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The D.C. Council passed on July 7 on first reading a draft of the fiscal 2021 budget in which tax increases on estates, corporations, technology companies, gas and advertising serve as basis of earnings for the District, alongside a reduction in funding for the District’s police department — all to the chagrin of Mayor Muriel Bowser.
Council member Anita Bonds (D-At Large), in a July 10 e-newsletter to residents, noted the legislature’s duty to review and revise the city’s budget proposal saying “the council of the District is moving forward with approving and amending the mayor’s proposed fiscal year 2021 budget proposal.”
“As you are all aware, due to the COVID-19 health pandemic and subsequent economic hardship, the city must grapple with a revenue shortfall of nearly $800 million,” she said.
The legislators worked for almost two months on Bowser’s $16.7 billion proposed budget which didn’t raise taxes or lay off employees but maintained salary levels for District employees, suspended hiring of new workers and severely curtailed government travel. Bowser’s budget tapped into the District’s reserves, restructured the city’s debt and moved around funds from agencies to meet the required balanced budget. However, in its efforts to balance the budget too, the council supported such measures as rolling back recent estate tax cuts that benefit wealthy residents by reducing the exemption from 5.6 percent to 4 percent.
Council member Trayon White (D-Ward 8) sponsored an amendment to the budget favoring the rollback, saying it would help fund violence prevention programs, and it passed, 8-5.
“Today, we took from the very rich and gave to the poor,” Trayon White said. “Given the challenges the city faces and the wider support for more progressive taxes, we believe a highly targeted and progressive increase in the estate tax to fund essential services for the neediest will be welcomed.”
In summary, the council enacted about $63 million in revenue enhancements for social services such as housing vouchers, violence interrupters, undocumented immigrant economic assistance and mental health aid in schools, according to Council member Brandon Todd (D-Ward 4) in an e-newsletter to constituents on July 9.
The enhancements included a delay in the tax break for publicly traded companies generating $7 million and ending a tax break for the city’s technology companies, putting $17 million into the District’s coffers. Council member Charles Allen (D-Ward 6) offered an amendment increasing the income tax on wealthy District residents, but his proposal was shot down on an 8-5 vote.
Bowser criticized the tax increases.
“When I made up my budget for fiscal year 2021, I didn’t think it was prudent to raise taxes in this environment,” she said at a July 8 news conference. “We are trying to weather this year and next and we have the tools to do that without raising taxes.”
The mayor denounced raising the gas tax by 10 percent and a 3 percent assessment on advertising.
“There has been little discussion about both of those proposed taxes,” the mayor said. “I would like to know what was used for their analysis? We have very few gas stations in the District so there won’t be much of an impact from the gas tax. As far as the advertising tax, local newspapers are already being crunched and you want to add a tax to that.”
Bowser also took issue with cutting the District’s police department’s budget by $10 million, saying “they have made the District less safe.”
“It appears to me to be a shell game, them moving dollars around from this to that, and we’re going to have to dig into it,” the mayor said, WTOP reported. “What also appears is that the amount of the cuts will mean that our force strength will go down in the upcoming year to levels that it was in 1990s. And that to me is very unfortunate and I think … if that’s what happened yesterday with the budget, they made the District less safe.”
The mayor said she didn’t like the District of Columbia Public Schools (DCPS) having to manage its security instead of the police department, a change made by the council.
Todd agreed with her.
“The security staff inside DCPS schools are by and large unarmed,” the council member said. “I’ve heard firsthand from students, parents, families, administrators and teachers that more security is wanted — not less. Furthermore, DCPS does not have the expertise to manage these security concerns and is an unnecessary added responsibility to an already overloaded school system.”
The council’s website said the final vote on the budget will occur on July 28.
Tarza Mitchell, the policy director of DC Fiscal Policy Institute, a think tank specialized in studying the District’s low and working class communities, said the budget “moves in the right direction, it raises over $61 million to boost vital funding for programs and services but falls short of what these unprecedented times require.”
“We’re disappointed that the council failed to approve very modest personal income tax increases on well-off D.C. residents, further scale back the police budget and put forward or approve bolder revenue changes.”