DC for Democracy’s proposal on DC’s Fiscal Year 2013 Budget was delivered to the Council Committee of the Whole as written testimony for the FY13 Budget Support Act of 2012.

DC for Democracy strongly objects to the proposed FY13 budget, on the grounds that it is an austerity budget that is not fair, not socially responsible, and will fail to pull our economy out of the current economic recession. [Note: our response is based solely on the Mayor’s budget proposal; the Council is discussing many changes to both spending and revenues, but they are unofficial and continually evolving].

Spending Proposals

The Mayor calls for $102.7 million in spending cuts, 75% ($76.6 million) of which inflict further suffering on people who are homeless, poor, unemployed, or sick, many of whom are children. These are the people who are asked to sacrifice:

Homeless people who will suffer $7 million in federal funding cuts, which may require shutting down the DC General homeless shelter.

Low-income DC residents currently paying more than 30% of their income on rent and who need affordable housing will suffer from $20 million in cuts to the Housing Production Trust Fund which builds affordable housing. DC has financed 8,900 units of affordable homes since 2002, but we have slowed down the pace significantly in the last few years and the government has diverted money from building affordable housing to pay for other housing programs that do not solve the problem. They will also suffer from the loss of $5 million in federal funds that help them buy affordable homes (Home Purchase Assistance Program).

23,000 low-income DC residents who get health insurance through the public Healthcare Alliance program will suffer $23 million in cuts, which means they will not be covered for hospital care.

Low-income DC residents suffering from domestic violence will suffer $1.2 million in cuts to the Victim Services Program, which offers a variety of services for the victims of domestic violence.

Poor, unemployed families with children will suffer $14.7 million in cuts to the new Temporary Assistance to Needy Families (TANF) employment program which has been proven to be an effective way of moving them from welfare to work. These 6,200 families (which include 12,000 children) will also suffer from $5.7 million in cuts to TANF benefits, if they have received benefits for more than 5 years.

The Mayor has placed most of the above programs on a “Revenue Priority List” which is basically a wish list. These programs will only be funded if DC gets revenues that are currently not expected. It is unconscionable for the Mayor to propose funding basic human needs from fantasy dollars that may never materialize. We need to put these programs back in the real budget and pay for them with real revenue.

Revenue Proposals

The Mayor calls for raising $70.5 million in revenue to bridge the budget gap through 4 revenue sources. All of these revenue sources are imposed on DC residents regardless of income level and ability to pay.

$28.2 million to be raised from collection of past due taxes and fees

$25 million to be raised from new traffic cameras that will generate speeding tickets for drivers

$5.3 million to be raised from expanded hours for selling alcohol, which increases alcohol addiction, accidents and injuries, noise, trash, and other social harm

$12 million to be raised in income and property taxes from people of all income levels, by refusing to raise the standard deduction, personal exemption and homestead exemption to account for the last 4 years of inflation.

These revenue proposals will exacerbate a tax structure that is already regressive, where the working poor bear the heaviest tax burden.

According to the Office of the Chief Financial Officer (OCFO)’s 2010 “Tax Rates and Tax Burdens, Washington Metropolitan Area” report, a typical household of three earning $25,000 bore an overall local tax burden (consisting of income, sales, property and automobile taxes) of 10.4 percent, the highest tax burden of any income bracket. A comparable family earning $150,000 bore a tax burden of only 8.9 percent. [see chart on p. 20 of the report]

The FY13 revenue proposals will serve to further burden the working poor at the $25,000 level, making DC’s tax structure even more regressive.

Recommendations on Spending

DC’s FY13 Budget should reflect its progressive values. First, it should protect our most vulnerable residents: the poor, the sick, the unemployed, and the homeless, many of whom are children. The budget should pay for the $76.6 million in cuts identified above, and it should also pay for the following:

Add $4 million to the Housing First Program, to allow more homeless families to leave the shelters and into a permanent home with wrap-around services to break the cycle of homelessness

Add $2 million to the Local Rent Supplement Program, which helps poor families to stay in their homes

Add $4 million to the public school budget to provide a school librarian for every school (44 schools currently do not have dedicated funding for a full-time librarian)

Add $10 million for public libraries, to build up the library collections and to reopen the branch libraries on Sundays, when they are most needed by the community

With the addition of this $20 million in essential social infrastructure to the $76.6 million in spending cuts that must be restored, the FY13 budget should include at least $96.6 million in additional spending, with a matching $96.6 million in additional revenues in order to balance the budget.

Revenue Recommendations

We should eliminate revenues raised from people who are already finding it hard to make ends meet, or from penalties designed to change behavior rather than raise money.

Reinstate the inflation adjustment to the standard deduction, personal exemption, and homestead deduction. This means subtracting $12 million in new revenues.

Exempt the 140,000 DC residents who are on food stamps from the improved collection of overdue taxes and fees. We should not be asking people who are not getting enough to eat to bridge the budget gap. This means subtracting an estimated $6.6 million from new revenues ($6.6 M = estimated $28.2 million * 140,000/600,000 residents).

The expanded hours for alcohol sales is not advisable, given the likely social costs involved. This means subtracting $5.3 million from expanded hours for alcohol sales from new revenues.

Use the automated cameras for traffic “calming” but do not count expected $25 million in revenues toward the FY13 budget. This will ensure that the goal is increasing pedestrian safety rather than raising revenue. This money can be counted towards the FY13 budget surplus instead.

Adding the $48.9 million from these foregone revenues to the additional $96.6 million required in new revenues means that $145.5 million of revenue must be raised to balance our budget in a progressive, socially responsible manner.

DC for Democracy favors making our tax code, which is currently regressive, truly progressive. However, given that the tax code is being reviewed by the Tax Revision Commission, we urge the Council to adopt the following short-term measures to fully fund urgent human needs:

1) Impose a 4 percent surcharge on the $1.2 billion — yes, that’s billion with a “b” — of investment income (qualified dividends and capital gains) received by the richest 5% of DC residents, i.e., households with $200,000 or more in Adjusted Gross Income (AGI). Qualified dividends and capital gains currently enjoy a tax advantage over wages and salaries, since they are taxed at a maximum rate of just 15%. A 4 percent surcharge would generate $47.2 million in needed revenues. See [IRS historical data from 2009].

2) Impose a higher limit of 10 percent on itemized deductions claimed by the richest 5% of DC residents, i.e., households with $200,000 or more AGI. Last year, the Council wisely imposed a 5 percent limit on such itemized deductions. Based on the CFO’s forecast last year [pdf] we calculate than a 10% limit would raise an additional $20.1 million this year.

3) Use just one-quarter ($78.2 million) of the budget surpluses of $304.5 million from FY11 and FY12 to fund urgent human needs for the next fiscal year, saving a full three-quarters of the money to build up our savings.

Together, these three proposals would yield the $145.5 million we need for a more balanced, progressive, fiscally and socially responsible budget.

DC for Democracy members can help the budget campaign by doing the following:

1) Commit to email and phone targeted Councilmembers in early May (we will provide information and talking points).
2) Join us at the Wilson Building on Thursday, May 10, 10am - Noon to show our elected officials a typical “Day in the Strife” of vulnerable DC residents. For more information, click here to view the flyer [PDF].
Please contact Kesh at keshinil@yahoo.com or 202-537-6768 to join the campaign.

DC for Democracy’s proposal on DC’s Fiscal Year 2013 Budget was delivered to the Council Committee of the Whole as written testimony for the FY13 Budget Support Act of 2012.

DC for Democracy strongly objects to the proposed FY13 budget, on the grounds that it is an austerity budget that is not fair, not socially responsible, and will fail to pull our economy out of the current economic recession.

Spending Proposals

The Mayor calls for $102.7 million in spending cuts, 75% ($76.6 million) of which inflict further suffering on people who are homeless, poor, unemployed, or sick, many of whom are children.  These are the people who are asked to sacrifice:

Homeless people who will suffer $7 million in federal funding cuts, which may require shutting down the DC General homeless shelter.  

Low-income DC residents currently paying more than 30% of their income on rent and who need affordable housing will suffer from $20 million in cuts to the Housing Production Trust Fund which builds affordable housing.  DC has financed 8,900 units of affordable homes since 2002, but we have slowed down the pace significantly in the last few years and the government has diverted money from building affordable housing to pay for other housing programs that do not solve the problem.  They will also suffer from the loss of $5 million in federal funds that help them buy affordable homes (Home Purchase Assistance Program).

23,000 low-income DC residents who get health insurance through the public Healthcare Alliance program will suffer $23 million in cuts, which means they will not be covered for hospital care.

Low-income DC residents suffering from domestic violence will suffer $1.2 million in cuts to the Victim Services Program, which offers a variety of services for the victims of domestic violence.

Poor, unemployed families with children will suffer $14.7 million in cuts to the new Temporary Assistance to Needy Families (TANF) employment program which has been proven to be an effective way of moving them from welfare to work.  These 6,200 families (which include 12,000 children) will also suffer from $5.7 million in cuts to TANF benefits, if they have received benefits for more than 5 years.

The Mayor has placed most of the above programs on a “Revenue Priority List” which is basically a wish list.  These programs will only be funded if DC gets revenues that are currently not expected.  It is unconscionable for the Mayor to propose funding basic human needs from fantasy dollars that may never materialize.  We need to put these programs back in the real budget and pay for them with real revenue.

Revenue Proposals

The Mayor calls for raising $70.5 million in revenue to bridge the budget gap through 4 revenue sources.  All of these revenue sources are imposed on DC residents regardless of income level and ability to pay.  

$28.2 million to be raised from collection of past due taxes and fees

$25 million to be raised from new traffic cameras that will generate speeding tickets for drivers

$5.3 million to be raised from expanded hours for selling alcohol, which increases alcohol addiction, accidents and injuries, noise, trash, and other social harm

$12 million to be raised in income and property taxes from people of all income levels, by refusing to raise the standard deduction, personal exemption and homestead exemption to account for the last 4 years of inflation.  

These revenue proposals will exacerbate a tax structure that is already regressive, where the working poor bear the heaviest tax burden.

According to the Office of the Chief Financial Officer (OCFO)’s 2010 “Tax Rates and Tax Burdens, Washington Metropolitan Area” report, a typical household of three earning $25,000 bore an overall local tax burden (consisting of income, sales, property and automobile taxes) of 10.4 percent, the highest tax burden of any income bracket.  A comparable family earning $150,000 bore a tax burden of only 8.9 percent.  [see chart on p. 20 of the report]

The FY13 revenue proposals will serve to further burden the working poor at the $25,000 level, making DC’s tax structure even more regressive.

Recommendations on Spending

DC’s FY13 Budget should reflect its progressive values.  First, it should protect our most vulnerable residents: the poor, the sick, the unemployed, and the homeless, many of whom are children.  The budget should pay for the $76.6 million in cuts identified above, and it should also pay for the following:

Add $4 million to the Housing First Program, to allow more homeless families to leave the shelters and into a permanent home with wrap-around services to break the cycle of homelessness

Add $2 million to the Local Rent Supplement Program, which helps poor families to stay in their homes

Add $4 million to the public school budget to provide a school librarian for every school (44 schools currently do not have dedicated funding for a full-time librarian)

Add $10 million for public libraries, to build up the library collections and to reopen the branch libraries on Sundays, when they are most needed by the community

With the addition of this $20 million in essential social infrastructure to the $76.6 million in spending cuts that must be restored, the FY13 budget should include at least $96.6 million in additional spending, with a matching $96.6 million in additional revenues in order to balance the budget.

Revenue Recommendations

We should eliminate revenues raised from people who are already finding it hard to make ends meet, or from penalties designed to change behavior rather than raise money.

Reinstate the inflation adjustment to the standard deduction, personal exemption, and homestead deduction.  This means subtracting $12 million in new revenues.

Exempt the 140,000 DC residents who are on food stamps from the improved collection of overdue taxes and fees.  We should not be asking people who are not getting enough to eat to bridge the budget gap.  This means subtracting an estimated $6.6 million from new revenues ($6.6 M = estimated $28.2 million * 140,000/600,000 residents).

The expanded hours for alcohol sales is not advisable, given the likely social costs involved.  This means subtracting $5.3 million from expanded hours for alcohol sales from new revenues.

Use the automated cameras for traffic “calming” but do not count expected $25 million in revenues toward the FY13 budget.  This will ensure that the goal is increasing pedestrian safety rather than raising revenue.  This money can be counted towards the FY13 budget surplus instead.

Adding the $48.9 million from these foregone revenues to the additional $96.6 million required in new revenues means that $145.5 million of revenue must be raised to balance our budget in a progressive, socially responsible manner.

DC for Democracy favors making our tax code, which is currently regressive, truly progressive.  However, given that the tax code is being reviewed by the Tax Revision Commission, we urge the Council to adopt the following short-term tax measures to raise $ 83.9 million to bridge the FY13 budget deficit:

Impose a 3 percent surcharge on investment income (interest, ordinary dividends, and capital gains) received by those households with $200,000 or more in Adjusted Gross Income (AGI).  This income group enjoyed investment income of $1.45 billion in 2009 [IRS historical data]. A 3% surcharge will generate $43.7 million in needed revenues.

Impose a higher limit of 10 percent on itemized deductions for those households with $200,000 or more AGI.  Last year, the Council wisely imposed a 5 percent limit on such itemized deductions.  The CFO forecast [pdf] that a 5 percent limit would raise $20.1 million in FY13; therefore, a 10 percent limit on itemized deductions will raise $ 40.2 million.

We need to use the surplus from previous years to benefit those who made the greatest sacrifices. Therefore, use one-quarter ($61.6 million) of the FY11 surplus of $240 million for our FY13 needs.

Adding together the $83.9 million in new revenue from high income filers and $61.6 million from the FY11 surplus yields the $145.5 million we need for a more balanced, progressive, fiscally and socially responsible budget.

DC for Democracy members can help the budget campaign by doing the following:

1) Commit to email and phone targeted Councilmembers in early May (we will provide information and talking points).
2) Join us at the Wilson Building on Thursday, May 10, 10am - Noon to show our elected officials a typical “Day in the Strife” of vulnerable DC residents. For more information, click here to view the flyer [PDF].
Please contact Kesh at keshinil@yahoo.com or 202-537-6768 to join the campaign.

DC for Democracy has been working on the DC budget for three years. In Fiscal Year 2013, we are being offered yet another austerity budget reflecting the values of tea party Republicans. We face another round of budget cuts to important social safety net programs and a failure of political will to ask the wealthiest DC residents to foot their fair share of the bill. The budget is arguably the most important vote the DC Council makes, yet very few DC residents make their voices heard on the subject. We believe it is vital that the public be mobilized to press our elected officials to invest in our community and social infrastructure with adequate revenues.

DC4D’s Budget Committee, which consists of Dan Wedderburn, Dave Power, and Kesh Ladduwahetty, has worked hard the last several weeks to study the FY13 budget. Kesh summarized our findings in a short article on the subject, with encouragement and input from the rest of the Budget Committee, Angela Bradbery and Chair Jerry Clark.

Kesh submitted the article to the Washington Post Local Opinions section, and we are delighted it was selected for publication in the Washington Post blog and will appear in the April 29th Sunday print edition (Metro section).

Please click here to read “A tea party budget for D.C.”

DC for Democracy members can help the budget campaign by doing the following:

1) Commit to email and phone targeted Councilmembers in early May (we will provide information and talking points).

2) Join us at the Wilson Building on Thursday, May 10, 10am - Noon to show our elected officials a typical “Day in the Strife” of vulnerable DC residents. For more information, click here to view the flyer [PDF].

Please contact Kesh at keshinil@yahoo.com or 202-537-6768 to join the campaign.