charter schools and a rising cost of living mean that schools have needed 4.8 percent more each year over the last five years.[iii]
  • Homeless Services. The number of families in shelter has nearly tripled in the last five years – increasing an average of 28 percent per year.[iv]
  • School Modernization and Other Capital Projects. DC’s debt payments have increased 8.6 percent per year over the last five years, due to increased borrowing for school construction and other capital projects.[v]


Tax Cuts Affected the Ability to Meet Needs in the FY 2017 Budget  

The $47 million in tax cuts triggered over the past year lead to a fiscal year 2017 budget with modest growth and many gaps. For example, the proposed homeless services budget will not be sufficient to end chronic homelessness in FY 2017, a goal embraced last year. In addition, the proposed budget does not provide any funding to support permanent reforms to the TANF time limit to protect 6,200 vulnerable families who face the loss of all income and employment assistance.

The tax cut triggers will likely contribute to funding gaps in key services for years. With limited revenue growth, it will be hard to tackle challenges such as these.

Tax Cut Triggers Should Be Modified to Balance Tax Cuts with the Need for Adequate Revenues to Meet Important Needs

Moving forward, the tax triggers can be reformed in two ways:

  • Delay the implementation of the two most recently triggered tax cuts: a reduction in business franchise taxes, and the elimination of taxes for estates worth between $1 million and $2 million. These tax cuts have not been implemented yet, and thus could be suspended without changing current taxes for residents and businesses. This would free up $17 million that could be used to fund critical services in this year’s budget.
  • Longer term, a more balanced approach – one that doesn’t devote 100 percent of revenue increases to tax cuts – should be adopted. For example, for each dollar of new revenue above the baseline, half would be preserved for services and half would go to tax cuts.

The DC Council votes on the Budget Support Act next week. In that legislation, they should include an amendment to reform the tax triggers as listed above. This would go a long way in helping the city to fund critical services at a time of growing needs, while keeping the overall tax cut package intact.

[i] The Mayor’s proposed FY 2017 Budget. Chapter 3: Revenue.

[ii] DC Department of Health Care Finance.

[iii] DCPFI. 2017. “A Changing Landscape: Examining How Public Charter School Enrollment Is Growing in DC.”

[iv] DCPFI FY 2017 Budget Toolkit. “What’s in the Proposed FY 2017 Budget for Homeless Services?”

[v] DCFPI FY 2017 Budget Toolkit. “What Revenue Changes Are in the Proposed FY 2017 Budget?”

 

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DC Council Added Funds to Important Services for DC Residents During Budget Mark-ups

May 10th, 2016 | by DCFPI Staff

Last week’s DC Council committee “mark-ups” resulted in increased funding for a variety of programs that will help meet the needs of low-income residents. During mark-ups, each Council committee gets a chance to change the proposed funding for agencies and programs they oversee.

The committee mark-ups are an important part of the budget process, but not the end! The mark-up results are sent to the Council for consideration at its vote on the full budget on May 17. Further changes to the budget will likely occur at that point.

Below is a summary of some of the major committee mark-up changes that affect low- and moderate-income residents.

Health and Human Servicescity budget photo

  • $350,000 for the Office on Aging for Senior Villages and transportation services.
  • $900,000 to increase slots for Rapid Rehousing for individuals.
  • $1 million to expand an existing grant (the Urban Health Initiative) to allow a university hospital to expand patient centered care for substance use disorder patients.
  • $1,200,000 to support the Produce Plus Farmers Market Subsidy program.
  • $380,000 to further expand Joyful Markets, which allows monthly pop-up food markets to all public elementary schools in Ward 7 and Ward 8.
  • $250,000 to support a food access program that assists small retailers and corner store owners to stock and sell fresh, healthy food.
  • $1,200,000 to augment the school-based health clinics at Coolidge High School, Dunbar High School, and H.D. Woodson High School to support behavioral health screening, community engagement, and real-time tele-video linkages to behavioral health providers.
  • $500,000 for HIV/AIDS Housing and Supportive Services.
  • $500,000 for Rapid Housing stipends and other supportive services for youth emancipating from foster care.
  • $300,000 to restore a cut Safe Shores, which provides services for abused and neglected children.

Housing and Community Development

  • $423,000 to the DC Housing Authority to provide rental subsidies to approximately 20 elderly returning citizens.
  • $200,000 to hire three new public safety officers to patrol DC Housing Authority properties.
  • $544,000 to provide seed money to tenant associations seeking to buy their building. Tenant associations would use to funds to pay for legal and technical reports required to exercise their tenant purchase (TOPA) rights and to apply for assistance from the city under the First Right Purchase Program.

Education

  • $1 million to the Healthy Tots program, which helps early childhood centers provide nutritious meals and snacks, use locally grown food, and strengthens standards for physical activity at these centers.
  • $1.8 million to increase reimbursement rates paid to early care and education centers and homes for children in the District’s subsidized child care program. A recent report by the DC Fiscal Policy Institute and DC Appleseed cites the need for at least $38 million more to help providers cover the costs of providing quality early care and education. The $1.8 million will come from re-directing a portion of $3.6 million in new funding to improve the quality of child care.
  • $200,000 to support college access and college readiness programs.
  • $10 million to enhance the six-year school capital budget.

Legal and Domestic Violence Services

  • $400,000 to address cuts to grants to local victim services and social justice and legal services providers.
  • $719,000 to replace funding that was lost when the Freddie Mac Foundation closed for domestic violence shelter and housing services.
  • $150,000 for the Alternatives to the Court Experience Diversion Program, a juvenile justice youth diversion program.
  • Increased staffing at the Office of Attorney General to fund a new Victims Specialist, and at the Office of Human Rights to handle the case backlog for the Fair Criminal Record Screening Amendment Act of 2014 (“Ban the Box”), which prohibits employers from asking job applicants about their criminal background prior to making a job offer.

Stay tuned for more budget updates in the District’s Dime!

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Guest Blog: Without DC Trust: What is the Path Forward for Supporting Afterschool and Summer Programs for Youth?

May 9th, 2016 | by Guest Blogger: Joseph Gavrilovich, Senior Policy Analyst with the DC Alliance of Youth Advocates

The DC Council should act this budget season to ensure resources will be available for afterschool and summer programs for low-income students, following the recent news that the DC Trust will be dissolved due to financial mismanagement and other problems. For over a decade, the Trust has served to distribute funds from DC government for these important programs run by community-based organizations.

The collapse of the Trust raises a question that affects the lives of thousands of DC kids: Without the DC Trust, what is the path forward for funding youth development in the District? For the coming year, a short-term solution makes sense. A group of youth-serving organizations recommends allowing a local foundation to allocate the $4.9 million in the Mayor’s fiscal year (FY) 2017 budget for community-based afterschool and summer programming. This will give the Mayor and DC Council a year to work with community stakeholders to develop a permanent solution.

Already Declining Funding for Youth
Resolving the problems that the Trust faced is critical to the well-being of DC’s youth. Annual funding to the DC Trust for youth development programming declined by 60 percent from 2010 to 2016, and as a result, there is now only a quarter of the locally-funded slots for community-based afterschool and summer learning that were there for kids just six years ago.

Source: DC Alliance of Youth Advocates

Source: DC Alliance of Youth Advocates

The DC Alliance of Youth Advocates (DCAYA) believes that in the long-term, increasing funding for these programs is critical, along with greater evaluation of program quality system-wide. While reversing these downward trends in funding and access remains DCAYA’s greater advocacy goal, in the nearer term, we and our partners are concerned about protecting the $4.9 million in FY 2017.

Recommendation for Path Forward
A coalition of youth advocates and community-based providers are now looking at two decision areas before the Council and the Mayor:

In the short-term, our coalition recommends the use of a local foundation to manage the $4.9 million in FY 2017 funding for community-based afterschool and summer learning. A distinct one-year strategy like this is necessary to ensure that the money gets granted out in a timely way, as government and community stakeholders take an appropriate “pause” to strategically and collaboratively plan out a long-term solution that is sound and secure, is not overly-reactive to the present climate, and will outlive any current political agenda.

In the longer term, an intentional path forward is needed for where the DC Trust’s grantmaking and other youth development functions will live. This was highlighted last week by Andria Tobin, Executive Director of Kid Power Inc. and a member of DCAYA’s Board of Directors, in an interview last week on the Kojo Nnamdi Show on WAMU: “We want to make sure that there’s a really thought out plan to protect those funds for many nonprofits and youth in the District, one that is collaborative and strategic, and is flexible and innovative in the way that the Trust was designed to be.”

The DC Trust was founded in 1999, and while it was not always insolvent, there is no reason we cannot draw on lessons from what went wrong over its 17-year history to create a more stable entity that is sustainably funded and operates above board for DC’s children and youth year after year. What we don’t want is to have an issue like this again in 5, 10, or 17 years.

What we do want is to make certain that our system creates greater opportunities for our kids. As Andria Tobin puts it, by rising to the task of meeting their academic, social-emotional, and health and wellness needs over time, “our young people will gain a sense of agency to help create a stronger District.”

Joseph Gavrilovich is a Senior Policy Analyst with the DC Alliance of Youth Advocates. He can be reached at joseph@dc-aya.org

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DC Tax Reforms are Helping Thousands Cope with Rising Housing Costs

May 6th, 2016 | by Ed Lazere

“What a quintessential Washington thing to do: celebrate a section of our local tax code!” That’s from Councilmember Elissa Silverman, who joined Councilmember Jack Evans this week with a ceremonial resolution to “Honor the expansion of the Schedule H Homeowner and renter property tax credit.”

Yes, the Council took time to honor a tax form.

But it’s a really important one. Schedule H helps low- and moderate-income residents when their property taxes or rents are high. And last year, participation in Schedule H Picturethe Schedule H tax credit nearly tripled – to nearly 18,000 households – thanks to reforms adopted by the Council. It is a reminder that seemingly small things, like reducing the number of lines on a tax form, can make a real difference in the lives of residents.

Schedule H offers a tax credit when property taxes are high compared with a homeowner’s income.  This is especially important today, with many moderate-income homeowners in changing neighborhoods seeing property values and taxes rising around them. Schedule H helps renters with rising housing costs, too, because the credit allows them to claim 20 percent of their rent as property taxes passed through from their landlord.

The concept of Schedule H is great, but until recently, the reality has not been. Until 2014, residents could receive Schedule H only if their income was below $20,000. In addition, applying for Schedule H was complicated and as a result many residents simply did not apply. These were highlighted by DCFPI in a 2008 report. Other organizations, like Community Tax Aid and Legal Counsel for the Elderly, also called for Schedule H reforms.

The DC Council recognized these problems and moved to address them. Legislation adopted by the Council in 2013 increased the Schedule H income eligibility to $50,000, increased the maximum credit from $750 to $1,000, and made the credit easier to apply for.

Those changes went into effect in 2014 and showed immediate results. Over 11,000 households struggling with property tax bills or unaffordable rents got help that they had not gotten before. The number of households claiming Schedule H growing almost three-fold in one year, from 6,400 in 2013 to 17,900 in 2014. In addition, the average Schedule H credit increased from $580 to $780.

Council member Evans talked about the importance of tax benefits like Schedule H, as well as the Earned Income Tax Credit, as ways to use the tax code to help residents who need it the most.  Evans pointed out that in addition to a better Schedule H, DC has the strongest state-level Earned Income Tax Credit for working poor households.

And that’s why it makes sense sometimes to honor the tax code!

You can see the resolution to salute Schedule H here.

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Guest Blog: DC Should Fund a Better Start for Struggling Young Children

May 4th, 2016 | by Guest Blogger: Renee Murphy, Senior Policy Attorney at Children's Law Center

Children’s Law Center and allies like DCFPI are urging the DC Council to fully fund a key program to help hundreds, if not thousands, of children start school on par with their peers. The Council approved a plan two years ago to reach children before developmental delays get too severe, but it hasn’t been put into effect yet due to lack of funding. Each additional year that the District waits leaves 1,200 children behind and pushes them into special education programs.

Early ChildhoodThe Strong Start/DC Early Intervention Program helps children up to three years old who are struggling with development, like language and motor skills. The program provides early intervention services, therapies that teach parents and child care teachers so they can help children make progress by the time they start school.

The Mayor’s proposed fiscal year 2017 budget adds some money to the program but it is not enough to keep up with the numbers of children who need early intervention services. Also, the Mayor’s budget fails to fund an expansion of the program that was planned by the DC Council.

The DC Council should invest $6.5 million to maintain and expand this program. These dollars will be a wise investment in our children and our schools.

First, it would allow the District to invest in children during the years when intervention can make a critical difference in their future. Birth to age three is a crucial time of rapid brain and body growth. In DC, too many babies and toddlers have unaddressed developmental delays and, as a result, start school behind.

The good news is that 46 percent of children who get early intervention services completely catch up and several years later they are still doing as well as peers, according to national research. For other, more severely delayed or disabled children, getting help early improves their expected skills. This is a truly effective way to start children strong.

Second, it saves money in the long run. Children who have unaddressed developmental delays will end up straining the special education system. That gives DC’s schools a very challenging task, since children who do not receive the specialized support they need as infants and toddlers have a much harder time making up lost ground later. DC’s dismal academic gap for children in special education – about four percent are on level – illustrates how hard it is to catch older children up in school.

Finally, the program already has the DC Council’s stamp of approval. The DC Council and the Mayor made a good decision to expand program eligibility to infants and toddlers with a 25 percent delay in one area of development (to replace a policy to wait for a 50 percent delay in one area or 25 percent in two areas) in the Enhanced Special Education Services Act of 2014. This is a step many other states have successfully taken with good results. The law requires the program expansion by July 2017, but this expansion needs to be funded.

The time is now for the DC Council to invest in the futures of our youngest children. Fully funding the Strong Start/DC Early Intervention Program and its expansion will help thousands of children have a better start.

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