Not Enough Revenues To Break The Shortfall Cycle

FuseDC blogger Charise puts her finger on an issue I’ve been mulling over. Only difference is that she’s furious and I’m just stymied.

As Charise says, “front-end investments in prevention and intervention measures for youth and families” cost a whole lot less than programs that address our failures to provide the integrated education, training and other services that will get young people into ongoing living-wage employment.

Yet we don’t want to pit investments that will in the long run pay off in higher tax revenues and reduced social spending against programs that provide a safety net for those our system has failed.

Nor, I trust, do we want to opt for investments in youth development if that means neglecting the needs of people who for various reasons can’t become fully self-sufficient. What about seniors who worked at low-wage jobs their whole lives and now depend on meager Social Security retirement benefits? What about individuals with severe physical and/or mental disabilities?

And what about investments in programs that can lift adults out of poverty? These too will reduce safety net spending — and probably needs for spending on young high school dropouts and other “disconnected youth” as well.

So here’s the quandary. We know that robust, well-targeted investments in public education, job creation, workforce development, child care and other poverty reduction programs will help get us out of the current cycle of budget gaps that repeatedly have sent District officials back to the drawing board.

In fact, they’ll generate more revenues to plow back into these investments. But the budget gaps result largely from revenue shortfalls. So we don’t have the funds to turn the spending cycle around — more on prevention and early intervention, less on safety net because less needed.

Look, for example, at what the DC Council faces now. Say it finds the funds to make the adult job training program whole again. That would still leave local funding for the program at only $9.2 million — this when a 2007 Brookings Institution study found that as many as 61,000 low-income working-age residents needed more training and related services.

Say the Council rejects the proposed cut in funding for subsidized child care. That would still leave about 13,000 children on the waiting list for placements.

Parents with very young and/or disabled children would still face a formidable barrier to sustained full-time employment. More child care providers could close their doors, putting yet more people out of work — and likely in need of additional training.

Same story for a host of other investments that pay off in the long run.

The Council can and should find alternatives to Mayor Fenty’s proposed cuts that don’t make a bad situation worse — a new top income tax bracket among them.

But I think the District is in the same situation as state governments across the country. The need to maintain a balanced budget when this deep recession has so depressed revenues severely limits measures that could generate more revenues without further tax increases while also reducing pressures on the safety net.

The federal government doesn’t have to keep its budget balanced. It could shore up hard-pressed state and local programs, including some that have been under-funded for a long time. Instead, we see a range of initiatives to slash federal spending — not just in the long term, but right now.

Not a damn thing we can do about this so far as I can see.

3 Responses to Not Enough Revenues To Break The Shortfall Cycle

  1. I previously put my testimony that addresses revenue sources on this blog: https://povertyandpolicy.wordpress.com/2010/11/18/new-hopes-for-dc-tax-reforms/#comments

    They include a comprehensive progressive restructuring of the DC income tax, curbing corporate welfare in the budget, a PILOT campaign and establishing a DC Municipal Bank. Again, revenue sources can be found for a budget that better serves the needs of our residents if there is the political will to break with years of subsidizing the very wealthy and big corporate sector. This is the challenge for all those who reject the argument of David Catania that hiking the tax rate on the rich would be “class warfare”. The ongoing violent class warfare has been the other way, with growing income inequality directly linked to premature death in our community.

  2. Kathryn Baer says:

    David, I hope I didn’t leave the impression that the DC Council has no revenue raising options. You have proposed a number of them. Some people who testified at the recent budget-gap closing hearing also cited opportunities for bringing in more federal funding.

    My point is only that it will take significant investments over quite a long period of time to overcome the educational, economic and other disadvantages that marginalize so many members of our community. These disadvantages themselves are part of the District’s budget problems.

    At this point, I don’t see where the revenues will come from. But that doesn’t mean our local government can’t be doing a better job than it does now.

  3. Kathryn,

    Thanks for your response. You say “At this point, I don’t see where the revenues will come from.” I agree if you mean that right now there is not the political will for the Council/Mayor Elect to take the necessary action to get this revenue. The revenue is potentially there from local sources to much better fund low income programs, but only a more powerful movement from below can force our elected government to make it happen.

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