Today, 58 organizations signed on to a letter to Mayor Fenty, asking him and the Council to spare safety net programs from budget cuts. DC faces a $190 million revenue shortfall for the current fiscal year and a $150 million shortfall for FY 2010.
After a year of budget-cutting in response to falling revenues – the latest shortfall represents the third round of cuts – the options for finding budget savings without hurting critical public functions are getting fewer and fewer. Mayor Fenty has asked all DC agencies for proposals to cut their budgets by 10 percent. Given that they already have laid off staff, eliminated vacant positions, and closed some service centers, these proposals likely will include real cuts to services.
Yet demand for public services is growing, as it always does in a recession. DC’s unemployment rate – at 10.7 percent – is at its highest level in 25 years. Over 13,000 District residents have lost their jobs over the past year. As a result, demand for services in DC has increased. Nearly 12,000 additional households have applied for food stamp assistance over the past year, and more than 1,400 additional households have applied for cash assistance and job training through the Temporary Assistance for Needy Families (TANF) program.
Rather than increase hardship on families suffering the most during this economic downturn, the letter recommends that District leaders consider using the rainy day fund – as 27 states have – or raising revenue – as half of all states have. Using just half of DC’s rainy day fund could solve half of the budget shortfall. The letter also recommends tapping special purpose revenue sources, like the Baseball Fund, in order to close the shortfall.
This week, DCFPI released a paper outlining five principles that city leaders should consider as they address the current revenue shortfall. In the coming days and weeks, check back for specific proposals describing how DC can raise revenue to help close its budget gap.