Testimony of Katie Kerstetter, Policy Analyst, DC Fiscal Policy Institute, at the Joint Public Hearing on the Food Stamp Expansion Act of 2009, District of Columbia Committee on Human Services & Committee on Goverment Operations

Good morning, Chairperson Wells, Chairperson Cheh, and members of the Committees. Thank you for the opportunity to speak today. My name is Katie Kerstetter, and I am a Policy Analyst with the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with particular emphasis on policies that affect low- and moderate-income residents.

I am here today to support the Food Stamp Expansion Act of 2009 and to offer additional recommendations to strengthen the safety net for low-income District residents.

The Food Stamp Expansion Act of 2009 would expand access to food stamps for more low-income working families and increase benefits for some families, by adopting two federal options: Categorical Eligibility and “Heat and Eat.” Expanding eligibility for the District’s Food Stamp Program is important because many families that need help buying food currently are not eligible to receive assistance. Before the implementation of Categorical Eligibility (Cat-El), a family of three earning more than $24,000 a year (130 percent of the federal poverty line) would not be eligible for any food stamp assistance, under federal eligibility rules. Under Cat-El, in contrast, a family of three with high housing and child care costs making up to $37,000 per year (200 percent of the federal poverty line) could be eligible for help with food costs.[1] Other assistance programs in DC, like Medicaid and housing assistance, serve families with incomes up to 200 percent or more of the FPL.

Boosting the purchasing power of low-income families also helps to stimulate the District’s economy. Economists estimate that $1 increase in food stamp payments can generate $1.73 in economic activity.[2] In fact, increasing food stamps is considered one of the best ways to stimulate local economies, because families tend to spend all their food stamps quickly and locally. In other words, providing food stamp benefits to more DC families means that more dollars will be spent in neighborhood grocery stores across the District.

The implementation of Cat-El also makes it possible for families with modest savings – who currently are ineligible for food stamps – to access these benefits. With an unemployment rate near 10 percent, more District families are faced with hard choices about how to make ends meet while they search for employment. Thanks to Cat-El, these families will no longer have to spend down most of their savings before they can access food stamp benefits, placing them in a better position to weather what has already been a very difficult economic downturn.

DCFPI recommended the implementation of Cat-El in our Bridging the Gaps report released last November. This report, which is attached to my testimony, includes a variety of recommendations to help low-income families better make ends meet, including updating the “Schedule H” Property Tax Credit for Low-Income Homeowners and Renters. The District has implemented substantial property tax relief for homeowners in recent years. However, this relief has not benefited renters, who pay property taxes indirectly through their rent, and many low-income homeowners who still face sizable property tax burdens. One option is to update the District’s Schedule H credit, a low-income property tax credit that both renters and homeowners can claim. The Schedule H income-eligibility ceiling of $20,000 and maximum credit amount of $750 have not been adjusted in the 30 years since the credit was created. Increasing the income ceiling and raising the maximum credit would help extend property tax relief to more low-income homeowners and renters.

While the Food Stamp Expansion Act would make progress in providing aid to low-income families, there are some aspects of the proposed FY 2010 budget that would represent a step backward. We are concerned that the FY 2010 budget proposes to eliminate the cost of living adjustments for the standard deduction, personal exemption, and homestead deduction – a proposal that would make the DC tax system less progressive by disproportionately increasing taxes and fees on low-income residents. Legislation passed in 2007 required all of these deductions to be adjusted upward for inflation each year, because each of these deductions had not been adjusted for many years and had lost ground to inflation. Eliminating the annual inflation adjustments in these tax benefits would increase the taxes DC residents pay, with a disproportionate affect on low-income residents. In addition, the budget proposes a new streetlight maintenance fee and an increase in the E911 fee that would add to household utility bills and place an added burden on families already struggling to pay these bills. This means that the gains families receive from greater access to food stamp benefits would be offset in part by higher taxes and fees they will pay if the budget proposals are approved.

Thank you, Chairperson Wells, Chairperson Cheh, and Councilmember Brown for your support of this important legislation. Thank you for the opportunity to provide testimony, and I am happy to answer any questions you may have.

[1]This is especially significant, given that Wider Opportunities for Women estimates that a family of three needs about $52,000 a year just to meet basic costs in the District.

[2] Mark Zandi, “Written Testimony of Mark Zandi, Chief Economist and Co-Founder, Moody’s Economy.com Before the House Committee on Small Business Hearing on “˜Economic Stimulus For Small Business: A Look Back and Assessing the Need for Additional Relief,'” July 24, 2008, http://www.house.gov/smbiz/hearings/hearing-07-24-08-stimulus/Zandi.pdf.