The moment we have been waiting for has come! No, we’re not talking about Eclipse, the latest in the Twilight saga, or the lower temperatures”¦.On Monday, Dr. Gandhi said the District’s revenue picture remains unchanged! That is good news, since almost every forecast in the past two years has shown things getting worse. This means we can close the books, so to speak, on the Fiscal Year 2011 budget (at least until September, when Dr. Gandhi looks into the revenue crystal ball again).
So what happened? Read on for a quick summary, but also check out the DC Fiscal Policy Institute’s budget summary report, which can be found at the DCFPI Budget Toolkit.
The DC Council approved a $6.2 billion local spending plan for FY 2011, adopting much of Mayor Fenty’s proposed budget but making some key restorations of funding that had been cut by the Mayor from programs that help low-and-moderate income residents. The Council rejected some of Fenty’s revenue-raising proposals ‘ for example, it eliminated a proposed 1 percent tax on hospital patient revenue and substituted with a lower fee assessed by hospital beds ‘ but largely kept the Mayor’s proposed fee increases, particularly higher fines for vehicle moving violations. And the Council added a few revenue sources of its own, including applying DC’s 6 percent sales tax to soda and raising the property tax rate for vacant properties. .
Where did the money come from to restore cuts? Some was shifted within Council committees, but most was found during a last-minute scramble within the Committee of the Whole to identify available dollars.
Those key restorations include:
- Adult Job Training: The Council restored $4.6 million in local dollars cut from the mayor’s budget for workforce development training for adults. The money came from two sources: $2.5 million came from a pay-go capital shift to the operating budget. The additional $2.1 million came from a transfer of funds from the summer youth employment program.
- Captive Insurance: The Council’s Committee on Health restored approximately $7 million of the $8 million cut from the captive insurance program, which provides insurance for the city’s nonprofit medical clinics.
- Child Care: In the end, the Council restored $3.5 million of the $4 million cut from the city’s child care budget.
- Earned Income Tax Credit (EITC): The Council restored $1 million to maintain the District’s EITC at 40 percent of the federal credit. The EITC is one of the most effective anti-poverty programs, providing an incentive for low-income families to work by allowing them to keep more of their earnings.
- Grandparent Caregiver: Funding for the grandparent caregiver program, which gives cash assistance to grandparent guardians, was fully restored. The Council eliminated the mayor’s $2 million cut to the program.
- Local Rent Supplement Program: The Council put an additional $1 million to fund the District’s local rent supplement program. The monies will help approximately 75 low-income families acquire safe and affordable rental housing.
Unfortunately, not all programs were so lucky. The Council restored only $1 million of the $7 million cut from Interim Disability Assistance, a cash assistance program for residents with disabilities who are waiting for federal disability benefits to be approved. Often these residents have no other source of income.
The Council adopted several small tax changes but did not vote in favor of any major revenue increase, limiting its ability to find funds for programs without impacting funding for other programs. A proposal to create a new income tax bracket for households with taxable income above $350,000 was introduced in the form of an amendment to the budget on May 26, but the measure was rejected in an 8 to 5 vote.
The revenue additions included:
- Expansion of Sales Tax to Soda
The Council voted to make sugary drinks including non-diet soda subject to DC’s 6 percent sales tax. Previously beverages of this kind were exempt from the tax. The decision to tax soda at the retail level came after the Council opted not to consider a proposal from Ward 3 Council member Mary Cheh to tax sugary beverages higher at the wholesale level. Cheh wanted to use some of the funds for the DC Healthy Schools, a program to make meals served in DC public schools more nutritious and sustainable. Money was found elsewhere to fund DC Healthy Schools.
- Medical Marijuana
The Council also agreed to subject medical marijuana to DC’s 6 percent retail sales tax.
- Vacant Property Tax
The Council created a fourth property tax class for vacant properties. The rate will be 5 dollars for every 100 dollars of assessed value.
