Mayor Fenty Wants Five-Year Lifetime Limit On Full TANF Benefits

November 29, 2010

I thought the proposed five-year lifetime limit on TANF benefits and other D.C. public assistance was dead.

Councilmember Tommy Wells, Chairman of the Human Services Committee, said he wouldn’t move it forward. Councilmember Marion Barry, who cosponsored and apparently initiated the bill, said he wouldn’t vote for it anyway.

“Imperfect and incomplete,” he called it. Really just all about starting “a dialogue on how to break the cycle of generational poverty, government dependency and economic disparity in the city.”

But the time limit has resurfaced in a different form in Mayor Fenty’s plan to close what’s now a $188 million gap in the current budget.

Scrolling through many lines I find inscrutable, I see that the Department of Human Services intends to reduce funding for TANF cash assistance by more than $4.6 million “to more closely align with federal policy.”

The proposed Budget Support Act, which would make District laws consistent with the gap-closing plan, shows that the purported alignment means an across-the-board 20% cut in the maximum TANF cash benefits available to participants who’ve been in the program for a total of more than five years.

This would mean that a District family of three could receive, at most, $342.40 per month — about 77% below the federal poverty line. This when the current maximum leaves the family short $133 per month, even if it has one of those scarce housing vouchers, plus all other standard forms of assistance.

We’ve been cautioned by Council Chairman Vincent Gray not to object to a budget cut unless we’re offering ideas for balancing the budget. Don’t know if the new top tax bracket I’ve joined in supporting would count. The latest letter that Save Our Safety Net has drafted for us says it would raise at least $65 million.

Still, a plan for using the new revenues to protect all under-funded safety net and other core programs is well beyond my expertise. So I’ll confine myself here to noting that nothing in federal policy suggests — let alone mandates — a TANF benefits cut at the end of five years.

States can set their own benefits levels wherever they choose. The federal government’s five-year lifetime limit sets the standard for the caseload that can be partially funded by the block grant. States may exempt up to 20% of their caseload from this limit without financial penalty based on “hardship or domestic violence.” They are also free to use their own funds for a higher percentage.

No exemption whatever in the benefits reduction section the Budget Support Act would add to the District’s public assistance law. Rather, a guarantee that families who, for a variety of reasons, haven’t become — or remained — fully self-sufficient will be plunged into even greater hardship than they are now.

Mayor Fenty tells us that “we cannot afford to ask [residents] to shoulder a bigger financial burden” in these “tough economic times.” I guess poor parents constrained to rely on TANF don’t count.


Worse State, DC Budget Woes To Come If Extra Medicaid Funding Dies

June 14, 2010

Recent weeks have brought us several important updates on state-level budget woes and their impacts on our still-struggling economy and anemic job market.

First came the Commerce Department’s quarterly report on the gross domestic product–a common measure of the country’s economic health. Cuts in state and local government spending reduced the GDP increase rate by half a percent. This translates into a loss of about $72 billion in economic growth.

Then the National Governors Association and the National Association of State Budget Officers issued the results of their latest fiscal survey of the states. Bottom line here is that Fiscal Year 2010 “presented the most difficult challenge for states’ financial management since the Great Depression.” More of the same is expected in FY 2011.

States spent an estimated $74.4 billion less in FY 2010 than in FY 2008. But they would have had to make even larger cuts if they hadn’t received emergency fiscal assistance through the economic recovery act. The single largest part of this was a higher-than-usual federal match on states’ Medicaid costs (FMAP).

Then we got the Bureau of Labor Statistics’ employment figures for May. While nonfarm payrolls showed on increase of 431,000 employees, but all but 20,000 of them were temporary workers hired by the Census Bureau.

State and local government payrolls shrank by 22,000 jobs. The Center on Budget and Policy Priorities reports that this brings the total to 231,000 jobs shed since August 2008, including 100,000 in education.

The American Association of School Administrators estimates that an additional 275,000 education jobs will be lost in the upcoming school year–unless the federal government steps in with more emergency aid.

And here’s the kicker. According to a lengthier CBPP analysis, 29 states and the District of Columbia developed their FY 2011 budgets on the assumption that FMAP would be extended. Without the assumption, projected shortfalls–and, therefore, cuts–would have been even greater.

It was a reasonable assumption. After all, both the House and Senate had passed bills including a FMAP extension. But, as I recently ranted, the House leadership dropped the extension to garner the votes needed to pass its version of the Senate’s jobs/tax cut extender bill.

Now the Senate leadership has put the extension back into the bill, encouraged by outcries from governors and the National Conference of State Legislators.

It’s trying to corral the magic 60 votes needed for a substantive vote on the bill by easing the tax rates applied to hedge fund managers’ incomes and raising more revenues from oil companies.

Hard to tell whether this will work–or, if it does, whether Blue Dogs will again push back when the bill cycles back to the House.

If the FMAP extension fails, the District will have an estimated $77.6 million budget gap to close. Shortfalls identified in CBPP’s analysis range from $85 million in Maine to a whopping $480 million in Washington state.

No way these and other impending shortfalls will be resolved without larger public service job losses. Mark Zandi, an expert in the economics of economic recovery, says they could be at least as large as those we’ve already seen–”in all likelihood measurably larger.”

Do our business-friendly, deficit-minded members of Congress have a grasp on the impacts? We’ll find out soon, when the Senate votes on whether to proceed to a final vote on the jobs/tax bill.


A Little Home Rule Could Go a Long Way

April 1, 2010

District of Columbia officials have good reason to be wary of Congress. Over the years, it has violated the spirit, if not the letter, of our putative home rule. We’ve been forced to do things we didn’t choose to do and barred from doing things we chose to do with our own local revenues.

For example, we had to have a referendum on the death penalty because a senior Republican Senator decided we should reinstate it. For 10 years, we were barred from formally recognizing domestic partnerships and from providing health insurance for the partners of D.C. employees.

Only this year did we gain, at least for the time being, the ability to implement laws passed in 2002 that fund elective abortions for low-income women and needle exchange programs to help control our egregiously high rate of HIV/AIDS. Our just-gained freedom to permit medical uses of marijuana gives life to a referendum passed in 1998.

But none of these intrusions seems to have scarred the memories of our elected and appointed officials so much as the 1995 imposition of a control board to manage the District’s financial affairs.

Last year, during budget deliberations, several Councilmembers repeatedly raised the specter of another control board–this in defense of balancing the budget mainly by tightening our belts and without tapping the cash reserves in the rainy day fund.

Use of those reserves, said Council Chairman Vincent Gray, would not be “prudent …, especially given the stringent pay back requirements.”

The reference here is to an amendment to the Home Rule Act that was attached to our budget 10 years ago. This amendment requires a rainy day fund of a specific size, mandates repayment of any funds withdrawn within two years and prohibits their use for “shortfalls in projected reductions in proposed District budgets.” Yet another instance of Congressional over-oversight.

We also heard worries last year about negative reactions from the bond rating agencies. They reportedly wanted to see spending cuts in core areas like education and human services. And the Council took heed, with cuts in these areas totaling more than $90 million.

But that was then. And this is now. We’ve got a $500 million budget gap to close. And no one, I think, could credibly assert that it reflects financial mismanagement. What member of Congress could flog us when so many states are grappling with enormous budget gaps?

So I think the DC Fiscal Policy Institute is right to recommend that our leaders seek relief from the unique restrictions on the use of our rainy day fund. As it says, no state has to replenish its fund so quickly. Indeed, most can wait until economic conditions improve enough to give them the needed revenues.

All but one of the states that have used their rainy day funds have the same bond ratings as before. The exception here is Illinois, which, as you may recall, had some big-time corruption issues at the top. Yet Councilmember Jack Evans, Chairman of the Finance Committee, still warns of risks to the District’s ratings.

Last year, Mayor Fenty and Council Chairman Gray testified in support of two related federal bills (H.R. 960 and H.R. 1045) that would give the District autonomy over its local budget and other legislation. These bills aren’t going anywhere fast.

So how’s about going back to Congress with a modest proposal to let us use our rainy day fund when it’s raining and replenish it when the sun shines again. That in itself wouldn’t close our budget gap. But it could make a big difference.


Who Pays For DC’s Business Tax Giveaways?

March 8, 2010

For the past year or so, the DC Fiscal Policy Institute has been alerting us to business tax breaks pending before the DC Council.

These aren’t across-the-board tax breaks that would benefit a broad sector of local businesses. They’re tailored for one or another developer or other commercial enterprise.

A few recent examples:

  • A $6.1 million property tax abatement, plus other incentives worth as much as $15 million to lure the CoStar Group–a global “real estate intelligence” company–to downtown D.C.
  • Twenty-year property tax abatements worth an estimated $8.5 million for mixed-use developments on top of two Metro stations.
  • A property tax abatement for a mixed-use project on H Street, NE., although the project could qualify for existing tax breaks for new supermarkets.
  • A 10-year property tax abatement and an exemption from sales taxes on construction materials for a hotel at Constitution Square, for a total price tag of $18.6 million. This although it would be the fourth hotel in the neighborhood and could get a share of $6 million in existing tax subsidies for the overall Constitution Square project.

I guess each of these has some purported justification. A mixed-use development at the Petworth Metro station will help revitalize the neighborhood. CoStar will hire a hundred D.C. residents. Or, to borrow from Council Finance Committee Chairman Jack Evans, the District has very few corporate headquarters. If we want them, “we’re going to have to pay for it.”

The “we,” my friends, is us. Because tax revenues the Council gives away must be made up by other tax revenues or by cutbacks in programs and services.

DCFPI warns that the District faces a $230 million shortfall for this fiscal year and a shortfall of about $600 million for Fiscal Year 2011. The main cause is a drop in tax revenues.

The Chief Financial Officer reports that Fiscal Year 2010 revenues will be $17.7 million less than he previously projected. The latest revenue estimate for Fiscal Year 2011 is now $49.4 million less.

The Fenty administration says it won’t raise taxes. The watchword again is “painful choices.” Not nearly so painful for the decision-makers as for the low-income residents who’ll probably again take a hit.

Meanwhile, the administration is offering a $19 million tax abatement, plus $5.5 million in relocation costs to bring Northrop Grumann’s corporate headquarters here. Council Chairman Vincent Gray and six other Councilmembers are on board with this.

Last year, the Council balanced the budget mainly by making spending cuts. But it did adopt some revenue raisers. It may do so again. And it should.

But I can’t help thinking, What good will it do to jack up a fee here, expand a tax there if the Council proceeds to give away more tax revenues so that big businesses can profit at our expense?

CORRECTION: An analysis presented this morning by the Council’s Budget Director shows that the Fiscal Year 2010 budget shortfall is “spending pressures,” i.e. projected agency spending over budget. Lower tax revenues are the second largest factor. The new projected budget shortfall for Fiscal Year 2011 is $605.4 million.


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