How to Balance the DC Budget

March 7, 2009

Like state and local governments across the country, the District of Columbia is confronting a large budget gap for FY 2010. The Chief Financial Officer now says that revenues will fall $800 million short of earlier projections. Even if the city uses what will remain in federal stimulus funding, it will still have an estimated $425 million gap to close.

When a shortfall in the current budget was first projected, the City Council addressed it solely by reducing expenditures. Nearly 50% of the reductions were cutbacks in programs that serve the District’s homeless and other low-income residents.

These essential safety net programs are highly vulnerable to further cutbacks. They will be especially so if the Mayor and City Council choose to balance the FY 2010 budget by cutbacks alone. They have another option–a prudent mix of cutbacks and revenue expansions.

This is what the Coalition for Community Investment recommended in its principles for collaborative budget decision-making.

Now CCI has followed up by offering D.C. policymakers a range of savings and revenue-raising options that would not overly burden hard-pressed residents, businesses or the local economy.

They include:

  • Actions that will generate savings or additional revenues without any changes in tax rates or fees
  • Changes in tax legislation that would not increase rates
  • Expanding the base of existing taxes to capture additional revenue from high-income residents and out-of-town visitors
  • Increasing select fees that are disproportionately low compared to those in neighboring jurisdictions
  • Raising taxes on cigarettes, commercial parking and/or alcohol sold for off-premises consumption
  • Establishing a new top income tax rate for high-income families–here again aligning District revenue raisers more closely with those in nearby communities

CCI has given the Mayor and City Council thoughtful, expert advice on how to balance the budget while preserving critical investments in programs that expand local economic opportunity and support D.C. families–including those whose hardships are greatest.

What’s needed now is grassroots support to make sure the decision-makers listen. CCI has a suggested message on its website, along with the Mayor’s e-mail address. Contact information for City Council members is in the Council’s online directory.