On December 21, 2010, the DC Council approved a plan to address a $188 million budget shortfall for the current fiscal year. The Council made several changes to the gap-closing proposal that was submitted by former Mayor Fenty in November, but the final plan continued to rely heavily on spending cuts to address a budget gap that was caused by a drop in tax collections, a reduction in expected federal revenues, and overspending in special education and a handful of other agencies.
The Council restored just over $20 million of Mayor Fenty’s proposed cuts and added just over $500,000 to fund a new Deputy Mayor for Public Safety office and a new DC Open Government office. The large majority of the funds to restore cuts are one-time dollars ‘ $19 million ‘ that came from creating four furlough days for non-essential District government employees. The Council restored $11 million in cuts for low-income programs, including a complete restoration of cuts to adult job training, but the final plan still relies significantly on cuts to low-income programs, including cuts to basic assistance to thousands of poor families with children.
The Council also considered, but ultimately rejected, a number of proposals to raise taxes that would have been able to prevent some of the cuts. Most notably, two proposals to increase income taxes were introduced but rejected.
In addition to some funding restorations, the Council also attempted to create a budget reserve for unforeseen problems during the remainder of FY 2011. They indentified $40 million for the reserve; however $32 million of the reserve are funds that may be needed to address likely special education cost overruns. This likely leaves just $8 million to address other concerns.
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