This Tuesday, the DC Council will likely finalize a budget that falls short of representing the values and priorities of the overwhelming majority of DC residents. On Saturday, June 11, DC for Democracy launched a last ditch email and phone campaign directed at Council members to try to ensure that the Council votes to keep the budget from straying even further from the public’s priorities.
Since April, DC for Democracy has worked with a broad coalition of social service providers, progressive organizations, activists and concerned citizens to press for a budget that would fund vital government services in order to address basic human needs, stimulate job creation at a time of severe recession, and identify targets to reduce unnecessary or inappropriate expenditures. In doing this (judging by poll and survey results, as well as emails and phone calls to DC Councilmembers), we represent the progressive values and priorities of the overwhelming majority of DC residents. Nevertheless, our largely Democratic elected officials have produced a surprisingly conservative budget that keeps government spending more or less flat, continues the pattern of hugely disproportionate cuts in human services programs, and closes the door to meaningful and reliable revenue increases to address them. To us, this appears similar to what House Republicans are attempting to do at the national level and is not, we think, what District residents prefer.
The Mayor proposed $131M in cuts to vital human services and community development programs, which are needed more now than ever, given the recession and severe cuts in federal funding. He also proposed $127M in new revenue, most of which we fully supported. We thought his proposed income tax measure was inadequate compared to our proposal for three new high income tax brackets: $100K - 200K at 9%, $200K - 500K at 9.5%, and $500K + at 10%. We also proposed eliminating the tax loophole on non-DC state and municipal bonds, as well as increased resident parking permit fees for trucks and SUVs. Together with the revenue measures the Mayor proposed that we agreed with, our budget proposal would raise $230.7M in new revenues next year. This would be enough to fund all of the proposed cuts to human services and community development for this year, make up for successive cuts to these programs since 2008, and reduce our dependence on borrowed funds, which impose expensive debt servicing costs. Altogether, this revenue package would have resulted in quite modest tax increases for those making more than $100,000 per year. We also sought to eliminate fat in the budget through a temporary moratorium on tax abatements and subsidies for private development projects.
We are gratified that in response to the public outcry over human services cuts, the Council voted on May 25 to restore $27M for homeless services, Temporary Assistance to Needy Families (TANF), and Interim Disability Assistance. We were also pleasantly surprised that the Council finally eliminated the tax loophole for non-DC state and municipal bonds. However, in this first vote on the budget, the Council demonstrated a lack of fiscal responsibility by voting down the Mayor’s modest income tax proposal, which would provide reliable revenues year after year, and which was broadly supported by the public. It then relied on $33.5M in hoped for funding contingent on updated revenue forecasts from the CFO to fund critical human services, including homeless services, affordable housing, children’s mental health, libraries, and childcare subsidies. Even assuming they materialize, these funds would most likely be available for one year only. CFO Gandhi has warned against using this kind of “contingent budgeting”.
Certain members of the Council have also been irresponsible in proposing the bond tax reform as an alternative, rather than a complement, to the income tax increase. The idea was first introduced behind-the-scenes without adequate public input, and later negotiated amid flagrant horse-trading on the dais. The bond tax reform would produce less revenue over the years once its favorable tax treatment is eliminated. It is also apparent that their votes for the bond reform measure were not sincere, as some members of the Council, led by Councilmembers Jack Evans and Mary Cheh, are planning to effectively undo it, by grandfathering the measure to allow current owners of these bonds as well as purchases through Oct.1, 2011 to enjoy the tax loophole well into the future. Thus, while DC retirees pay income taxes on most other investment income, including pension benefits and Social Security income, the Council may well vote next Tuesday to grandfather the bond measure to extend this tax loophole for an extended period of time.
DC for Democracy is mobilizing its members to urge the Council to vote against grandfathering the bond measure, to use unanticipated revenues strictly for human services and community development programs, and to keep the budget from straying even further from the public’s priorities and values.
In the longer term, we will continue to campaign for adequate and reliable revenues through a progressive income tax, sufficient funding of vital human services, the elimination of spending that is either wasteful or does not serve a public benefit, and greater public accountability in our budget process.