DC Council Chairman Kwame Brown and his 12 colleagues met yesterday for a public discussion of Mayor Gray’s budget proposal for next year. As District Dime readers know, Mayor Gray released his proposal April 1, and the DC Council is set to vote on it May 25.
So what did we learn about the changes the Council might make to next year’s budget?
Honestly, not a whole lot.
Most of yesterday’s discussion involved reviewing actions taken by the 12 DC Council committees. Many of the changes involved small transfers of funds within agencies, though a few garnered significant discussion. The Committee on Human Services eliminated 19 positions in the Child and Family Services Administration and reallocated those dollars to mental health and substance abuse services for youth, as well as to the Grandparent Caregiver program. The Committee on Public Works and Transportation’s proposal to increase the residential parking permit fee to fund Metro and other projects met concern from several councilmembers. The Committee is proposing to increase the fee for a parking permit from $15 to $35, and to even higher amounts for a family’s second or additional cars.
What about Mayor Gray’s proposal to raise the income tax on high earners? It was not discussed in depth. It was listed within a table of “Council Wide Priorities” to be either ELIMINATED or altered to a bracket starting at $500,000, which would raise less revenue to fund critical services.
Were any other revenue proposals discussed? Once again, not in detail though several were listed within the Council Priorities table. The list included:
“¢ One or more furlough days for DC government employees
“¢ Expanding the sales tax base to include armored cars, investigation services, and security services
“¢ Elimination of the tax exemption on interest earned on out-of — state bonds or reduce the exemption by 50%
“¢ Reduction of Mayor Gray’s proposed shift of capital budget expenses to the operating budget from $47 million to $20 million
What does DCFPI think of some of these proposals? First, we remain strong proponents of Mayor Gray’s income tax proposal, which also has the broad support of DC residents. DC’s top tax bracket starts at $40,000 even though median income is much higher. Also, when all of DC’s taxes are considered, middle class families pay the highest percentage of income in taxes. Mayor Gray’s proposal helps level the playing field.
DCFPI has been a strong voice in advocating that DC should act like every state in the country and eliminate the tax exemption on interest earned on out-of-state bonds. It will encourage investors to put their money in DC-related projects. It is a smart move to make in addition to the income tax rate increase, but DCFPI believes it should not be a substitution for the income tax.
DCFPI also encouraged the Council to consider shifting the $47 million back to the operating budget incrementally rather than all at once. It is good budgeting practice to keep only big infrastructure, capital project-related costs in the capital budget, but this fix does not need to happen all at once. This proposal, which would modify the Mayor’s budget, would free up resources to restore some of the most serious budget cuts, such as a large cut in homeless services that many Council members have expressed concern about. Some councilmembers also spoke about the need to restore funding to critical programs like Temporary Assistance for Needy Families and Interim Disability Assistance.
Councilmembers also discussed how a potential increase in the June revenue forecast might impact the budget. As District Dime readers know, DC Chief Financial Officer Natwar Gandhi releases a revenue forecast every quarter. Many expect his June forecast to show additional tax dollars but it is not certain. The Council did not make specific decisions for use of these funds, although Chairman Brown suggested that fully half should be used to build up DC’s savings.
Check in to tomorrow to see why DCFPI thinks there are better ways to use additional revenues.
As of today, it is unclear whether the council will hold additional meetings on the budget. Stay tuned!
