The DC Council cast its first, and arguably most important, vote to advance the fiscal year (FY) 2022 budget last week. The Council budget leverages over $3 billion in temporary federal recovery funds and maintains the Mayor’s strong investments in affordable housing production, shelter repair and improvements, and education funding, among many other areas. It goes even further with modest tax increases on DC’s wealthiest households to help pay for ongoing, transformative investments in housing for homeless residents, better pay for childcare educators, and expansion of a key tax credit for low-paid working families. The Council also makes important investments in wealth building, School Based Mental Health, and out-of-school time programming.
Despite these meaningful investments, the budget fails to fully support DC workers who have been excluded from unemployment benefits and federal stimulus payments or to offer hazard pay for essential workers. It also fails to reduce barriers to health care through DC’s Healthcare Alliance program and offers the Metropolitan Police Department (MPD) and Mayor too much discretion over the size of DC’s police force. We call on Councilmembers to address these remaining priority areas in the second vote on August 3rd to ensure that DC secures a just recovery and future.
New Revenue Allows for Historic, Ongoing Investments
The Council voted to modestly raise income taxes on DC’s wealthiest households, which will generate over $170 million annually by FY 2025 to fund several critical priorities for the District. The tax plan narrows DC’s fourth income tax bracket, creates two new high-income brackets starting at $250,000 and $500,000 in taxable income, and raises the income tax rates for the top three brackets, as shown in Table 1.
The new dollars allow for historic investments in:
- Early care and education. The revenue will support higher wages for the District’s early childhood educators, who are paid substantially less than DC Public School educators. This is a central provision of the Birth-to-Three Act, which was signed into law in 2018 but has been left unfunded since then.
- Additional affordable housing supports. Arguably the largest ever made, they include:
- 1,012 Permanent Supportive Housing (PSH) slots for individuals and 255 for families. PSH combines tenant vouchers with wrap-around services, including intensive case management and help managing health problems,
- 307 Targeted Affordable Housing (TAH) slots with ‘light touch’ services for families, including help with the housing application and service referrals,
- 310 Local Rent Supplement Program (LRSP) vouchers for families, 20 for LGBTQI+ residents, 40 for returning citizens, and 25 for seniors,
- 20 LRSP vouchers for individual domestic violence survivors and 40 for families, and
- 501 DC Flex slots—a program that provides families $8,400 per year for rent.
- Expansion of DC’s earned income tax credit (EITC) for working families with children living on low- and moderate-incomes. The credit increases to 55 percent from 40 percent the value of their federal credit. For a single mom with three children earning so low as to receive the full $6,557 in federal EITC, the expansion means an additional $3,600 local boost to make ends meet. (Working people without qualifying children and with very low incomes can also claim a credit worth 100 percent of the federal credit, which is smaller than for families and under federal relief measures tops out at about $1,500.).
Federal Rescue Plan Dollars Enable Many Additional Investments in a Just Recovery
The Council maintains some of the Mayor’s boldest investments, like $400 million for the Housing Production Trust Fund, and makes a number of additional investments that allow DC to “build back better,” including:
- 775 PSH slots for individuals (in addition to those noted above),
- Full expansion of the School-Based Mental Health Program so that all students in all DC Public Schools and public charter schools receive vital behavioral health services,
- An additional $5 million for Out-of-School Time (OST) programs, for a total of $21.8 million in FY 2022,
- An additional $28 million for public housing repairs, bringing the total to $50 million,
- An initial $32 million for the Child Wealth Building Act (also known as “Baby Bonds”) that provides eligible children with savings of up to $1,000 per year to invest in a business, property, education, or retirement savings upon turning 18 years old, and
- Funds for the Access to Justice Initiative ($10.8 million) to expand legal services to prevent eviction and denial of benefits for tenants
The Council Should Fund Remaining Priorities to Truly Build Back Better
A few key priorities were not addressed in the first vote but should be taken up in the second one to help DC residents recover and move forward.
- The Council failed to provide adequate funding for excluded and essential workers. Excluded workers asked for $200 million as a partial replacement of lost wages and (for many) having been excluded from federal relief measures. The Mayor and Council included just $35 million in payments for these workers. And, while the Labor Committee added $5 million in hazard pay for essential workers who have risked their health during the pandemic, those dollars were swept in the draft of the budget presented at first vote. Councilmember Silverman introduced an unsuccessful amendment to pay essential workers $20 million in hazard pay and to add another $6 million for excluded workers. Her plan would have tapped into Paid Family Leave surplus dollars that have been unwisely slated to shore up the Unemployment Insurance Trust Fund. (The UI Trust Fund can be easily replenished with a federal loan, as the system is set up to do. DC would have a two-year grace period to pay back the loan and be able to use increases in revenue as the economy rebounds to repay the loan without any penalties.) Councilmembers should free up PFL resources to support the urgent needs of excluded and essential workers at the second budget vote in August.
- The Council failed to remove hundreds of unfunded Full Time Equivalents (FTEs) from the MPD budget. MPD’s budget has 540 unfunded sworn officer positions, which 1) obscures the actual size of the police force, and 2) allows the Mayor to reallocate funding for those positions throughout the year. DCFPI strongly urges the Council to remove these unfunded FTEs from the MPD budget to ensure the Council has genuine oversight of the agency’s size and number of officers.
- Finally, the Council failed to remove onerous DC Healthcare Alliance recertification requirements. This program provides critical health care coverage to residents with low incomes who do not qualify for Medicaid, most of who are immigrants. However, the DC Healthcare Alliance does not have the same low-barrier application and recertification requirements as Medicaid. Alliance recipients must prove their eligibility more frequently and in person. The Council should act to reduce these requirements in the second vote.