Testimony at the DC Council Committee of the Whole Budget Oversight Hearing

Chairperson Mendelson and members of the Committee, thank you for the opportunity to submit written testimony. My name is Erica Williams, and I am the executive director at the DC Fiscal Policy Institute (DCFPI). DCFPI is a nonprofit organization that shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future.

My testimony today will focus on three recommendations, two for ensuring the District’s recovery is inclusive of undocumented and otherwise excluded workers and one for ensuring equitable and sensible tax policy. They are to:

  • Fulfill the request for $160 million in pandemic relief for excluded workers denied unemployment benefits or stimulus payments because they’re undocumented, returning citizens, or working in the cash economy.
  • Extend the District’s Earned Income Tax Credit (EITC) to undocumented workers by extending the credit to those who file their taxes with an Individual Taxpayer Identification Number (ITIN).
  • Ensure the tax abatements for downtown building conversions are necessary, transparent, in alignment with affordable housing goals, and contain “clawback” provisions.

Ensure A Recovery Inclusive of All Workers, Regardless of Immigration Status or Other Factors

Fulfill Request for $200 Million in Relief for Excluded Workers

Due to a long history of structural racism, occupational segregation, and discrimination, Black and brown workers and women are disproportionately likely to work in one of the nation’s and DC’s industries hardest hit by the pandemic—leisure and hospitality.[1]  While the sector is recovering in DC, it is still down by around 20,000 jobs since December 2019.[2]  Many Black and brown workers, including those excluded from unemployment and other forms of assistance, will continue to face joblessness and economic hardship in what is—based on their experience—an ongoing, prolonged recession.

Last year, a coalition of DC’s excluded workers called upon the DC Council to provide a total investment of $200 million in cash assistance for them in the fiscal year (FY) 2022 budget to support their ability to pay for basic needs such as medicine, transportation, diapers, child care, and debt that they have incurred throughout this pandemic. DC lawmakers only met part of that ask. DCFPI supports the coalition’s full ask and urges the Council to find the additional $160 million in FY 2023. The investment would ensure each qualified excluded worker receives a total of $12,000 (equivalent to $1,000 per month for the first year of the pandemic), which is still substantially less than average unemployment benefits provided to eligible workers in the first year of the pandemic—roughly $34,000.[3] This figure doesn’t take into account the additional federal stimulus payments that many immigrants were unable to receive.

In addition to additional relief, DCFPI calls on the Council to:

  • Ensure a sustained approach to the DC CARES program so that payments are planned, processed, and delivered in a timely and efficient manner
  • Explore a long-term solution to permanently include excluded workers in our work and income support policies and programs, guided by workers themselves in those efforts.

Excluded workers have languished in this economic crisis and have yet to feel the recovery. Failure to provide additional support will ensure these workers and their families will fall further behind.

Extend DC’s EITC to Undocumented

DCFPI urges the Council to make our EITC more inclusive by extending it to undocumented workers. Council can do this by making the credit available to income-eligible filers using an ITIN. Six other states have done this, including our neighbor Maryland.

As the Council well knows, DC’s EITC makes a big difference in the lives of DC families with low and moderate incomes.

  • It offers a cash boost to low paid workers—especially those with incomes between $10,000 and $30,000—to meet basic needs, like paying for food, bills, transportation, and child care.[4]
  • It improves racial and gender equity. Black and brown residents—especially women—are disproportionately likely to be in low wage work and eligible for the EITC. Right now, around seven in ten eligible EITC filers or their spouses are women.[5]
  • And, the EITC delivers a lasting benefit to children. Research finds that young children in families with low incomes that get a cash boost like that provided through the EITC tend to do better and go further in school, and work and earn more as adults, likely because the additional resources help parents better meet their needs. Children of color are even more likely to see these improvements.[6]

Approximately 5,100 tax units (roughly households) would benefit from the proposed EITC expansion, preliminary estimates by the Institute on Taxation and Economic Policy (ITEP) show. The cost of this transformative policy would range from up to roughly $4.8 million today to roughly $10.2 million by full implementation (TY 2026) of the expansion adopted last year, assuming a level of participation on par with current EITC filers. It is likely that participation, and therefore cost will be lower due to factors like lack of awareness and the vulnerability of the undocumented population. [7]

DC is a welcoming city, and our commitment to low paid workers, to healthy child development and equitable outcomes, and to an inclusive economy, overall, should not be based on immigration status.  If we care about a just recovery and, in particular, ensuring that all children in the District get the start they deserve, show up to school ready to learn, and have economic mobility as they reach adulthood, then we should make full use of this proven tool.

Ensure Tax Abatements are Necessary, Purposeful, and Contain “Clawbacks”

The “Tax Abatements for Housing in Downtown Act of 2022” would provide $2.5 million for 20-year real property tax abatements to qualifying property conversions in a specific area of downtown DC that add at least 10 housing units. Properties must set aside 8 percent of housing units at rents affordable to households earning 60 percent or less of median family income. Tax abatements are limited to $2.5 million beginning in FY 2024 and then increase by 3 percent annually thereafter. In aggregate, abatements would be limited to $70 million over the 20-year period.

DCFPI urges the Council to interrogate the need, parameters, and accountability mechanisms of this proposal:

  • First, the Council can explore whether tax abatements are truly needed to subsidize office-to-housing conversions in DC’s downtown area. Tax abatements often go to companies already prepared to engage in a particular business activity, begging the question of whether the public is subsidizing activity that would have happened anyway. The Council can research and make public any evidence that these conversion projects couldn’t happen in the absence of a public subsidy. If there is no evidence to support the need for subsidy, the Council should remove it from the budget during the mark-up process.
  • Relatedly, Council should explore whether downtown conversions are the best tool for creating affordable housing. The proposal would require a set aside of 8 percent of housing units at rents affordable to households at 60 percent of median family income. Council should consider whether that requirement goes far enough and whether investment of these dollars in another affordable housing tool would better serve affordability goals.
  • Second, if evidence justifies public support each year over the next 20 years for downtown conversions, the Council should reconsider the design of the program. A more transparent program that allows the District to target subsidies to true need might be a competitive grant process run by the Office of the Deputy Mayor for Planning and Economic Development. Through such a process, developers could make their case for a project and how public dollars ensure financial viability of the conversion, and especially the affordable housing component.
  • Finally, if the abatements or a grant process move forward, there should be strong “clawbacks” or recapture provisions that require partial or full repayment of public dollars if developers fail to meet specific requirements, such as the affordability target and First Source Agreement.

Thank you for the opportunity to testify. I am happy to answer questions that members of the Council may have.

[1] Elise Gould and Melat Kassa, Low-wage, low-hours workers were hit hardest in the COVID-19 recession: The State of Working America 2020 employment report, Economic Policy Institute, May 20, 2021.

[2] Bureau of Labor Statistics, State and Area Employment, Hours, and Earnings for DC between December 2019 and December 2021.

[3] Doni Crawford, “Excluded Workers Demand Inclusion: $200 Million Investment is Essential Though Less than Half of What’s Needed,” DC Fiscal Policy Institute, June 24, 2021.

[4] Office of Revenue Analysis, “District of Columbia Tax Expenditure Report,” December 2020.

[5] Center on Budget and Policy Priorities estimates prepared using Urban Institute’s Analysis of Transfers, Taxes, and Income Security (ATTIS) microsimulation model and American Community Survey data via IPUMS USA.

[6] Chuck Marr, et al., ”EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s Development, Research Finds,” Center on Budget and Policy Priorities, October 1, 2015.

[7] Erica Williams. “DC’s Earned Income Tax Credit: The Most Generous in the Nation, but not the Most Inclusive.” DCFPI, April 2022.

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