DC for Democracy is a leading unaligned progressive group of activists, community leaders and everyday voters in the District of Columbia working for positive change in our local & federal government and recognition in America’s legislature. We are the Democracy for America (DFA) affiliate in Washington, DC.

TO JOIN US, email us at dcfordemocracy@gmail.com.

We commend the committee for increasing the term of the Ethics Board to six years, which will enhance the Board’s independence vis-a-vis elected officials. We are also happy to see the disqualification of the Mayor and Council members for felony conviction and the provision of online reports of businesses having contracts with the city (although we would prefer the last to be in database form).

Unfortunately, Council Chairman Kwame Brown has decided that it is more important to pass ethics reform before the holidays than to do the right thing. The vote took place only a few days after the last public hearing, ensuring that only minor changes were made to the bill. And even though more amendments are planned relating to bundling and outside employment, Chairman Brown is determined to have the second vote on December 20th. If the Council were serious about public participation in ethics reform, the first vote would have been later this month and the second vote in late January of next year. But public participation appears to be largely window-dressing.

The bill makes barely a dent in the larger problem of the “pay-to-play” culture that violates basic democratic principles. Amendments proposed by Councilmember Wells to ban contributions from entities having city contracts and to eliminate constituent service funds were voted down overwhelmingly. Meanwhile, council members claim that disclosure is preferable to regulation, yet fail to provide for the public to enjoy the benefits of disclosure in a timely and usable manner. While Councilmembers speak philosophically about the inevitability of money in politics, they do not appear to have noticed that 99% of the public is outraged at this corruption of our democracy.

The unfinished business on ethics reform is so great that were the Council to rush its second vote on the bill this month, the voters in the primary election next Spring will assuredly make it the number one reason for throwing the incumbents out.

We also hope that the full Council will consider imposing a ban on the outside employment of Council members. Serving both the public interest of DC residents and a private employer poses too many conflicts of interest. While taking leave of absence from one’s career is a sacrifice, there are many benefits from public service which make the latter more than worthwhile. The fact that a majority of current Council members do not have outside employment demonstrates the viability of this policy.

Finally, we urge the Council to consider reducing the outsized role of private money in politics, including banning private monies for official travel, banning contributions by entities with business before the city, reducing contribution limits, and eliminating Constituent Services Funds. While Council members may believe that the role of money is inescapable, the public still holds to democratic ideals. We are deeply concerned that our democracy is in danger of replacing the principle of “one person, one vote” with the reality of “one dollar, one vote.” We will be watching this vote on ethics reform carefully to see which elected officials understand these concerns and vote to safeguard our democracy.

DC Councilmembers are allowed to receive up to $80,000 per year in contributions to their Constituent Services Funds (CSF’s) per year, and may spend up to that amount per year as well for constituent services. Leftover campaign funds may also be contributed without regard to the $80,000 limit. It is a widely held view among District residents that CSF’s are used primarily to pay for urgent individual or family needs such as rental assistance to avoid eviction, utility bills to prevent cutoff, or help with funeral expenses, etc.

The reality is that councilmembers spend very little from their CSF’s to meet these immediate constituent needs. As shown in Table 1, during 2010, for nine (9) councilmembers the amount spent for these needs represented only between 1% and 12% of their total expenditures. The other four members ranged from 25% to 32%. For all members combined, the amounts spent totaled only $48,271, representing 12% of all expenditures from CSF’s for the year.

¹Covers immediate constituent needs, mostly to provide rental assistance to avoid eviction, pay electricity bill to avoid service cutoff, and help pay funeral expenses.

Source: DC Office of Campaign Finance (OCF) quarterly reports submitted by councilmembers.

Thus, despite widespread impressions to the contrary, councilmembers spent the vast majority of their constituent services funds for purposes not related to helping constituents with serious, immediate needs.

What then are most constituent services funds spent for? They fall into two broad categories. The first is to assist community organizations and to sponsor or support community events. In 2010, as shown in Table 2, councilmembers spent far more on community organizations and events than on pressing individual and family needs. The amounts spent in this category by councilmembers ranged from 8% to 48% of their total expenditures, with the exception of one member for whom these kinds of expenditures represented 77% of total expenditures.

The other category of expenditures may primarily benefit the councilmember and staff rather constituents. This includes spending spending on office supplies, computer expenses, printing, local travel and large amounts for catering and refreshments, of which an unknown amount may be for community events. Constituent funds were also used for Council breakfast meetings, for bottled water for their offices, and even to pay for season tickets costing $28,000 to four professional sports teams.

Nine councilmembers spent far more from their constituent services funds on this category of expenditures that they spent on either immediate constituent needs or on community events or organizations, with their expenditures for this category ranging from 40% to 87% of their total CSF expenditures. (See Table 2 for details)

¹Includes spending by councilmembers for office supplies, computer expenses, printing, catering & refreshments and local travel; also for breakfast meetings of councilmembers, for Deer Park water and to pay for season tickets to DC professional sports teams.
Note: Catering & refreshments were not broken down and likely include amounts spent in support of community events.

Source: DC Office of Campaign Finance quarterly reports submitted by councilmembers.

Contributions to CSF’s

As noted above, councilmembers are allowed to accept contributions of up to $80,000 per year for their CSF’s, plus leftover campaign contributions. Contributions are limited to $500 per individual or entity.

As can be seen in Table 3, there was great variability among councilmembers in the amounts brought in during the year, ranging from a low of $33 to a high of $81,000. Only four members had contributions in excess of $40,000, while eight brought in less than $15,000. Total contributions to CSF’s were $308,321, and average of $23,717 per member.
The contributions came primarily from those donating the $500 maximum allowed. Many of the $500 maximum donations were from familiar names of individuals and entities that appear prominently in campaign fundraising reports as well. We can only speculate about the motivations behind these contributions. It is worth noting, however, that contributions of $500 over four years ($2,000) vastly exceed the amounts that can be legally contributed to a campaign fund during that time ($500 for ward-level races, $1,000 for at-large races).

Source: DC Office of Campaign Finance quarterly reports submitted by councilmembers.

Conclusions

DC for Democracy believes that CSF’s should be eliminated. The quite limited amounts spent on hardship cases handled by these funds—less than $50,000 for all councilmembers’ CSF’s—suggests that there must be a better way to handle them, perhaps in the executive branch through a central office with the ability to access city-wide public and private resources to service them.

We are also concerned that the combination of the nature and sources of contributions, the ability to transfer leftover campaign funds into these accounts, and their use to fund community organizations and events, raise the question whether these funds are being seen as an adjunct to political campaign contributions. There are many legitimate expenditures being made by CSF’s, but our belief is that they should be covered by other means and through budget authorizations. Reducing the limits on contributions and expenditures from $80,000 to $40,000, as Councilmember Muriel Bowser proposes, yet not really narrowing the definition of what CSF’s can be spent for, does not, in our view, address the underlying question of why the CSF’s should be continued.

Despite these figures, a number of arguments are made in favor of allowing outside income for members of the Council. Let’s consider these arguments:

• The perspectives gained through outside employment enhance a councilmember’s Council service. It is no doubt true that a councilmember’s PRIOR occupation, whether as a lawyer, businessperson, doctor, or educator, provides valuable perspectives for members of the council. That does not mean, however, that it is essential to continue one’s job and draw a salary while serving as an elected member of the Council. There are continuing education programs, seminars, conferences and web-based programming that are readily available to those who want to “keep up”.
• Earning a living through another job renders the individual more independent from outside influence. This is akin to the argument that voters should prefer wealthy candidates because they don’t “owe anyone anything”. Despite its surface appeal, there is scant evidence to support this proposition. If talking about independent wealth, it may have more plausibility. But in the case of councilmembers receiving outside income, there is much more room for conflict of interest when attempting to serve the interests of both the public and the employer.
• Dedicated individuals are capable of handling the demands of two or more jobs. This may be true for some, but not for others, and it is doubtful that a meaningful standard can be devised and enforced as to who is sufficiently dedicated or capable to be able to handle the demands successfully. Perhaps this could be left for the voters to decide on an individual case based on their level of satisfaction with a councilmember’s performance. We prefer the position that the potential problems with outside employment outweigh the benefits.
• Abandoning one’s career to serve the public for a period of years is a huge sacrifice. In one sense this is true. However, the high demand by the private sector for people who have served in public office indicates that the knowledge and relationships developed in the course of being an elected official are considered very valuable. Public service is both a sacrifice and a great investment in one’s career, with the net benefit being on the side of the latter. It should also be said that public service is considered an honor worth some sacrifice.
• Conflicts of interest do not come only from outside employment. True, there are many sources of conflicts of interest. All of these conflicts should be disclosed and, when they exist, should require recusal. But career ambitions are a particularly important potential source of conflicts of interest. Just as federal officials place their investments in blind trusts to protect themselves from such conflicts, a temporary leave from one’s primary career while serving in public office serves to minimize such conflicts of interest, which can never be entirely eliminated.

We believe our Councilmembers are well compensated at annual salaries of $125,583. We recognize that serving as a Councilmember may be a financial sacrifice for some, but we believe that the intangible benefits it bestows at least offset whatever sacrifice there may be. And we hold strongly to the view that potential conflicts that may arise from outside employment justify a policy of banning such outside sources of income.

The draft bill of the Committee on Government Operations headed by Councilmember Muriel Bowser contains provisions that represent a substantial improvement over the current situation by requiring far greater disclosure of outside employment income than is currently the case. We support these changes, but we think they do not go far enough as regards councilmembers. Among other things, reporting would be required only at the end of each year. While such reports would be audited and made public, there would be a substantial period of time before auditors or the public would be informed of their contents. Finally, there appear to be no penalties in the relevant Chapter for failure to adequately and timely file the disclosure reports.

For the reasons stated above, we feel that the better course of action to simply ban all outside employment income.

We must address both types of threats referred to above. First, we must prevent future scandals from engulfing the Wilson building by enforcing the laws already on the books. The Office of Campaign Finance (OCF) must be adequately staffed to audit campaign records and to initiate its own investigations. Its current staff of four auditors is clearly not sufficient. More importantly, enforcement of ethics statutes, which are currently scattered across multiple agencies, must be consolidated into a unified Ethics Code, as Ken McGhie of the DC Board of Elections & Ethics (BOEE) eloquently urged at the hearing on October 26. This unified and expanded Ethics Code would then be enforced by an independent Ethics Board consisting of members nominated by the Mayor, Council Chair, and the Attorney General, as well as four members from outside of government nominated by labor, business and community organizations. All would be subject to confirmation by the DC Council.

Only an independent Ethics Board that is adequately staffed and funded would have the authority for broad oversight, could carry out the training of government personnel, including our elected officials, and could enforce ethical behavior by all personnel. Establishing and funding such a body will be an important test of the Council’s seriousness about genuine ethics reform.

As important as it is, the enforcement of existing laws alone will not solve the problem. The pay-to-play culture of crony capitalism is deeply engrained throughout our political system through the power of money. To curb its influence in our local government and politics, our proposals include the following:

Ban political contributions by lobbyists and entities that do business with the District.

Ban the bundling of campaign contributions, and reduce contribution limits for Mayoral and Council Chair Campaigns to $1,000.

Attribute contributions of corporate affiliates and subsidiaries to the parent corporation for purposes of campaign contribution limits.

Eliminate private donations, using public financing only, for Transition Committees, and limit donations for Inaugural activities to $100 per individual or entity.

Require reporting to OCF of Independent Expenditures related to political campaigns.

Eliminate Constituent Services Funds.

Ban free or discounted legal services for elected officials; ban private donations for official travel (use public financing only); and ban public officials from receiving free or discounted prices not available to the general public for entertainment, sports events, etc.

Require full reporting to OCF of meetings between lobbyists and councilmembers.

Closely related to the pay-for-play culture is the potential abuse of power by elected officials in cases where there is a clear conflict of interest. To address this problem, we propose the following:

Require Councilmembers to state on the record before consideration of legislation whether they have a conflict of interest and, if so, require that they recuse themselves.

Ban outside employment for councilmembers beginning January, 2014.

Finally, there must be accountability for those who have engaged in corrupt practices. Too often, only public officials pay the price for corruption, while the private parties—without whom such corruption would not exist—escape punishment. To make sure there is accountability on the part of these private parties, we propose the following:

Prohibit organizations that have been convicted of fraud from doing business with the District government for five years.

Prohibit contractors or individuals who have misrepresented information in the contract awards process from doing business with the District government for five years.

We believe that a piecemeal approach to ethics reform will not work, and that it will not provide the necessary reassurance to District residents that serious reforms are being adopted. The above proposals will, in our view, go a long way towards clearing that cloud over the Wilson building and restoring public trust in our local government.

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.

Remember how Mayor Gray heavily relied on the phrase “One City” when he was asking for our votes? We assumed that a united city meant actually doing something about income inequality and keeping the safety net intact. After all, DC does suffer staggering gaps between its rich and poor residents, and contrary to common perception the well-to-do actually pay less in overall taxes than most of the surrounding counties in MD and VA. Clearly, vital services for the disadvantaged should not be bearing the brunt of efforts to balance the city’s budget.

Mr. Gray did propose a slightly higher income tax rate on those earning over $200,000, which we applaud. Although we can and must go further, it’s a good start. However, we cannot say the same about the choices Mayor Gray made to place vital programs like homeless services, affordable housing, disability assistance, mental health services and child care on the chopping block. These cuts among others to the safety net make up some two-thirds of the amount of overall budget cuts.

How, in such an overwhelmingly Democratic city, does the “prudent” and “safe” option involve slashing programs for the poor yet again while corporate welfare goes completely untouched? It’s not like our social welfare programs have been living high on the hog in recent years either; Mayor Gray proclaimed last year that “we’ve cut so much out of this budget that we’re not only down to the bone, we’re into the bone marrow”. Our city’s disadvantaged families didn’t cause the current recession, but they have repeatedly been forced to pay the price while powerful corporations that continue to thrive get off the hook.

With the final budget vote still a full month away, the City Council has the option to pursue a different path. Instead of throwing homeless families out onto the street, we should pursue modest revenue raisers targeted to those who can most afford them. We should also end wasteful tax giveaways and subsidies in the name of “economic development” until proper oversight mechanisms are in place.

DC4D has released a concrete plan to do just that. Check it out here.

Then, TAKE ACTION! Just 12 phone calls or personalized e-mails on an issue makes a real difference. If you contact your councilmember and pass on the message to 11 of your friends, you can be that differencemaker. Let’s make it happen!

Jeremy Koulish
Chair, DC4D Tax/Budget Committee