Speaking As A DC Senior

June 12, 2011

True confession: I’m one of those seniors who’s become such a focus of political concern — sometimes real, often as not just a sure-fire talking point.

I generally don’t think of myself as a senior, except when I mislay my keys. And I rarely identify myself as such, for what I trust are obvious reasons.

The occasion for this exception is DC Councilmember Jack Evans’s purported objection to the proposed tax on interest earned on out-of-state bonds.

In the first of two required votes, the Council approved the tax– a majority viewing it as a lesser evil than the new 8.9% top income tax bracket in Mayor Gray’s proposed budget.

Also because some Councilmembers thought it would vanish before anyone had to pay it, as it would have had Council Chairman Brown’s version of the tax provision passed unamended.

Evans says he’s against the tax because many retirees depend on income from bonds.

Not the same thing as income from bonds issued by state and local governments, mind you. Bonds come in lots of flavors.

But why make fine distinctions when you’re trying to gin up sympathy for us seniors who’re supposedly trying to make do on Social Security and the proceeds from our little nest eggs?

Let’s get real.

The proposal that’s so concerning Evans and some of his colleagues would tax interest on out-of-state bonds the same as other ordinary income.

So seniors who are scraping by would pay the extra at a relatively low rate, especially because the District doesn’t tax Social Security benefits or the first $3,000 from public-sector pension plans.

But most who’d be more than minimally affected aren’t scraping by. The DC Fiscal Policy Institute reports that 67% of retirees who hold out-of-state bonds have incomes over $100,000. Only 2.4% of those with adjusted gross incomes under $50,000 hold any out-of-state bonds at all.

And what’s all this out-of-state bond interest anyway? Surely the Chairman of the Finance Committee knows that interest rates on municipal bonds are no great shakes.

I’ve got a couple in my portfolio — all yielding about 5%. Quick browse of the Web indicates that’s about par for the best-performing municipal bond funds.

So you’d have to own lots of out-of-state bonds and/or shares in municipal bond funds to get hit with a significant DC tax increase.

All of this doesn’t mean that I think the tax on out-of-state bond interest is a good substitute for a new top income tax bracket — or several new brackets for that matter.

But the opponents of the bond interest tax are also staunchly against that approach to making our local tax structure more progressive.

What irks me is when policymakers use some heart-tugging stereotype of geriatric cases like me to argue for positions that have little or nothing to do with our interests.

High on this senior’s list are investments in programs that make our community a good place to live — for everyone. Holding on to every penny of interest from my out-of-state bond holdings isn’t.


DC Council Looks To New Revenue Estimate As Answer To Conflicting Priorities

May 18, 2011

Monday’s DC Council budget discussion answered my question about where the money’s going to come from to restore cuts Councilmembers don’t like while also rejecting revenue raisers they really, really don’t like.

Or rather, it answered the question of where Councilmembers think it will come from. They’re banking on the next revenue estimate from the Chief Financial Officers.

Council Chairman Kwame Brown says the estimate will show at least $20 million — maybe as much as $60 million — more than the estimate the Gray administration used for the proposed budget.

Councilmember Jack Evans, who chairs the Finance Committee, says it could be as much as $90 million more.

But the Council’s apparently not going to use much of the found money to restore the deep cuts the mayor’s budget makes in affordable housing or key safety net programs.

Council Chairman Brown’s plan would allocate just 25% for the entire range of programs that “assist District residents in need.” Assuming his hopeful $60 million projection, that could still mean cuts totaling at least $116 million.

So it seems that homeless families may get year-round shelter. But judging from the discussion, homeless individuals will still be on the streets, except during the winter season.

Families that the Temporary Assistance for Needy Families program hasn’t helped to achieve self-sufficiency will probably, as one Councilmember remarked, be punished for the program’s failures.

Low-income individuals with severe disabilities will be on their own for the many, many months they wait to get approval for Supplemental Security Income.

Under the Chairman’s plan, another 25% of the additional revenues would go to investments in the District. Given the cryptic description and the heated discussion, a portion could, in effect, substitute for revenue raisers that some Councilmembers find gravely offensive.

At least four take out after the notion that the residential parking fee for a second car would go up to $50. How, Councilmember Evans asks, can his family get along without two cars when he and his wife have six kids?

And, as Greater Greater Washington reports, Councilmembers Mary Cheh and Muriel Bowser join him in arguing for a rollback in current downtown parking rates — though Cheh half-retracts later.

But I’m guessing that top priority will be given to building up the police force. Councilmembers spent at least twice as much time on how much bigger it should be than on the impacts of the cuts to safety net programs.

What about the remaining 50% of the future found money? Brown’s plan would allocate it to replenishing the general fund reserve balance.

Note that the Council has already passed legislation to do this, using funds agencies haven’t designated for spending by the end of each fiscal year.

Very different from creaming off revenues that are urgently needed to shore up core programs for the fiscal year ahead. And besides, tweets the DC Fiscal Policy Institute, the fund reserve has got at least $890 million now.

In any event, Councilmembers are counting chickens that haven’t been hatched. They’re scheduled to vote on the Budget Request Act (the actual budget for next fiscal year) and the Budget Support Act (the legislation needed to implement it) on May 25.

If past is prologue, the revised revenue estimate won’t be issued until some time after the Council must cast its second and final vote on the BSA.

And it must vote for a budget that’s balanced on the basis of the latest revenue estimate. So the best it can do is write into the BSA how any additional revenues that materialize will be used.

Will it use this option to kick the hard, divisive decisions into the future? Guess we’ll find out next Wednesday.

UPDATE: After I posted this, DCFPI published its own posting on the next revenue forecast and Council Chairman Brown’s plan to commit half of any additional revenues to building up the fund balance. It says the balance is expected to be $690 million by the end of this fiscal year.

UPDATE #2: I just saw the complete set of PowerPoints distributed to Councilmembers. It shows that the second vote on the BSA will be June 14 — later than the schedule I used to predict that the vote would occur before the Council get the next revenue estimate.


Marathon Budget Hearing Previews Fight On DC Tax Increases

December 2, 2010

First a confession. I didn’t watch all of Tuesday’s 12-hour hearing on Mayor Fenty’s plan for closing the budget gap. Gave up mid-afternoon when I realized that more than half of the 144 scheduled witnesses still hadn’t been called.

But I heard enough to get a sense of how the revenue raising debate will proceed.

First the good news. Even Councilmember Jack Evans seems open to the idea of some revenue raising. True, he began by advocating for a process that would require any add-back to be offset by a comparable spending reduction. What we would expect, given his recently reaffirmed aversion to “revenue hikes.”

But he later remarked on the need for “those with the greatest ability to step forward” — this in reference to lawyers such as himself perhaps accepting an income tax increase. A number of lawyers testifying said they would.

Now the rest. Councilmember David Catania is ferociously opposed to a new top income tax bracket — or the two new top brackets that Councilmember Jim Graham earlier proposed and still seems to favor.

To Catania, a more progressive income tax structure is tantamount to “class warfare.” He absolutely rejects the notion that “one side” should pay — this framing itself a reflection of a class warfare mentality. He’ll have no part in “the game of politics that plays one community off against another.”

In his view, a new top tax bracket exemplifies what’s wrong with our country, i.e., having what we want so long as someone else pays for it. If we care about the safety net, then we should all contribute, he says.

He seems to be entertaining the notion of a 1% across-the-board tax increase. “We all give a little,” he says. No recognition that a little for someone supporting a family on a minimum wage translates into a lot of basic needs budget trimming.

Councilmember Marion Barry also speaks of an across-the-board tax increase. Says that the Earned Income Tax Credit will protect the lowest earners.

Quick review of the IRS rules shows that in many cases it won’t. But who knows where the self-described representative of the District’s “underserved and overlooked population” will be coming from these days?

Councilmember Tommy Wells, on the other hand, reviews some of the proposed cuts in services for low-income residents and says, as he has in the past, “I haven’t been asked to pay one additional cent.”

Wells has previously mentioned a possible new tax bracket that kicks in at an adjusted income lower than what’s been thus far proposed. Councilmember Mary Cheh may be thinking this way too. At any rate, she asks one of the witnesses how low a new tax bracket should go.

Not as much discussion of other potential revenue raisers. Several Councilmembers, however, seem to be looking for ways to get more revenues from all those Maryland and Virginia residents who come into the city to work.

No chance of getting Congress to lift the home rule prohibition on a commuter tax. But might there be some workarounds?

Evans seems inclined to impose a targeted salary cut on District employees who live outside the city, plus a 10% cut for the largest contractors.

Graham tees up the idea of raising the vehicle storage and use tax, i.e., the sales tax on charges for commercial off street parking. Kicking it up by 5.5%, he says, would nearly pay for restorations of cuts to key safety net programs that witnesses advocated for.

So Councilmembers, by and large, seem uncomfortable with the huge tilt toward spending cuts in the mayor’s plan. The DC Fiscal Policy Institute tells us it’s $40 in new cuts for every $1 in additional revenues.

Some Councilmembers also registered concerns about cuts in certain programs witnesses sought to defend. They’ll have a tough time restoring them all without adopting new revenue raisers.

But Council Chairman Vincent Gray didn’t tip his hand. And we know that, at the end of the day, it’s going to be his budget.


Thanksgiving Thoughts On Safety Nets

November 23, 2010

Let me be up front about this. I’m having a hard time getting into the holiday spirit.

I know I’ve got an enormous amount to be thankful for — my health, my loving and ever-patient husband, my home, which is now fully restored from the fire damage of two winters ago, friends, an extended family, including a wonderful second mother, an occupation and a nest egg that should keep us secure through our “golden years.”

But I can’t stop thinking about the millions of Americans who can’t count all these blessings — and who are now dependent on a tattered safety net that’s likely to be yanked out from under them. Surely will be if the Republicans in Congress stand fast on their pledge to drastically roll back federal spending.

I’m acutely anxious for those whose plight I know best — my fellow District of Columbia residents. So many unemployed or in jobs that don’t pay enough for them to afford the high cost of living here. A chronic problem made worse by the recession. For many of them, an upswing in the local job market won’t be enough.

Budget cuts have already damaged the local safety net. And now we’re told there have to be more cuts to get the budget back in balance. Councilmember Jack Evans is all for this. “Make as many cuts as possible,” he says, “so we can stay away from revenue hikes.”

I’m thankful not all Councilmembers share his view — especially thankful for my own Councilmember Tommy Wells’s outspoken support for a tax increase.

He’s of course concerned about the safety net programs under the jurisdiction of the Human Services Committee he chairs. But the argument he’s making for progressive reforms in our tax system reaches beyond his turf.

His recent response to a DC for Democracy questionnaire echoes remarks he made during the last budget cycle. The Council, he observes, made “steep cuts in services for the most vulnerable…. My wife and I were not asked to make any sacrifice.”

Nor were my husband and I. But we’d pick up our share of the burden in a heartbeat. Because we know first-hand what a strong safety net can mean.

Back when that fire broke out, our safety net was homeowners insurance.

We called our agent as soon as the smoke cleared enough for us to get back in the house — and discover that we had no heat and a bedroom open to the great outdoors.

Within an hour, someone was on the phone telling us about reservations they’d made for us in a comfortable, centrally-located hotel. Our agent showed up with a check for incidental expenses.

The next day, someone else called us to talk about what sort of apartment we’d like and where. And someone else to tell us about the company’s arrangements for storing our belongings, sending our smoke-reeking clothes for specialized cleaning, even lining up a restoration expert for our beloved “art collection.”

Without this safety net, we’d have been literally homeless. In our car for the night, I guess. Then in separate shelters for men and women until we somehow located something more stable and secure — and figured out how we’d liquidate assets to pay for it.

My wish for the District is a safety net that’s as broad, responsive and individualized as ours. I understand this is pie in the sky.

But I hope that next Thanksgiving we’ll have a budget that puts a higher priority on basic human needs than on the investment portfolios of the wealthiest residents.

If you hope so too, Save Our Safety has an editable letter you can send to the Council. Or use the text to leave a message for Chairman Vincent Gray at 202-724-8032.

UPDATE: The Save Our Safety Net letter is now addressed only to Council Chairman Gray.


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