We have all been dismayed by the dark cloud of scandal over the John A. Wilson building. Some may want to believe that this cloud rolled in just this past year with the allegations of nepotism, illegal use of campaign funds, misuse of city vehicles and public grant funds, etc. Such scandals make for a perfect storm that has ripped away whatever was left of any naïve faith that our laws are properly enforced. In fact, however, the District—just like the 50 states and the federal government—is threatened by something far more insidious: the pay-to-play culture of crony capitalism that allows the privileged few and the special interests to exert far more influence than their limited numbers would allow in a truly democratic system.

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.

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.

DC for Democracy is known throughout Washington political circles as a group of savvy progressive boots-on-the-ground activists. What most people don’t know, however, is that we have a cadre of budget geeks within our midst. We’re taking advantage of that expertise and diving headfirst into the murky waters of city budget politics. After some analysis, internal discussion and vetting, we’re proud to announce our campaign to ensure the Council pursues a balanced approach toward deficit reduction.

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