Just as DC is set to enter a local recession and Congress is advancing historic cuts to health coverage and food assistance, Mayor Bowser proposed a fiscal year (FY) 2026 budget and financial plan that abandons residents with the fewest resources to fend for themselves in the coming storm. Her budget takes cash assistance, health care coverage, paid leave benefits, and wages from the District’s workers and most vulnerable residents, while sinking scarce public dollars into spending that an abundance of research has shown won’t grow anything but the profits of corporations and billionaire sports team owners.
DC’s forthcoming recession is being triggered by mass federal layoffs projected to reduce revenues by about $1 billion over the next several years. That fact is exacerbated by the serious threat of Congress slashing resources families need—like Medicaid, food assistance, and education funding—to help pay for tax cuts for the wealthy. Given the enormity of the 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. 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. The mayor’s proposed budget does just the opposite of what is needed. It leaves DC’s poorest residents out in the cold and will exacerbate already extreme racial inequities, likely harming the economy.
Bowser’s vision for DC’s economy is based on economic theory that doesn’t work. It relies on disproven “trickle-down” tactics, prioritizing public money for a stadium and corporate giveaways at the expense of decent wages and legal protections for workers, supports and rights for struggling renters, and health care and cash supports for the people and families most sidelined in our economy.
Bowser also has claimed that incredibly successful and proven programs—like publicly funded health care and cash assistance that supports rather than penalizes families—are “unsustainable” and in need of “right-sizing” to justify harsh cuts or in some cases wholesale elimination. But these public investments are lifelines to many DC residents, help them to pay rent, buy groceries, meet children’s needs, and contribute to the economy, and have many long-term social, health, and economic benefits. Asking those with the least to sacrifice the most in a time of economic constraint is the wrong choice for DC.
As DC Council reviews and changes the proposal, they should reject public funding for widely discredited economic strategies that distribute resources to the top and prioritize communities in need. They should also take a page out of Maryland’s book, where the wealthiest were asked to pay more in income and capital gains taxes to avoid an overreliance on budget cuts. Particularly as Republicans in Congress pursue trillions in tax cuts, which would deliver an estimated $44,000 per year to millionaire households in DC, Councilmembers can ask the wealthiest residents here to pay more in local taxes to minimize cuts.
Below are more details of what is in the mayor’s budget proposal based on initial review.
Makes Cuts Forced By Congress in the FY 2025 Supplemental Budget
- Offsets the required local fund spending reduction mandated in Continuing Resolution adopted by Congress by tapping various special and dedicated funds, implementing a mid-year hiring freeze, requiring non-personnel reductions in several agencies, and shifting some costs into FY 2026, such as for affordable housing projects and future contract negotiations.
- Manages to finance $141 million for RFK projects in the supplemental budget rather than using those funds to stave off non-personnel cuts and fund sweeps that scale back other public services or using them to reduce FY 2026 cuts.
Slashes Funding to Vital Lifelines with Disproportionate Harm to Black and Other Residents of Color
- Cuts Temporary Assistance for Needy Families (TANF), which provides cash assistance to families, by reinstituting a local time limit and increasing the penalty for failing to meet a harsh work requirement for adults in families and eliminates the program’s annual cost of living adjustment.
- Reduces funding for the Emergency Rental Assistance Program, which helps renters who are behind on their rent and utilities, from $26.9 million to $5 million. This cut comes after significant legislative changes to restrict program eligibility and access.
- Phases out DC’s Health Care Alliance coverage for adults over age 21 and institutes a moratorium on new enrollees. The DC Health Care Alliance program provides critical health care coverage to residents with low incomes who do not qualify for Medicaid, most of whom are immigrants.
- Kicks adults with low incomes off robust Medicaid services and moves them into a to-be designed “basic health plan” in the public Marketplace that could end up offering fewer benefits, such as dental and vision services. It is unclear what premiums and out-of-pocket cost changes this group would face. It’s also unclear whether the federal government will continue to cover 95 percent of basic health plans given its current negotiations to slash health care coverage through Medicaid and the Marketplace.
- Repeals the DC Child Tax Credit and ends the “baby bonds” program, both of which would reduce racial income and wealth gaps.
- Fails to fund the “Give SNAP a Raise Amendment Act of 2022,” which is intended to increase the minimum monthly Supplemental Nutrition Assistance Program (SNAP) benefit and help residents get food on the table. During economic downturns, every dollar funded for SNAP produces $1.50 of economic activity.
- Fails to fund any housing vouchers for individuals experiencing homelessness. Individuals experiencing homelessness are some of the most vulnerable and most likely to die without housing and services.
Proposes Harmful Cuts to Worker Wages and Work Supports
- Reduces universal paid leave benefits, including by cutting 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 proposal enables a reduction to the employer payroll tax rate from .75 percent to .72 percent through these cuts to benefits for workers.
- Repeals the I-82 wage increases for tipped workers, slashing their base wage by 40 percent. The mayor proposes taking the tipped minimum wage back down to $5.95 per hour from the current $10 per hour as of October 2025. DC voters passed the I-82 initiative twice—with 74 percent approval the second time—and workers are benefiting from higher wages plus tips that remain strong.
- Provides level funding to the Pay Equity Fund (PEF) in FY 2026 ($70 million)—which is an effective cut since the program is on track to spend $74 million in FY 2025—and eliminates all funding for fiscal years 2027-2029. The PEF increases compensation and offers affordable health care for early educators and the elimination of funding backtracks on the progress DC has made towards attracting highly qualified educators to early childhood classrooms, thus expanding child care options offered to District families.
- Reduces funding for the child care subsidy program by about $5.7 million by failing to fill the gap left by a loss of federal funding, which could lead to a program waitlist for the first time in decades.
Squanders DC’s Limited Resources on Ineffective Strategies That Won’t Grow the Economy
- Suspends taxes on restaurant meals via “sales tax holidays,” despite the fact that research shows these tend to be costly, benefit wealthy residents the most, and enable businesses to exploit consumers with higher prices.
- Revives the Qualified High Technology Company (QHTC), which 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. It is estimated to cost the city $2.2 million for FY26 and FY27, increasing to more than $7m in FY28 and FY29.
- Extends the life of the Ball Park Fee and dedicates $155 million in capital funds to RFK stadium over the financial plan, with additional investment to come in later years.
- Expands the Housing in Downtown tax abatement to Georgetown and Mt. Vernon Triangle at current funding levels in FY 2026 without proof the program is meeting its goals and that office-to-residential conversions wouldn’t happen absent the subsidy. In FY 2027, her proposal temporarily cuts the program by $1.8 million before the program vastly expands in FY 2028.
