Note: DCFPI updated these priorities on June 17, 2025, to reflect the mayor’s proposed budget

As the DC Council reviews the mayor’s proposed budget and begins forming its own decisions on how to raise and allocate resources to meet residents’ needs, they are at an important crossroads. Federal threats to longstanding programs that help people meet their basic needs and the District’s economy leave DC leaders with a choice between accepting the mayor’s devastating proposals or proactively shoring up and expanding programs that will help residents weather the storm.

Federal officials are working to slash funding for public services to pay for tax cuts for millionaires and wealthy corporations, which would leave DC residents worse off through lost health coverage, less money for groceries, and under resourced schools. The full costs of these cuts, as well as the potential elimination of federal jobs and rising unemployment in the District, will put extreme pressure on the DC budget as local revenues are already projected to decline as a share of the economy over the next four years.

DC leaders must rise to the occasion by protecting the most vulnerable residents and fortifying local programs that build economic security. While uncertainty remains about how much harm federal officials will cause, that harm will undoubtedly and disproportionately fall on Black and brown people with the fewest resources because of systemic racism. To mitigate this harm, lawmakers will need to raise adequate revenue to support these needed investments.

Now is not the time to hold back. It is time to lead. The DC Council must be bold and visionary in ensuring that the 700,000 residents that call the District home are safe and economically secure.

As DC Council develops the fiscal year (FY) 2025 supplemental budget and FY 2026 budget, the DC Fiscal Policy Institute (DCFPI) urges consideration and prioritization of the following recommendations:

Early Education

• Increase the Pay Equity Fund by $10 million, for a total of $80 million annually, to reward credential attainment and finance modest growth in participation. An additional $8.6 million would finance a slight increase in credential attainment among participating educators, allow new educators to join the program, and raise minimum salaries by two percent to account for inflation. An additional $1.4 million would also allow facilities who are on the waitlist for either PEF or HealthCare4ChildCare to join the program.
• Increase the child care subsidy program by $20 million to sustain the current caseload. Restoring a portion of recent local and federal cuts to the subsidy program would allow DC to better maintain caseloads and avoid any cuts to the program.

Inclusive Economy

• Move the RFK stadium deal out of the budget—including the resource allocation across the four-year financial plan—and take the time to have a full public debate on the proposal. Such a massive commitment of District resources should be given a separate, comprehensive debate where the full costs and tradeoffs are identified, a range of options are discussed, such as building affordable housing on public land, and residents have adequate opportunity to weigh in on their priorities for the RFK site. Any agreement should minimize DC subsidization of the stadium, maximize revenue for the District, and include DC first source hiring requirements and strong project labor agreements.
• Reject the mayor’s proposal to slash cash benefits for 13,700 of DC’s poorest families, most of whom live in Wards 7 and 8. The mayor’s proposal would freeze Temporary Assistance for Needy Families (TANF) cost-of-living adjustments, increase the sanction for failing to meet a participation requirement, and reinstitute penalties for hitting a time limit. Before making drastic changes to TANF, DC should hire a consultant to assess how DC spends its TANF funds and make recommendations for how DC can better align its use of federal and local funds.
• Maintain the current level of universal paid leave benefits. The mayor proposes decreasing the employer universal paid leave tax rate from .75 percent of payroll to .72 percent, paid for entirely through cutting benefits, including reducing 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). By keeping the tax rate at .75 percent, the Council can maintain current benefits without any impact to general revenue.
• Remove the I-82 repeal from the Budget Support Act (BSA). 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. This provision is not germane to the budget and should be removed.
• Allocate $4.2 million to improve nutritional standards and workforce training for people incarcerated in the Department of Corrections (DOC). Fund DOC to provide nutrient-dense food that meets or exceeds federal nutrition standards in addition to requiring the mayor to establish a hospitality and culinary arts training program for residents incarcerated in the DOC, as prescribed in the SECURE DC Omnibus Amendment Act.
• Allocate sufficient funds to mitigate federal cuts to the Supplemental Nutrition Assistance Program (SNAP) and offset the rising cost of food. Congress is currently debating legislation that guts SNAP funding and eligibility, threatening vital food assistance to DC residents. The Council should allocate sufficient funds through the Give SNAP a Raise Amendment Act to mitigate the harm of looming federal cuts and to help DC residents afford the growing cost of food.
• Restore funding for the Child Wealth Building Act, or “baby bonds” program, to help close DC’s outsized racial wealth gap. The District should restore funding and mandate coordination across agencies to support implementation of this program to achieve its long-term goal of reducing the substantial racial wealth gap in DC.

Health

• Allocate $130 million to reject the mayor’s proposal to narrow eligibility and benefits for the DC Healthcare Alliance, which provides critical health care coverage to residents with low incomes who do not qualify for Medicaid, most of whom are immigrants.
• Reinvest some of the savings from the Medicaid shift—which will affect 25,500 adults—to ensure the Basic Health Plan includes intensive rehabilitative behavioral health services and dental and vision benefits to minimize harm. While this shift may save DC local funds, it could come at a high cost to struggling residents via reduced benefits and a very short timeline that could disrupt continuous care. Consider using a portion of the savings to offer a state-premium wrap to the roughly 2,500 adults that would be shifted into the marketplace.

Affordable Housing

• Set aside 30 percent of the Housing Production Trust Fund (HPTF) for preservation. To ensure that preservation projects have a path to becoming safe, affordable, high-quality housing, the District should set aside 25 percent of the HPTF for preservation. Flexible capital would support carrying costs, gap financing, and other up-front costs required for preserving affordable housing.
• Invest $30 million to enable tenants to purchase their building through the Tenant Opportunity to Purchase Act (TOPA) to build Black and brown wealth. Reopen, expand, and fund the First Right to Purchase Program, which provides affordable financing to tenants who seek to purchase their building through the TOPA process.
• Allocate $17.33 million to the Local Rent Supplement Program to improve housing affordability for residents and families with extremely low incomes. This would create 800 new housing vouchers, improving housing affordability for those with extremely low incomes.
• Remove the Rebalancing Expectations for Neighbors, Tenants, and Landlords Act (RENTAL Act) from the budget. The bill would weaken tenant protections and should be given a separate debate outside of the budget process.

Ending Homelessness

Move More Residents Who Are Unhoused into Housing

• Fund 1,260 new Permanent Supportive Housing (PSH) vouchers for individuals annually for three years. PSH combines a housing voucher and individualized, intensive case management for individuals experiencing chronic homelessness, meaning they have been homeless for a long time and have a disabling condition.
• Add 608 PSH vouchers for families to the 156 vouchers that the mayor already funded and invest in Targeted Affordable Housing (TAH) for families. Some families need the extra support that PSH provides. TAH combines a housing voucher with light-touch case management, and housing search and move-in assistance.

Fund Homelessness Prevention and Robust Services

• Add an additional $95 million for Emergency Rental Assistance Program (ERAP) and additional $1 million to Project Reconnect to prevent evictions. A $100 million ERAP investment would help approximately 15,000 households, on average, avoid evictions by helping to pay overdue rent and legal costs. The funding for Project Reconnect, the prevention program for singles, would ensure all who qualify can find alternatives to shelter such as reuniting with friends and family.
• Allocate an additional $3.2 million to the Coordinated Street Outreach Network. This funding helps unsheltered residents meet their basic needs and move into housing, if housing is available.
• Provide an additional $7.5 million to the Rapid Rehousing Program (RRH) for individuals to restore caseload to the FY 2024 level of 600 individuals and create an additional 100 slots to eliminate the wait list. This funding would restore the $5 million cut to the program in FY 2025, which reduced the program in half, and add $2.5 million to serve all individuals on the wait list in need of RRH’s support services and short-term rental assistance.
• Create a flexible funding program at the Department of Human Services to cover one-time move-in expenses for residents receiving a voucher or RRH. Also, provide storage space for unhoused individuals so they can keep their belongings in a safe place until they find housing.
• Ensure there are at least 100 medical respite beds for individuals. Meet the need for medical respite beds, which offer a safe place for people who are unhoused to recover from surgery and illness or to learn to manage a chronic condition.
• Increase the Personal Needs Allowance (PNA) to $300 to improve living standards for residents who were chronically unhoused and now call DC’s first assisted living facility home. Improve the facility’s Medicaid tenants’ ability to purchase essentials like hygiene products and clothing by increasing the monthly PNA floor, which is capped at $138, and indexing it to inflation. This would likely boost participation in the program, which is currently undersubscribed.

Tax and Revenue

• Maintain the proposed pause in the sales tax increase for FY 2026. This would benefit low- and moderate-income households which pay a larger share of their income in sales taxes than higher income households.
• Allocate at least $14.6 million to restore DC’s Child Tax Credit (CTC) to support families and take aim at child poverty. Consider allocating another $80 million to expand the CTC to all children under age 18 (including those with an Individual Taxpayer Identification Number) and to increase the maximum credit to at least $1,500 per child for families with the lowest incomes. Lawmakers should also consider an opt-in coaching program modeled after LIFT’s Coaching + Cash program, evaluation of which found statistically significant increases in LIFT families’ personal and household income, employment, financial well-being, and social support as well as educational enrollment and attainment.
• Reject ineffective business incentives that squander millions in tax dollars and won’t grow the economy. Save $2.2 million by rejecting the proposed revival of the failed Qualified High Technology Company (QHTC) tax incentive, which the 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. Save $1.9 million in FY 2025 and $4 million in FY 2026 by nixing the proposed restaurant sales tax holidays, which research shows tend to be costly, benefit wealthy residents the most, enable businesses to exploit consumers with higher prices, and are difficult for businesses and government to administer. Maintain the combined reporting tax deduction delay to save $7.4 million annually.
• Require the mayor to provide proof that the Housing in Downtown (HID) program is effective. Before expanding the geographic reach of HID and providing additional tax abatements, the Council should request evidence that office-to-residential conversions would not happen absent the subsidy and take other steps to control costs, safeguard public investments, and protect tenants, like removing the TOPA exemption. In addition, Council should reverse massive expansion of this abatement in FY 2028—when it is set to jump to $41 million—and end the 4 percent year-over-year growth thereafter.
• Close a loophole to ensure all businesses operating in DC pay their fair share of taxes by adopting a Business Activity Tax. Close a lucrative loophole that allows many non-resident business owners, and some high-powered corporations, to avoid DC business taxes. A 2 percent BAT could raise $500 million per year, depending on adjustments to existing business taxes.
• Create a progressively tiered surcharge on capital gains for tax units with an adjusted gross income (AGI) above $500,000 and for capital gains at/above that level only. Create a capital gains surcharge of 1, 2, and 3 percentage points for taxpayers with AGIs between $500,000 and $750,000, $750,000 and $1 million, and over $1 million, respectively; the surcharges would apply only to capital gains income at or above $500,000. This would raise $123 million annually, affecting just 1.85 percent of taxpayers overall.
• Eliminate the stepped-up basis for capital gains bequeathed at death to raise $43.7 million. If an investor leaves an appreciated asset to an heir upon death, neither they nor the heir will ever owe capital gains tax on the growth in value up to that point. DC can either tax realized gains at the time of transfer to an heir or implement a carryover basis tax. Lawmakers may want to consider an exception for residents participating in the Heirs Property Assistance Program or others with low incomes inheriting a primary residence.
• Preserve DC revenue by decoupling from costly federal tax policies that put our tax system at risk. Take the necessary steps to avoid losing substantial revenue due to any misguided federal tax giveaways that may occur.