The Districts Dime

DCFPI’s Toolkit on the Approved FY 2018 Budget is Here! Understand the FY 2018 Budget in Pictures, Numbers, and Words

July 27th, 2017 | by DCFPI Staff

With the budget now finalized by DC Council, and the final numbers released in the Council’s budget books, we can tell you what did—and did not—end up in the approved fiscal year (FY) 2018 budget, and what this means for DC residents.

Here are a few examples of what you’ll find in our Budget Toolkit:

  • DC will end time limits for cash assistance (TANF) for families: The FY 2018 budget resolves long-standing concerns with the District’s rigid 60-month TANF time limit. With this change, 6,000 families—and over 10,000 children—are no longer at risk of permanently losing their TANF benefits due to the District’s time limit, which was set to occur on October 1, 2017. Additionally, families will see a significant increase in the income assistance they receive each month, from $154 to $576 for a family of three.
  • Adult learners and re-engaging youth will now be able to get to class with the help of free transportation assistance: The budget includes $2 million to provide transportation assistance to adults in education and training programs. With cost of transportation identified as a major barrier to participation for many adult learners, investing in transportation subsidies will ensure that these students can get to and complete their classes. And it means that the District will get more out of its substantial investment to support educational instruction for adult learners.
  • A new fund will help preserve DC’s affordable housing:The budget includes $10 million to establish a housing preservation fund, which will help acquire and rehabilitate affordable housing projects. This is an important step towards saving more of DC’s disappearing affordable housing, and adds a new tool to the District’s affordable housing toolbox.

We hope you find the DCFPI Budget Toolkit useful!

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

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How the Latest Senate Health Bill Will Harm DC’s Medicaid Program

July 21st, 2017 | by Jodi Kwarciany

Another day, another Congressional health bill – and the latest could have a devastating effect on the District’s budget and health coverage rates if passed. The Better Care Reconciliation Act of 2017 (BCRA), the Senate’s latest version of the House bill that passed in May, would drastically reduce federal funding for the District’s Medicaid program and potentially jeopardize coverage for hundreds of thousands of residents. Here we’ll cover how the BCRA would negatively impact Medicaid expansion, a key component of the 2010 Affordable Care Act (ACA) and a vital program in DC.

Q: What is Medicaid Expansion?aca expansion

Although all states and DC have Medicaid programs, each one differs greatly in what—and who—is covered, beyond federal requirements. Under the ACA, the federal government encouraged all states to expand coverage for childless, able-bodied adults with incomes up to 138 percent of the federal poverty line (or a yearly income of about $12,000 for an individual), by offering to cover the vast majority of the cost of the expansion. The federal government would initially cover 100 percent of the costs, and would gradually reduce that to 90 percent over time, with states paying the other 10 percent. Over time, 31 states and DC chose to expand Medicaid coverage to this population.

Q: What did DC do about Medicaid Expansion?

DC was already covering this population and had been paying for it entirely with local dollars. When the ACA offered cost-sharing for Medicaid expansion, the District benefitted in two key ways:

  • First, the federal government began reimbursing 90-100 percent of the District’s cost to cover childless adults up to 138 percent of the federal poverty line.
  • Second, the District received approval from the federal government to be reimbursed for 70 percent of the cost to cover individuals with incomes between 138-210 percent of the federal poverty line.

Today, DC’s Medicaid expansion program covers over 80,000 adults, or about a third of the District’s total Medicaid population that also includes groups like children or individuals with disabilities.

Q: How does the BCRA affect DC’s Medicaid Expansion?

The BCRA would negatively impact both of DC’s Medicaid expansion groups. For those with incomes between 0-138 percent of the federal poverty line, the BCRA would phase out the enhanced match of 90 percent, bringing it down to 70 percent by 2024. Filling the 20 percent gap could cost the District millions of dollars.

Yet the situation for individuals in that second group would be much worse. The BCRA would end Medicaid eligibility for the childless adult population with incomes above 138 percent, effective December 31, 2017. This means all funding the District previously received from the federal government for this group wouldn’t just be phased out—it would be halted entirely, adding millions more dollars onto DC’s expenses within just a year in order to continue it.

Such changes are estimated to cost the District more than $2.6 billion over the next seven years, according to the DC Department of Health Care Finance. What’s more, the $2.6 billion doesn’t reflect other components of the BCRA that would change Medicaid – and cost DC several hundreds of millions more. If DC cannot come up with the additional funding needed to fill the enormous federal funding gap, it may be forced to reduce eligibility, services, or health care provider rates – none of which are good options.

Q: What’s happening next?

It’s difficult to say. After a failed vote on the BCRA, some members of Senate hope to hold a vote soon to repeal the ACA without a corresponding replacement bill. Given the serious financial and human impacts of altering DC’s program, every additional day with the ACA intact helps to maintain beneficiaries’ access to coverage and care—and the District’s bottom line.

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

 

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What Are DC Residents Spending More Money On? Housing, Health Care and Restaurants

July 14th, 2017 | by Claire Zippel

District residents spent $37 billion in 2015. Where did that money go? A look at data on personal consumption expenditures tells us a lot about the changing composition of the DC economy. In particular, DC residents are devoting a larger share of their spending to housing, health care, and restaurants, and a smaller share to cars, clothes, and recreational goods (Figure 1) [1].

While the reasons behind an increase in spending on any given category is not always clear-cut (changes in price and quantity each make a difference), the growth in housing and restaurant expenditures can likely be explained by a number of clear trends.

  • Housing: 19 percent of consumer spending went to housing in 2015. That’s about $2,100 per month per household. [2] Housing and utilities grew faster as a share of DC residents’ spending than any other spending category between 2001 and 2015. That is likely related to the fact that as the price of housing increases, low- and moderate-income DC residents whose incomes have stagnated are forced to spend more for the same housing, and less on other goods and services. At the same time, high-income newcomers are choosing to “spend more to get more,” preferring high-end homes with amenities.
  • Restaurants: DC residents spent $4.7 billion at restaurants in 2015—that’s $306 per resident per month. [3] District residents are spending more to eat at restaurants, indicating more well-off residents with large disposable incomes, DC’s strong food service industry, and shifting consumer preferences. Spending at restaurants accounted for 6.7 percent of consumer spending in 2015, up a percentage point from 2001 (Figure 2). By contrast, the share of spending dedicated to groceries didn’t change much.

These trends in consumer spending appear to confirm that DC’s new prosperity and wealth have catalyzed growth, especially in industries that rely on consumers with disposable income, yet at the same time have placed substantial pressure on the housing market.

Research and lived experiences show that low-income DC residents bear the brunt of the burden of rising housing costs, but not necessarily from the booming restaurant scene—a reminder of the importance of policies that promote a more inclusive economy.

Most of DC Residents' Spending Goes to Housing and Health Care

FIGURE 1

Restaurants Account for Larger Share of DC Consumer Spending

FIGURE 2

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

[1] All data and figures in this post are from the Bureau of Economic Analysis’s Personal Expenditures (PCE) by State, available at https://www.bea.gov/iTable/index_regional.cfm
[2] Expenditures on housing and utilities as defined by the Bureau of Economic Analysis: “Housing consists of the monetary rents paid by tenants for tenant-occupied housing, an imputed rental value for owner-occupied dwellings (measured as the income the homeowner could have received if the house had been rented to a tenant), the rental value of farm dwellings, and spending on group housing. Household utilities consist of water supply and sanitation and electricity and gas.” See https://www.bea.gov/regional/definitions/
[3] The Bureau of Economic Analysis makes adjustments to account for non-resident spending, especially in expenditure categories related to travel and tourism. The BEA notes that these adjustments could be improved through methodological improvements in the future. See Awuku-Budu et al. (2016), available at https://www.bea.gov/scb/pdf/2016/11%20November/1116_personal_consumption_expenditures_by_state.pdf

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More Money, Part 2! Another Implication of DC’s Latest Revenue Forecast

July 12th, 2017 | by Ed Lazere

As we noted last week, the District is collecting a lot more tax revenue, according to the city’s latest revenue forecast. The growing tax collections reflect a strong DC economy that is outperforming the rest of the region.house money

Last week’s blog focused on tax collections that are projected to jump this year, which creates an opportunity to make important one-time investments in affordable housing and other needs before the end of the year.

Today’s blog examines expected revenue growth in 2018 and beyond. The new forecast also is higher than the previous one, although the increase is less than it was for 2017. Under the recently-adopted budget for 2018, this new money will be set aside to help pay for a teachers’ contract that is being negotiated and to support a new Metro funding plan. While these are worthwhile uses, dedicating growing revenues will decrease revenues that may be needed for other purposes when new budget planning starts next year.

Let’s explore this a bit more, with some numbers:

  • Where’s the new money coming from? Nearly all of DC’s major revenue sources are growing, according to the recent forecast, including property, sales, and business income taxes. (The one tax source not growing—resident income taxes—appears to reflect people holding on to investments, waiting for a possible federal income tax cut before cashing them in.) The robust growth of many tax sources is a reflection of a strong DC economy, which has outpaced the region in population and private-sector job growth for the past decade.
  • Just how much additional revenue will there be next year? Tax collections in 2018 and beyond will be about $30 million higher than previously thought. Half of that will be set aside for a new DCPS teachers’ contract that is currently being negotiated, and half will be set aside for any future Metro funding plan. The just-adopted budget also dedicates new revenues from the next revenue projection, in September, to the same two purposes.

The decision to set aside growing revenues, regardless of the worthiness of the expenditures, has a downside because it limits budget choices a year from now. Normally, changes in revenue projections that come out after one budget is adopted are available for next year’s budget, to address emerging priorities and rising costs due to inflation. Dedicating some of that growing revenue now will mean less new money next year when it’s time to put the next budget together.

It’s like knowing you will get a cost-of-living adjustment to your salary next year, and deciding in advance to spend some of it on something you need, like a new computer. That may work out fine, but it could be a problem if your refrigerator unexpectedly fails.

Like your own personal budget, keeping some wiggle room for the coming year makes sense.  The DC budget would be stronger if it didn’t include plans to spend money that hasn’t yet materialized.

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

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On July 1, a Raise for DC Workers Who Need it the Most!

July 11th, 2017 | by Ilana Boivie

Last Friday DC’s minimum wage increased to $12.50 per hour, a step on the path to reach $15 an hour by 2020. The latest increase is good news for thousands of workers who have already seen their wages grow as a result of minimum wage increases in recent years. Raising the DC minimum wage has helped those at the lowest end of the earnings spectrum — and has made wage gains from DC’s booming economy more equally distributed, according to a recent DCFPI analysis.

The Fair Shot Minimum Wage Amendment Act of 2016, passed last year, increased the minimum wage in the District to $12.50 per hour, and the tipped minimum to $3.33 per hour, on July 1 of this year. These wages will continue to rise to $15 (and $5 per hour for tipped workers) in 2020, and then will automatically increase based on the cost of living after that.

DC’s minimum wage has been steadily increasing in recent years, from $8.25 per hour in 2013 to $11.50 per hour in July 2016. [1] A recent DCFPI analysis [2] has found that these increases have had an extremely positive effect on low-wage workers. The report found that while the city has experienced robust economic growth for the last decade — and has outpaced the rest of the region by nearly every economic indicator — this growth has not been shared equally among all residents, until recently.

Percent change in hourly wage by wage percentile, 2014 to 2016

Percent change in hourly wage by wage percentile, 2014 to 2016

For example, DC’s lowest earners — those at the 10th percentile of wage earners — saw their hourly earnings fall 1.2 percent over the last decade, adjusting for inflation. [3] Meanwhile, the highest-paid earners — those at the 90th percentile — saw a 9.6 percent increase in their wages.

However, this trend changed in the last three years, with low-wage workers experiencing the largest wage gain since 2014. The hourly wage rose 3.8 percent between 2014 and 2016 for DC workers at the 10th percentile of earnings, compared with increases of no more than 3.4 percent for workers at other parts of the earning distribution. This suggests that the recent increases to DC’s minimum wage is ensuring more equitable distribution of wage growth.

Prior DCFPI analysis estimated that nearly 64,000 workers — roughly 10 percent of the people who work in the District — benefit from minimum wage increases. [4] As the city’s economy continues to grow, District government should do all that it can to ensure that this prosperity can be shared more equally among all District residents — and the continued increases to the minimum wage are one way to help make this happen.

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

[1] http://www.dcfpi.org/the-workers-who-will-benefit-from-raising-dcs-minimum-wage
[2] http://www.dcfpi.org/economic-powerhouse-dc-is-growing-faster-than-the-region
[3] The 10th percentile means that 10 percent of workers earn less per hour.
[4] http://www.dcfpi.org/the-workers-who-will-benefit-from-raising-dcs-minimum-wage

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