Report

Budget Reductions Adopted By the DC Council Would Fall Heavily On Services For Low-Income Residents

by Ed Lazere, Idara Nickelson and Angie Rodgers
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On May 11, the DC Council met to consider and adopt the District of Columbia budget for fiscal year 2005.  Largely out of concern that the proposed spending increase ‘  8.9 percent from the 2004 enacted budget  ‘ was too large, an amendment was introduced and adopted to make $59 million in spending reductions from the budget introduced that day by Chairman Cropp (the “chairman’s mark”).  Nearly two-thirds of the reductions ‘ $37.4 million ‘ are in agencies that provide health and human services, even though those agencies account for only one-third of the spending increases in the chairman’s mark.[1]

Although the package of cuts was accepted, several council members expressed concerns about the impact of the reductions, particularly because the amendment did not specify the services that would be cut to meet the reduction targets.  In response to those concerns, the budget session was recessed and postponed until Friday, May 14.

The desire by the DC Council to limit the size of the budget increase is reasonable.  While the proposed nine percent increase in expenditures for 2005 is not typical of recent trends ‘ it follows three years in which spending rose roughly three percent per year ‘ it is unlikely that the District could afford budget increases at this level over a sustained period.

Nevertheless, the steps taken by the Council to reduce the budget do not reflect a broad effort to scale back programs and services but instead would disproportionately affect low- and moderate-income DC residents.

  • Health and Human Services would bear a dis-proportionate share of the cuts.   Under the Chairman’s mark ‘ before considering the reductions adopted this week ‘ the total local budget would increase $340 million between 2004 and 2005.  Some $122 million of this increase ‘ or 36 percent ‘ is in the area of “human support services.”  While health and human services accounts for about one-third of the proposed budget increase, they received 64 percent of the reduction adopted on May 11.  (See Figure 1) 

  • Health and human service cuts are based partly on the inaccurate notion that such programs are the primary source of spending growth in the District.  While the $122 million proposed increase in human support services in 2005 is larger in dollar terms than proposed increases in other areas, the 2005 budget includes sizable growth in nearly every program area.  Spending other than human services would rise 7.8 percent in 2005 under the chairman’s mark.

Moreover, the proposed increase in human support services in 2005 is not typical of recent trends.  Under the chairman’s mark, spending on human support services in 2005 would be 29 percent higher than in 2000.  This is smaller than the increase in the total District budget during that period  ‘ which equals 33 percent  ‘ and slower than spending growth in other major areas of the budget, such as education (44 percent increase since 2000) and public safety (43 percent increase since 2000).[2]  (See Figure 2.)

It also is worth noting that the increase in the proposed budget for human support services includes services required to meet court orders.  Because reductions in mandated services are likely to be difficult to accomplish, the budget cuts are likely to come from other areas where services are not mandated.   Moreover, the budget cut amendment understates the impact of the adopted reductions in other ways.

  • Under the chairman’s mark, the Department of Human Services budget would grow from $225 million in 2004 to $266 million in 2005.  Some $29 million of the proposed $41 million increase is for court requirements to improve juvenile justice services and services for mentally retarded and developmentally disabled residents.  The budget reduction adopted this week cut $14.5 million from the DHS budget, leaving insufficient funds to address even the increase in court-ordered services.  The cut thus threatens a $10 million increase in child care funding that had been included in the chairman’s mark.  The increase was intended to help fund a new universal pre-K initiative and to address a waiting list for subsidized child care.  This increase could be threatened by the required budget reduction.  The cut adopted this week also is likely to require DHS to scale back other services.  In recent years, proposed DHS cuts have included the Interim Disability Assistance Program and Burial Assistance.
  • The budget cut amendment suggests that the budget for the Department of Mental Health would grow from $143.5 million in 2004 to $161.8 million under the amendment.  Of this increase, $16 million is required to cover health care costs that had been covered in 2004 by the Medicaid reserve.  Adjusting for this transfer, the 2005 Mental Health budget would be $145.8 million, or just $1.6 percent higher than the 2004 budget.  This agency has been under receivership until recently and remains under court order to improve services.  The budget cut adopted this week will make it harder for the agency to make such improvements.
  • The budget cut amendment suggests that the $11.5 million Department of Health reduction can be found through re-negotiating the contract for the HealthCare Alliance, under which private hospitals and primary care centers provide care to uninsured DC residents.  Yet there is no indication that contract savings can be achieved, which would mean that the $11.5 million cut would have to come from other health services.

While reductions in the proposed budget for 2005 may be warranted, such cuts should be approached through a careful consideration of service needs and should spread reductions as broadly as possible so as to limit the impact of cuts on DC residents.


End Notes:

[1] This includes $14.4 million from the Department of Human Services, $11.5 million from the Department of Health, $6.3 million from Child and Family Services, and $5.1 million from the Department of Mental Health.

[2] These figures and the figures presented in Charts 1 and 2 take into account shifts in funding responsibilities across appropriations titles in the 2005 budget, primarily the shift of equipment lease costs from public safety and public works agencies to a new master lease account in the Financing and Other Appropriations title.  For example, some $5.1 million in expenses from the police department were shifted to the master lease account.  To compare the 2005 budget with previous years, this $5.1 million expense was added back to the 2005 budget for public safety and deducted from the 2005 budget for Financing and Other.