Sign-On to Oppose Regressive Tax Increases in FY 2010 Budget

The DC Fiscal Policy Institute is spearheading an effort to oppose regressive tax and fee increases that are part of the proposed FY 2010 budget. We’ve drafted a sign-on letter that we hope you or your organization can support.

Mayor Fenty proposed about $120 million in additional revenues to help address an $800 million budget shortfall. The new revenues will help preserve many important services.

That’s good news.

But there is bad news, too. Several of the proposed tax and fee increases would fall heavily on low-income residents. The proposed budget would eliminate annual cost-of-living adjustments for three tax benefits that are important to lower-income residents – the standard deduction, personal exemption, and property tax homestead deduction. Until recently, these benefits had remained frozen for 15 years or more.

Keeping these deductions at the same level means that filers would pay more in taxes every year than they would if the inflation adjustments were maintained. The tax increases would grow each year, as the deductions fall further and further below their inflation-adjusted value.

The proposed budget also includes a new “streetlight maintenance” fee that would add $51to annual electricity bills, and an increase in a fee that supports 911 services that would add roughly $10 a year to phone bills. These may be manageable for many families, but they would place a burden on low-income families who struggle to pay utility bills and often face the threat of utility shut-offs.

The sign-on letter urges the Council and Mayor to reject these proposals and to develop alternate revenue raisers that do not adversely affect low-income residents. One option was proposed last week by Council member Jim Graham – a new income tax bracket for higher-income residents. Check in to our blog next week to learn why we think this is one of several good alternatives.

To sign on, send an email by Wednesday April 22 to Ed Lazere at You also can contact the Council directly – will reach all of them. The Council will have to decide what to do with the Mayor’s proposal when they vote on the budget on May 12.

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