May 6, 2013

The Honorable Phil Mendelson, Chairman
Council of the District of Columbia
1350 Pennsylvania Avenue, N.W.
Suite 504
Washington, DC 20004

Dear Chairman Mendelson,

DC for Democracy is deeply dismayed by Mayor Gray’s proposed FY 2013 supplemental appropriations bill (Bill B20-200) and his proposed FY 2014 Budget Request Act (Bill B20-198) and FY 2014 Budget Support Act (Bill B20-199).

The budget appears to be relatively sanguine, offering something for every notable constituency on the surface, but a deeper look illuminates grave shortcomings that leave a bitter taste.

Most notably, the FY 2014 budget bills continue the DC government’s economic development approach that lavishly subsidizes well-connected and already wealthy special interests, even while chronically under-investing in the much more urgent needs of the least fortunate residents of our city.Merely continuing status-quo funding, as the Mayor proposes for the most part,would fail to keep up with the sharp spike in poverty and homelessness for children and families, victims of the Great Recession they did not cause. While we applaud the Mayor’s proposal to partially fill the massive gap in the Housing Production Trust Fund that has been created through repeated cuts over the past several budget cycles, the FY 2013 supplemental bill rolls over $96 million in surpluses to FY 2014 without funding any of the other gaps in crucial safety net support identified last year and this year.

DC for Democracy urges the DC Council to fund immediately in FY 2013 all of the desperate human needs identified in the Mayor’s wish list (note 1) and/or identified in the testimony of a number of non-profit organizations to Council’s several standing committees during the past two months. The Office of the Chief Financial Officer (OCFO) would easily certify funds are available for all such desperate human needs, and the use of this or any other contingency list should therefore be unnecessary.If the need for more revenue should arise, we propose below measures to generate additional annual revenues of $69 million immediately and $99 million over time.

DC for Democracy urges the Council to ensure the following serious gaps in the social safety net are closed immediately in FY 2013 and through the end of FY 2014:

HOMELESSNESS & HOUSING

    Demonstrate commitment to end chronic homelessness: Invest $13.5 million in the Housing First Program to serve 540 additional chronically-homeless individuals and families.

    Stop the vicious cycle of homelessness early: invest $6.1 million in year one to provide housing, intensive counseling, educational, and career services for 150 homeless youth. This money would also fund, for the first time, a coordinated and mobile intake system for the estimated 3,000 youth ages 13-24 who experience homelessness every year in DC.

    Prevent homelessness by investing $10 million in the Local Rent Supplement Program (LRSP).LRSP must be expanded given the acute shortage of affordable housing in DC.Preventing homelessness is a better option than “treating” the homeless.

    Delete the Homeless Services Reform Act (HSRA) amendments in the Budget Support Act, which would gut DC’s homeless programs.Any amendments to the HSRA should go through the normal legislative process in order to ensure adequate input from the Interagency Council on Homelessness and service beneficiaries.

EDUCATION AND JOBS

    Invest $5 million to serve our troubled youth.This funding will help1,000 of the 9,910 disconnected youth (aged 16 -24) who are neither in school nor employed with school and/or training and employment.

    Enable low-income parents to remain employed by investing$11 million in child care subsidies.Many low-income parents want to work, but given the market cost of child care, cannot without this program.Ignoring them by placing this funding on a “wish list” is not only morally bankrupt, it makes for terrible economic policy.

    “Walk the walk” on job training by investing $4 million in basic adult literacy, which would allow an additional 1,000 adults to be get better jobs.

SUPPORT FOR DISABLED ADULTS & CHILDREN

    Demonstrate commitment to disabled persons: invest an additional $3.8 million in the Interim Disability Assistance (IDA) program, which has been cut 80% since 2008.This funding would allow an additional 1,200 disabled people to be covered.

    Delete the $16 million cut in appropriations for the Child and Family Services Agency.

REVENUE

In addition to funding the needs identified above, DC for Democracy supports comprehensive tax reform that ensures an adequate revenue base to continually fund core services, moves toward a fairer overall system for poor and working-class residents, and properly prioritizes earned over unearned income. As a modest down payment toward those broader changes, we recommend the following measures:

    Continue the taxation of interest income from non-DC municipal bonds.Rather than catering to a vocal but small group of mostly wealthy investors, the Council should consider the broader public interest, as all 50 states in the United States already do, by giving priority to investments in local infrastructure and maintaining local revenues in a period of damaging cuts to the federal budget. According to analysis by the DC Fiscal Policy Institute, restricting the tax break to locally issued bonds could eventually raise $30 million per year, including$14.5 million from just 81 very wealthy filers.

    Make permanent the temporary high income tax bracket for incomes over $350,000.

    Add a four percent surcharge on the investment income of DC’s wealthy filers receiving over $200,000 in adjusted gross income ($47 million).

    Increase the deductions “cap” from five percent to ten percent(i.e., itemized deductions will be reduced by 10% of amount by which the filer’s AGI exceeds $200,000)($22 million).

If you have any questions or comments regarding the above proposals, we would be happy to discuss them further.

Respectfully submitted,
Keith Ivey
Chair, DC for Democracy
Jeremy Koulish
Budget Committee Chair, DC for Democracy

Note 1: The so-called “wish list” is set forth in the Mayor’s “Revised Revenue Estimate Contingency Priority List,” section 902(a), Bill B20-199, pp. 108-110. The “wish list” items for DMPED (subsection 902(a)(12), $1,071,950 for 10 FTEs) and to reduce commercial property tax rates (subsection 902(a)(16), $10 million) appear unjustified in the face of such urgent gaps in the social safety net.