Solving DC’s Budget Crisis

| July 27th, 2009 |

Solving DC’s Budget Crisis

The District faces a newly identified $340 million shortfall over FY 2009 and FY 2010.  How can DC continue to balance its budget without jeopardizing critical services for DC residents?  Read below to learn more about DCFPI’s ideas on how to balance the budget.

  • Mayor’s Budget Cuts Target Low-Income Programs

Cuts will undoubtedly need to be part of any gap-closing plan adopted by DC officials.  Yet half of the Mayor’s proposed budget cuts target low-income programs, and these cuts are three times larger than the cuts in other areas of the budget.

It is important for our leaders to ensure that that a strong safety net remains for DC’s most vulnerable families.  Over the past year, the economic downturn has increased the demand for public assistance at the same time that nearly 15,000 more DC residents have become unemployed.  A strong safety net will ensure that DC residents can recover along with the economy.

“The Mayor’s Proposal to Balance the Budget Makes Disproportionate Cuts to Programs for Low-Income Residents”

  • Mayor’s Budget Plan Would Hurt Poor Families with Children by Cutting TANF

One of the largest program cuts in Mayor Fenty’s recent budget plan is a $6.2 million reduction in the Temporary Assistance for Needy Families (TANF) program – which provides cash assistance and job readiness services to low-income families with children. The Mayor’s plan would cut benefits in half for some families – and would some families entirely.  The goal of these provisions – to encourage more TANF parents to prepare for employment – is reasonable, but research from other states indicates that increased sanctions do not result in greater compliance with work requirements or better employment outcomes.  Instead, steep sanctions tend to fall on families that have the most personal problems and the greatest barriers to work – and result in greater hardships for very poor families with children.

“Mayor Fenty’s TANF Proposal Will Increase Hardship Among Poor Families with Children and Will Not Help Families Move from Welfare to Work”

“Imposing TANF Sanctions and Additional Compliance Requirements Will Force Victims of Domestic Violence to Make Difficult Choices About Their Survival”

“The Mayor’s TANF Sanction Proposal Will Harm Children and Families and is Unlikely to Increase Work Participation by TANF Recipients”

  • Raising Revenues

Our current budget shortfall is almost entirely a result of our falling revenues, not overspending on programs.  Raising revenues can help limit the need for deep service cuts and is a reasonable tool to use to help close DC’s budget cap.  25 states have raised revenues in order to limit services cuts.  The District largely has avoided revenue increases in this downturn.  Yet taxes were cut substantially during the boom of the early 2000s, and taxes on DC residents are now lower than in either the Maryland or Virginia suburbs.

Read why raising revenue in an economic downturn is a reasonable approach and DCFPI’s ideas for specific ways to raise revenue.

See some revenue-raising ideas in DCFPI’s budget overview piece

“Raising Revenue by Creating A New Tax Bracket for Top Earners: A Progressive Approach to Addressing DC’s Budget Shortfall”

“Taxes on DC Families are Now the Lowest in the Washington Region”

“Coalition for Community Investment: Revenue Raising/Budget Savings Ideas to Address DC’s Budget Shortfalls”

“Additional Revenue-Raising Proposals from DCFPI”

  • DCFPI Principles to Guide Budget Balancing

See DCFPI’s five principles for balancing the budget

  • DCFPI Testimony on the Gap-Closing Plans

DCFPI testified about concerns and suggestions for the gap-closing plans to address the budget shortfall.  Read testimony on principles to solve the budget shortfall, harmful cuts to DC’s TANF program, and why raising revenues is an important solution to solving the budget shortfall.