On Wednesday, the D.C. Council inched closer to fully approving a budget that reverses D.C. Mayor Muriel Bowser’s proposed cuts and addresses the D.C. Office of the Chief Financial Officer’s (OCFO) concerns about the District’s probable loss of future cash assets.
D.C. Councilmember Trayon White (D-Ward 8) was the sole “no” vote on the Fiscal Year 2025 budget bills, each titled the Fiscal Year 2025 Budget Act of 2024 and the Fiscal Year Budget Support Act of 2025. He told The Informer that he will spend the next two weeks working with his colleagues in crafting a budget he deems more suitable for Ward 8 residents.
“The budget is a moral document for what we care about and with a ward that has challenges we didn’t go far enough to fund education for our children,” Ward 8 Councilmember White told The Informer. “We had opportunities for more senior SNAP money. The mayor took out one of our recreation centers in Congress Park, a neighborhood plagued by violence… We evict 2400 residents in rapid rehousing and the [budget] funding doesn’t adequately support the 200 teachers, 90 [of whom are] in Ward 8.”
Throughout much of April and May, council members worked in their committees and, with several hours of public testimony in the back of their mind, raised taxes and reallocated millions of dollars in the FY 2025 budget toward education, housing, environment issues, and legal services, among other programs.
In presenting budget recommendations coming out of the Committee of the Whole, D.C. Council Chairman Phil Mendelson (D) said he intended to address revenue growth, fiscal health, and the allocation of resources to the District’s most marginalized communities.
To that end, he thanked his council colleagues, particularly D.C. Councilmembers Robert White (D-At large) and Charles Allen (D-Ward 6) for their work in restoring funding to housing and environmental justice programs.
“What we have tried to do is address the cuts in the programs that affect low-income citizens the hardest and with some of the tax expenditure programs to get us back on the path to the budget that transforms lives, helps children and continues the war on poverty,” Mendelson said on the morning of May 29.
Mendelson also addressed council colleagues’ concerns about growing expenses by announcing that a new office within the council would closely examine the District budget, agency by agency, to identify areas of exorbitant spending.
D.C. Councilmember Robert White (D-At large) would later speak to these efforts on the dais as part of a greater effort to allocate as much as possible to effective, critical social programs.
In the days leading up to the Committee of the Whole meeting, Bowser expressed her opposition to tenets of the council legislation. Hours before the council’s first vote on the FY 2025 budget, she released a letter, once again, lambasting funding cuts she said would leave schools, recreation centers and pools with insufficient security.
Bowser also criticized the nearly $530 million in new taxes imposed on paid family leave, some residential property owners, natural gas consumers, out-of-state municipal bonds, heavier vehicles with low fuel efficiency, and taxicab passengers and firearm registration.
Recommendations Bowser outlined in her letter included: the allocation of funds to the Department of Human Services and Department of For-Hire Vehicles to address truancy and safe passage. She also promoted the further fulfillment of her vision for Downtown, an indoor sports complex at RFK Stadium, a new Correctional Treatment Facility annex, streetscape improvements, and renovations to the Southeast Tennis and Learning Center.
“When I submitted my budget on April 3, I noted the confluence of post-pandemic factors that required us to strike the right balance by prioritizing investments that would result in greater economic growth for our residents and businesses — and increased revenues for the District,” Bowser’s May 29 letter read. “The council however appears ready to choose a different path — one that is simply not financially sustainable. It fails to recognize the new reality of our fiscal environment.”
An Inside Look at the D.C. Council’s FY 2025 Budget Proposal
The council restored Access to Justice, a program intended to help low and moderate-income residents access legal services. It also honored Bowser’s request for funding that yields 3,370 police officers and 150 cadets.
Other notable provisions involve funding for the Kennedy Street public library; $24 million for the Sustainable Energy Trust Fund and D.C. Green Bank; the restoration of six full-time positions in the Department of Youth Rehabilitation Services (DYRS); the shift of DYRS oversight to the Office of the D.C. Auditor; and an additional $6 million for domestic violence response via the Office of Victim Services and Justice Grants.
But wait, there’s much more:
Taxes
Bowser’s FY 2025 budget proposal included $328 million in new revenue via a 911 fee imposed on hotel patrons, a sales tax increase in Fiscal Year 2026 in support of the Washington Metro Area Transit Authority, and an increase in the paid family leave tax.
The Committee of the Whole, chaired by Mendelson, recommended an increase to the Universal Paid Leave program contribution rate from 0.62% to 0.75%, which would generate $76.1 million. This counts among the several tax provisions outlined in the committee print that, if approved, would culminate in more than $500 million in new taxes.
Other notable recommendations brought through the Committee of the Whole included increases on property tax rate on single-family homes and condominium units valued at $2.5 million or more from $0.85 per $100 to $1 per $100, along with an elimination of the 911 fee.
The last change, Mendelson said, came out of concern about how to best attract large organizations looking for a host city for their convention.
“We [have] increase[d] the hotel tax on a temporary basis so that the funds would go to Destination D.C.,” Mendelson said as he questioned the utility of the fee. “[When] we take the risk of a higher tax, it will be used for marketing, which will get people to come to the District. The mayor’s tax had none of that.”
Chairman Mendelson and CFO Glen Lee Settle Reserve Issue
The 2024 Budget Season started a couple weeks late due, in part, to Chief Financial Officer Glen Lee’s insistence that the District’s Fiscal Stabilization Reserve be replenished to the tune of $253 million over four fiscal years.
Bowser met that obligation in her FY 2025 budget proposal to the detriment of the Early Childhood Educator Pay Equity Fund. Over the next several weeks, Mendelson and Lee engaged in a battle about the stabilization fund that even the Office of the Attorney General had to weigh in on at one point.
In the end, Mendelson didn’t dedicate any funds toward the Fiscal Stabilization Reserve for FY 2025. He instead opted to include a provision allowing for the depositing of revenue surpluses that are certified up until the end of the year into the Fiscal Stabilization Reserve. If the Fiscal Stabilization Reserve isn’t full by 2026, funds from the FY 2027 budget would be allocated to close that gap.
Other provisions within the FY 2025 budget legislation include a $200 million increase in the amount that goes into the Cash Flow Reserve Account. The OCFO would also be allowed to use other large reserve accounts for the purpose of temporary cash flow.
“OCFO said that based on spending trends, we will have a spending issue in 2028,” Mendelson said. “We can wait until then. I think we can say with confidence that this government is serious about ensuring that there’s liquidity.”
Lee, who released a statement speaking to the council’s budget bill, seemed to be in agreement, going as far to say that OCFO would proceed with certification of the council’s budget.
“These provisions indicate that the council has taken the Office of the Chief Financial Officer’s concerns regarding liquidity very seriously and has taken direct action to address them during the financial plan period,” Lee said. “Should these provisions be enacted into law, they will satisfy the necessary liquidity requirements, thereby supporting the District’s financial health.”
A portion of the amount originally allocated toward the Fiscal Stabilization Fund — $70 million — went toward the Early Childhood Educator Pay Equity Fund. However, that wouldn’t suffice for several advocates, including those representing the D.C. Under Three Coalition, who demanded an extra $17 million in accordance with what the Office of the State Superintendent of Education said the fund needed.
“To prevent cuts in salary and benefits for early childhood educators, the D.C. Council must allocate at least that amount to the Pay Equity Fund in the final FY 2025 budget,” D.C. Under Three Coalition wrote in a statement. “In order to achieve this, they must find additional funding or keep additional revenue-raising strategies on the table, specifically for early education…”
Baby Bonds and Sports Betting
The D.C. Council engaged in robust debate about a portion of the FY 2025 budget that restores funding to the Baby Bonds program via revenues from online sports betting. In 2019, the council legalized the practice and allowed lottery vendor Intralot to monopolize the market.
Meanwhile, the Child Wealth Building Act, through which Baby Bonds was established, never received funding in the mayor’s budget proposal.
D.C. Councilmember Kenyan McDuffie (I-At large), who championed Baby Bonds as a means of closing the racial wealth gap, introduced legislation earlier this year that, if passed, would allow gamblers to choose among several platforms. Other provisions of the bill include the creation of a new license class for mobile and online wagering applications and the installment of tax rates of various classes of operators.
McDuffie’s bill, titled the Sports Wagering Amendment Act of 2024, follows years of significantly low revenue generation by Intralot, who created its own gambling app named GambetDC. Earlier this year, the Office of Lottery and Gaming brought FanDuel on as a new provider. Within a month of this arrangement starting, Fanduel accumulated nearly $2 million in revenue.
Such an outcome, along with other factors, raised concerns among council members about McDuffie’s attempts to open the online sports betting market through the FY 2025 Budget Support Act. While McDuffie spoke about the potential for more revenue, D.C. Councilmember Zachary Parker (D-Ward 5) expressed his concern about how the provision would adversely affect Ward 5 businesses.
D.C. Councilmember Christina Henderson (I-At large) said she wanted a deeper exploration of the legislation, and online sports betting as a whole, outside of budget deliberations. D.C. Councilmember Brianne Nadeau (D-Ward 1) later alluded to public health drawbacks of gambling, which she said overshadow the programs funded by gambling revenue.
McDuffie, not one to back down, defended the budget measure and process by which he and Mendelson crafted it. “To suggest that the chairman’s suggestion is a pivot gives short sight to the oversight provided of the program and the time spent to formulate this particular proposal,” McDuffie said as he pointed out his colleague’s embrace of the Office of Lottery and Gaming’s recent change in vendors.
School Fund Reallocation, and Questions about Security, Out-of-School Time Programming
On Tuesday, D.C. Council Chairman Phil Mendelson (D) introduced a bevy of proposals, including a reallocation of $25.4 million from D.C. Public Schools (DCPS) Central Office to District schools, in accordance with the Schools First in Budgeting Act.
He also allocated $3.5 million for one additional, permanent teaching position in each Ward 7 and Ward 8 elementary school.
Other allocations included $1.2 million in one-time funds for St. Coletta of Greater Washington, $2.5 million in one-time funds for community schools, and $70 million for the restoration of the Early Childhood Educator Pay Equity Fund, which includes $12 million for Health Care for Child Care Insurance Program.
Another $17 million went toward the continuation of a 3.1% annual increase in per-pupil facilities allotment to public charter schools.
In speaking about the reallocation of funds from DCPS Central Office to District schools, Mendelson said that he wants to ensure educational equity, despite assertions by DCPS Chancellor Dr. Lewis D. Ferebee and Bowser that the Schools First in Budgeting Act doesn’t achieve that outcome.
“Ward 8 schools were hit the hardest and they have the highest concentration of at-risk students,” Mendelson told The Informer on Monday. “The chancellor is creating enormous instability in these schools. It’s horrible and I don’t see what the long-term vision on the part of the chancellor is to keep reducing the budget… Schools First [in Budgeting Act] lays out a formula to promote stability so that this doesn’t happen. And we look at other measures to increase one [full-time position] in every Ward 7 and 8 elementary school.”
Mendelson doubled down on his point about equity when D.C. Councilmember Matt Frumin (D-Ward 3) introduced an amendment to reconfigure funding among schools in his ward. Despite Mendelson’s efforts to discourage support for Frumin’s amendment, the council approved it 8-4 with D.C. Councilmember Vincent Gray (D-Ward 7) being absent.
Frumin, explaining his amendment, said that, after listening to community members and examining the situation on the ground, he thought it best to reallocate nearly $2 million from Jackson-Reed High School and Stoddert Elementary School to Janney Elementary School, Hardy Middle School and other schools within the Jackson-Reed and MacArthur feeder systems that were underfunded, even with implementation of the Schools First in Budgeting Act.
While Frumin elicited support from At-large D.C. Councilmember White on the dais, Mendelson told his Ward 3 colleague that the amendment would set a dangerous precedent in which ward-level council members could “second guess” and “pick winners and losers.”
Moments before the council voted on the amendment, McDuffie and At-large Councilmember Anita Bonds (D) echoed Mendelson’s sentiments. Bonds in particular said that the council needs to maintain fidelity to the spending formula, even if the Schools First in Budgeting Act needs further examination.
“You want us to support this amendment when we haven’t had enough conversation,“ Bonds said to Frumin. “Things are verified but we also have this formula. That worries me. We need to have more conversations about this formula that are applied to determine how we fund our schools.”
The D.C. Council also discussed security at District schools and government buildings.
During the earlier part of May, DCPS Central Office told council members that loss of funding for security contracts would force DCPS to pass on security costs to community-based organizations that provide out-of-school time programming.
At that time, the Committee of the Whole recommended a more-than-$30 million reduction to DCPS Central Office, $10 million of which went toward DCPS security contracts. The committee print has since restored $7 million to DCPS security contracts. That still hasn’t laid to rest questions about whether DCPS will absorb security costs associated with out-of-school time programming.
Those who represent out-of-school time providers tell The Informer that DCPS’ seemingly opaque budget makes the situation even harder to assess.
On Wednesday, Ryllie Danylko, senior policy analyst for DC Action, counted among those who lobbied the council for an additional $3 million for one-time, or recurring DCPS security contract funds.
Failing to do so, she said, could have a ripple effect throughout the District.
“Community-based organizations are operating on tight budgets and insufficient funding in this sector would be devastating,” Danylko said. “They are working on enrollment for one year so if they have to pull out of a school, parents would be without a program and kids. It feels like $1 million isn’t that much, but for a nonprofit, it’s a lot.”
Housing
The D.C. Council deliberated on budgetary changes that increased the number of new housing vouchers to 477 (more than double than what Bowser allocated in her proposal).
Other aspects related to housing involved a nearly $6.7 million increase in one-time funds for the Emergency Rental Assistance Program and an increase in Housing Production Trust Fund allocations from $59 million to $80 million.
Of course, some council members, like D.C. Councilmember Brooke Pinto (D-Ward 2) and Ward 8 D.C. Councilmember White expressed concern about rapid rehousing and the need for additional emergency rental assistance funds.
Even as he acknowledged this reality, At large Councilmember Robert White (D) thanked Mendelson for his collaboration and cooperation on this issue, telling his colleagues that he’s looking toward a future where the council could examine government spending even more deeply.
“The mayor’s budget cuts our social safety net, forcing us to spend more in the future. If we see something different, we have to do something differently,” White said to Mendelson. “We face some of the deepest cuts in human services and housing. Your proposal more than doubles the number of housing vouchers. You also allocated $1 million for housing for returning citizens. These investments over time will reduce pressure on human services.”
I just wish the budget would take serious cuts and give the working people some tax relief.