What’s in the Fiscal Year 2026 DC Budget?

Each fiscal year, the mayor and DC Council decide how to raise and allocate the District’s resources through the budget, with input from residents about what is important to them. Right now, DC is facing multiple challenges: Historic federal program cuts that will leave DC residents worse off through lost health coverage and less money for groceries, as well as a projected local recession and depressed revenue. Yet DC lawmakers failed to use the fiscal year (FY) 2026 budget to help overcome those challenges and instead underfunded programs that help residents meet their basic needs and rejected the opportunity to raise needed resources. As a result, more DC residents will experience economic hardship, and the harm will disproportionately fall on Black and brown people because of systemic racism.

In May, Mayor Bowser proposed an FY 2026 budget that cut cash assistance, health care coverage, paid leave benefits, and wages from DC’s workers while sinking scarce public dollars into widely discredited “trickle down” economic development tactics. DC Council made improvements to the mayor’s proposal but failed to reverse the majority of her cuts to anti-poverty programs. Councilmembers did reject several of Mayor Bowser’s wasteful economic strategies, including the restaurant “sales tax holidays” and the revival of the disproven Qualified High Technology Company tax incentive. But they also voted to give a billionaire sports team owner hundreds of millions of taxpayer dollars to redevelop RFK stadium, while kicking more than 20,000 largely immigrant residents off their health coverage and failing to fund any new housing vouchers for individuals experiencing chronic homelessness, some of whom may die without housing and services.

Lessons from previous recessions show that public investment in people’s basic needs is key to an equitable recovery, just like reducing inequality is shown to be good for equitable economic growth. Given the enormity of the current threat to residents’ economic security, Mayor Bowser and DC Council should be doing everything they can to meet basic needs and keep people contributing to the economy. The table below details how the DC Fiscal Policy Institute’s (DCFPI) budget recommendations fared in the mayor’s proposed budget and the Council-approved budget. DCFPI advocates for budget recommendations that are rooted in the belief that the budget can and should be a tool to disrupt longstanding racial and economic inequity and build a future where everyone has what they need to live to their fullest. Asks with an asterisk (“*”) are those that DCFPI developed in response to the mayor’s proposed budget. (The Council-approved budget first goes under the mayor’s review and then will go through a 30-day Congressional review period.)

Early Childhood Education

DCFPI’s Recommendations	What the Mayor’s Budget Proposed	What’s in the Council-Approved Budget
Preserve and increase funding for the Early Childhood Educator Pay Equity Fund (PEF) to $80 million to meet rising costs. Costs of the program are growing due to more educators entering the field and acquiring higher credentials, and additional funding is needed to provide a cost-of-living adjustment to help maintain parity with public school teachers.	She proposed $69.6 million for the PEF, which is $400,000 short of the FY 2025 appropriation level, and she fully eliminated funding for the program beginning in FY 2027.	The Council enhanced funding for the PEF by $2.5 million, for a total of $72.1 million. This falls short of our ask and may require a freeze in award amounts. And it will likely require DC to keep the waitlist in place for new facilities wishing to participate. If there is revenue growth later in the year, the budget requires an additional $1.5 million allocation.
Enhance the child care subsidy program by $20 million, for a total of $106 million in FY 2026, to ensure access to high quality, affordable child care for over 8,000 children.	The mayor did not meet our ask and made a $9.2 million cut to local funding for the child care subsidy program.	The Council enhanced funding for the child care subsidy program by $9.5 million, undoing the mayor’s cut, but failing to fund it sufficiently to meet current demand. . As a result, DC will have to institute a waitlist for new families seeking subsidies. If there is revenue growth later in the year, the budget requires an additional $5.5 million allocation.

Affordable Housing & Ending Homelessness

DCFPI’s Asks	What the Mayor’s Budget Proposed	What’s in the Council-Approved Budget
Set aside 30 percent of the Housing Production Trust Fund (HPTF) for affordable housing preservation projects.	The mayor did not include any set-asides for preservation and cut funding for the Department of Housing and Community Development’s preservation office.	The Council set aside $20 million (20 percent) of the FY 2026 HPTF for preservation. If there is revenue growth later in the year, the budget requires an additional $10 million allocation. This would bring the total amount of the HPTF to $110 million and the set aside to 30 million (27 percent).
Invest $30 million into First Right to Purchase Program (FRPP) to enable tenants to purchase their building through the Tenant Opportunity to Purchase Act (TOPA), opening doors to stable homeownership opportunities for tenants and helping to build Black and brown wealth.	The mayor did not include any funding for the FRPP.	The Council did not include any funding for the FRPP.
Allocate $17.33 million to the Local Rent Supplement Program (LRSP) voucher program to improve housing affordability for residents and families with extremely low incomes.	The mayor did not include any additional funding for tenant-based LRSP vouchers.	The Council did not include any additional funding for tenant-based LRSP vouchers.
Remove the Rebalancing Expectations for Neighbors, Tenants, and Landlords Act (RENTAL Act) from the budget.	The mayor included the RENTAL Act, which would severely limit the number of tenants able to exercise their TOPA rights.	The Council removed the RENTAL Act from the budget and moved it forward as a separate bill. The bill includes harmful changes that speed up evictions and exemptions from TOPA that would take rights from tenants.
Allocate $100 million for Emergency Rental Assistance Program (ERAP) to prevent evictions.	The mayor allocated just $5 million.	The Council added $3.6 million, to reach $8.6 million. If there is revenue growth later in the year, the budget will allocate an additional $3 million.
Fund 1,260 new Permanent Supportive Housing (PSH) vouchers for individuals experiencing chronic homelessness. PSH provides intensive services that help people experiencing chronic homelessness stabilize in housing.	The mayor did not fund any PSH vouchers for individuals.	The Council did not fund any PSH vouchers for individuals.
Add 764 PSH vouchers for families to support a share of the families being terminated from Rapid ReHousing (RRH) in FY 2024 and who need intensive services.	The mayor partially met our ask, funding 156 additional vouchers.	The Council partially met our ask, funding 20 additional vouchers, bringing the total to 176 vouchers.
Invest in other vouchers for families, such as Targeted Affordable Housing (TAH), which offer access to long-term affordable housing.	The mayor did not include any additional vouchers for families.	The Council partially met our ask, adding $7 million for 160 new vouchers for families.
Ensure there are at least 150 medical respite beds for individuals. Medical respite beds offer people who are unhoused a safe place to recover from surgery and illness or to learn to manage a chronic condition.	The mayor did not meet our ask, failing to add funding for additional beds.	The Council also did not meet our ask.
Increase funding for Project Reconnect, the homelessness prevention program for individuals, to $1.75 million.	The Council maintained the funding allocated by the Mayor and did not meet our ask.	The Council met our ask and expanded upon it. They further increased the tax rate to 0.75 percent, raising an additional $321.6 million over the financial plan.
Include operation costs for two non-congregate shelter sites. This funding is necessary to provide residents at the new shelter sites the highest quality services.	The mayor met our ask, fully funding operations at two non-congregate shelters.	The Council maintained the mayor’s funding, meeting our ask.
Maintain 24-hour shelter access and increase shelter staff capacity. Allowing individuals to remain at shelter sites 24 hours per day eases the experience of homelessness and facilitates connecting individuals with services.	The mayor met our ask, providing sufficient funding to maintain shelter access and meet staffing needs.	The Council maintained the mayor’s funding, meeting our ask.
Create a flexible funding program at the Department of Human Services (DHS) to cover one-time move-in expenses for residents receiving a voucher or in RRH. The program should also provide storage space for unhoused residents.	The mayor did not meet our ask.	The Council also did not meet our ask.
Restore funding for DC Flex for singles, which provides annual cash assistance to working households who are struggling to afford rent. The program was originally supposed to serve 100 individuals but funding cuts in FY 2025 led to a decrease in caseload, serving just 25 individuals.	The mayor met our ask, allocating $621,000 to serve an additional 75 individuals or youths.	The Council maintained the mayor’s funding, meeting our ask.
Increase the Personal Needs Allowance (PNA). The current PNA for assisted living recipients falls short of what residents need to afford essentials such as hygiene products and clothing.	The mayor did not meet our ask.	The Council did not meet our ask. If there is revenue growth later in the year, the budget requires a $500,000 allocation to raise the PNA.
Add $7.5 million for the RRH program for single adults to increase the caseload. This program supports individuals with housing search assistance, supportive services, and short-term rental assistance. In FY 2025, the caseload was cut in half despite there being a waitlist.	The mayor did not meet our ask.	The Council did not meet our ask.
Increase funding for street outreach to bring the total budget to $6.5 million.	The mayor did not meet our ask, allocating just $3.1 million.	The Council maintained the funding allocated by the mayor and did not meet our ask.

Inclusive Economy

The mayor zeroed out funding and proposed repealing the legislation.	What the Mayor’s Budget Proposed	What’s in the Council-Approved Budget
Move the RFK stadium deal out of the budget—including the resource allocation across the four-year financial plan—and take the time to have a full public debate on the proposal.*	The mayor wanted the Council to approve the RFK stadium deal as negotiated by the mayor within the budget.	The Council removed the authorizing language for RFK stadium from the budget but left placeholders for funding at the level proposed by the mayor.
Maintain the current level of universal paid leave benefits.*	The mayor proposed decreasing the employer universal paid leave tax rate from .75 percent of payroll to .72 percent, paid for entirely through cutting benefits, including reducing the maximum number of weeks for medical leave to 8 weeks from 12 and family leave to 6 weeks from 12 and capping the weekly benefit at $1,000 (down from $1,153).	The Council removed the proposed cuts to the maximum weeks of leave and maximum weekly benefits from the budget and left the tax rate unchanged.
Remove the I-82 repeal from the Budget Support Act (BSA).*	The mayor proposed reducing the tipped minimum wage to $5.95 per hour from the current $10 per hour in October 2025.	The Council did not approve the mayor’s version of the I-82 repeal but instead substituted its own version of the legislation, which undermines the will of the voters by not fully phasing out the tipped minimum wage. Instead, the tipped minimum wage will increase 5 percent of the full minimum wage every two years until it reaches 75 percent of the full minimum wage in 2034.
Allocate $4.2 million to improve nutritional standards and workforce training for people incarcerated in the Department of Corrections (DOC).	The mayor did not meet our ask.	The Council did not meet our ask.
Allocate sufficient funds to mitigate federal cuts to the Supplemental Nutrition Assistance Program (SNAP) and offset the rising cost of food.	The mayor did not meet our ask.	The Council did not meet our ask.
Restore funding and strengthen the Child Wealth Building Act, or “baby bonds” program, to help close DC’s outsized racial wealth gap.	The mayor zeroed out funding and proposed repealing the legislation.	The Council zeroed out funding and repealed the legislation.
Restore Temporary Assistance for Needy Families (TANF) funding in FY 2026 and mandate a working group to review TANF spending and policies.*	The mayor cut TANF cash assistance across the financial plan, including freezing benefit levels and worsening sanctions starting in FY 2026 and imposing a time limit starting in FY 2027.	The Council met our ask by delaying the TANF cuts to FY 2027 and working with DHS to create a short-term working group to identify less harmful TANF policy changes for future years.
Make the DC Earned Income Tax Credit (EITC) available to returning citizens.	The mayor did not meet our ask.	The Council did not meet our ask.
Improve public transparency of DC revenues collected from fines and fees.	The mayor did not meet our ask.	The Council did not meet our ask.
Deepen investments in policies that guarantee and increase income to residents most sidelined by racism and economic exclusion. Continue investments in public pilots such as $1 million annually for Strong Families, Strong Futures and perform a rigorous evaluation of Career MAP.	The mayor did not fund Strong Families, Strong Futures but proposed $19 million for Career MAP.	The Council added in $1.5 million for Strong Families, Strong Futures and maintained the $19 million to Career MAP.
invest at least $37 million to pilot a quality job guarantee to ensure DC’s youth can fully participate in the economy.	The mayor did not meet our ask.	The Council did not meet our ask.

Health Access and Equity

DCFPI’s Asks	What the Mayor’s Budget Proposed	What’s in the Council-Approved Budget
Reinvest some of the savings from the Medicaid shift—which will affect 25,500 adults—to ensure the Basic Health Plan (BHP) includes intensive rehabilitative behavioral health services and dental benefits to minimize harm.*	The mayor proposed this shift, which reduces the quality of benefits that residents will receive compared to Medicaid and saves the District $42.8 million. Her proposal did not fund dental and behavioral health benefits.	The Council did not fund dental and behavioral health benefits in the BHP. (There is a slight chance that the District will be able to provide dental services without additional funding, preliminary actuarial analysis shows.)
Allocate $48.1 million to reject the mayor’s proposal to narrow eligibility and benefits for the DC Healthcare Alliance, which provides critical health care coverage to residents with low incomes who do not qualify for Medicaid, most of whom are immigrants.*	The mayor proposed these changes, which will lead to thousands of individuals having more limited insurance coverage or being cut off completely.	The Council allocated $3.7 million to undo some of these changes. If there is revenue growth later in the year, the budget requires an additional $21.5 million allocation. Even if this funding happens, the Council fell short of our ask, meaning some adults ill no longer qualify for the program.

Tax Justice and Equitable Revenue Policy

DCFPI’s Asks	What the Mayor’s Budget Proposed	What’s in the Council-Approved Budget
Create a progressively tiered surcharge on capital gains for tax units with an adjusted gross income (AGI) above $500,000 and for capital gains at/above that level only.	The mayor’s proposal did not include the adoption of a surcharge on capital gains taxes. She voiced her opposition to an income tax increase.	The Council rejected Councilmember Zachary Parker’s amendment to create a surcharge on capital gains income above $150,000 for high-wealth residents. The funding would have partially restored DC’s Child Tax Credit and funded 121 PSH vouchers for individuals who are homeless, among other investments.
Allocate $80 million to support families and take aim at child poverty by expanding DC’s Child Tax Credit (CTC).	Repealed DC’s Child Tax Credit, eliminating a tool taking aim at reducing child poverty and boosting opportunity.	The Council did not meet our ask and rejected a budget amendment that would have partially restored DC’s CTC (see row above).
Close a loophole to ensure all businesses operating in DC pay their fair share of taxes by adopting a Business Activity Tax (BAT).	The mayor did not propose a BAT.	The Council did not include the adoption of a BAT.
Eliminate the stepped-up basis for capital gains bequeathed at death to raise $43.7 million.	The mayor did not meet our ask.	The Council did not meet our ask.
Expand DC’s property tax credit (known as Schedule H) for homeowners and renters with low and moderate incomes.	The mayor’s proposal did not meet our ask.	The Council did not meet our ask.
Preserve DC revenue by decoupling from costly federal tax policies that put our tax system at risk.	The mayor did not meet our ask.	The Council did not meet our ask. DC lawmakers are expected to take up that issue in the fall legislative session.
Pause or eliminate the increase in the sales tax planned for FY 2026.	The mayor met our ask.	The Council met our ask.
Reject ineffective business incentives that squander millions in tax dollars and won’t grow the economy.*	The mayor proposing reviving the failed Qualified High Technology Company (QHTC) tax incentive, which the DC Council largely ended in 2020 after the Chief Financial Officer found the program to be costly without strong accountability measures or any sign of economic benefits. The mayor also proposed creating sales tax holidays for restaurants, which research shows tend to be costly, benefit wealthy residents the most, enable businesses to exploit consumers with higher prices, and are difficult for businesses and government to administer.	The Council met our ask and rejected both the QHTC and the sales tax holidays.
Require the mayor to provide proof that the Housing in Downtown (HID) program is effective before expanding it.*	The mayor’s budget proposal slightly decreased HID funding to $5 million (from $6.8 million) in FY 2027 but maintained the planned funding increase to $41 million in FY 2028 and the 4 percent year-over-year increase thereafter.	The Council did not meet our ask. It expanded the geographic boundaries of the HID program and left in place the planned funding increases.

What’s in the Fiscal Year 2026 DC Budget?

Latest Publications

What’s in the Fiscal Year 2026 DC Budget?

Fiscal Year 2026 Budget

What’s in the Fiscal Year 2025 Budget?