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.