What Revenue is in the Mayor’s FY2011 Budget?
Mayor Fenty’s FY 2011 budget includes approximately $100 million in additional revenue. The Great Recession has shrunken the city’s financial resources, and there is a need to find other sources of money to help fund critical services. However, the mayor took a no-new-tax pledge. So his proposals do not include major changes to the city’s big three revenue generators: the property, sales, and income tax.
So where does the money come from? More than a third of the proposed revenue enhancements comes from increases in driving and parking-related fees. Another third comes from two fees on the health industry, including a new 1 percent fee on patient billing for hospitals.
The mayor’s proposal also includes an increased E911 fee, a monthly fee on all phone lines in the city that helps support t he 911 system.. This proposal, which would increase the E911 fee by $0.39 per month and raise $7.1 million, has been proposed by the Mayor but removed from the budget by the DC Council in the past several years.
There is also a range of business-related fees, including increases on licenses and public space fees. Among the proposals, the mayor reduces a tax incentive package to help lure high technology companies to the city. Previous DCFPI analysis has shown that this extensive tax incentive package has done little to boost high-tech employment in the city. Scaling back worn-out tax breaks makes sense.
The 2011 budget marks the second year that the Mayor has proposed reducinged the DC Earned Income Tax Credit. We strongly urge the mayor to change his mind. Two years ago, the District increased the EITC — which creates a work incentive for those earning at or near the minimum wage — to 40 percent of the federal benefit. This proposal would scale back the credit to 39 percent, reducing critical dollars to lower-income working District families as they struggle through the downturn.
The basic revenue-raising categories include:
Driving and Parking Fees, $34.7 million
Increased traffic fines, $28 million
The budget would authorize the increase of 71 different fines for motor vehicle moving infractions such as speeding, running a red light, running a stop sign, turning from the wrong lane, and passing a stopped school bus.
Increased parking meter rates, $3.6 million
This would increase by $0.25 meters that currently charge $0.75 per hour.
Increased residential parking permit fee, $1.2 million
Residential parking permits, which allow residents to park vehicles on neighborhood streets without restriction, will be raised from $15 to $25. The District’s current fee is lower than fees charged in Arlington County and Montgomery County. Alexandria charges $15 for the first vehicle registered at an address, $20 for the second, and $50 for the third.
Health Industry Fees, $33.6 million
One percent patient revenue fee for hospitals, $25 millionThis would authorize the District to charge a general 1 percent tax on net patient revenue for hospitals, of which 90 percent would be used for healthcare-related expenditures. In addition, penalties would be imposed on hospitals that do not pay the fee on time.
Two percent premium tax on HMOs for Medicaid receipts, $8.6 million
HMOs would pay taxes equal to 2 percent of their policy and membership fees as well as net premium receipts for DC Medicaid, the Healthy DC Program and the DC HealthCare Alliance, which had previously been exempted.
Business-Related Fees, $10 million, including:
Steel plate fee for road construction, $3.1 million
Increased building permit fee, $2.7 million
Increased basic business license fee for technology, $750,000
Miscellaneous Fees, $12 million, including:
E911 fee, $7.1 million
This fee, which has been proposed in prior budgets removed by the Council, would increase the E911 charge by $0.39 for both wireless and Centrex phone lines.
Uniform 2% Insurance Premium Rate Fee, $1.8 million