Who Will Share In DC’s Economic Recovery?

September 27, 2009

The greater Washington area seems to be on the road to economic recovery. The Brookings Institution reports that it’s one of three metro areas whose economic input returned to its pre-recession level in the second quarter of 2009. And the Washington Business Journal reports that IHS Global Insight–an economic forecasting firm–predicts that the area will get back to its pre-recession job level in 2011.

This is good news. But we must remember the area’s history of unevenly shared prosperity. We were recently reminded of this when the Washington Post reported that the District’s unemployment rate surged to 11.1% in August, while Virginia’s fell to 6.5% and Maryland’s stabilized at 7.2%.

The Post noted that “some employment experts attributed the disparity to the higher proportion in the District of undereducated employees.” We’ve got large disparities within the District–and for the same reason.

In 2007, the DC Fiscal Policy Institute reported that the District’s decade-long economic boom had not been widely shared. This could be seen in the low employment levels among African-Americans and residents without postsecondary training and in dramatically growing disparities between high-wage and low-wage workers.

Recently-released census data show that these trends continue. As DCFPI reports, the overall median income for D.C. households rose in 2008, but households led by someone without a high school degree saw their incomes drop by nearly 20%. And while the inflation-adjusted median income for white households grew by 20% from 2000 to 2008, black households’ median income rose by just 2%.

Clearly, improving all levels of education and training must be a central element of efforts to bridge this economic divide. As a joint report by DCFPI and DC Appleseed says, D.C. has a “high-skill, knowledge-based economy,” with strong credentials required for even low-skill jobs.

Nobody would say that the Fenty administration isn’t trying to improve primary and secondary education. But adult education and training need attention too.

According to Census Bureau estimates, in 2007, approximately 51% of D.C. residents 25 years or older had attained less than an associate’s degree. And a 2007 Brookings report estimated that between 51,000 and 61,000 low-income working-age residents were in need of workforce development services to compete in the District’s high-skill labor market.

The Great Recession has almost certainly increased the need for such services. Of course, it’s also reduced tax revenues, thus hampering the District government’s ability to fund them.

But there’s some heartening news. The District has received $10.7 million in workforce development funds from the economic stimulus package. It plans to use the money to train residents for jobs in growth industries, i.e., emerging “green” industries, health care and hospitality. In fact, many who receive “green” training may get work immediately on the $8.1 million weatherization initiative that ARRA has funded.

And despite budget challenges, D.C. policymakers have thus far kept $4.6 million of locally-funded adult job training in the Fiscal Year 2010 budget.

If you believe that adult job training should be a top priority, you have a chance to weigh in by testifying at the public oversight roundtable that the Committee on Housing and Workforce Development will hold on Thursday, October 1.

The roundtable will start at 11:00 a.m. in Room 412 of the John A. Wilson Building (1350 Pennsylvania Avenue, NW). You can also submit testimony for the record. For either option, you’ll need to contact Drew Hubbard at 202-727-8230 or dhubbard@dccouncil.us.

This recession has taught us that we’re all affected by one another’s economic fortunes. Let’s each do our part to ensure that we learn from past mistakes and climb out of this economic morass together.

UPDATE:  The Committee on Housing and Workforce Development roundtable has been postponed. No new date has as yet been announced.


What’s So Bad About Raising Taxes?

July 26, 2009

Washington Examiner columnist Harry Jaffe warns against raising D.C. taxes. Doing that, he says, is a “prescription for disaster.”

The main reason he gives is that bond rating agencies just told city representatives not to do it–or to rely on one-time cuts. They want cuts in core programs like education and human services.

Granted, the District has to protect its bond rating. But does this mean that Wall Street financial interests should decide what kind of community we live in? Because that’s what’s at stake as the City Council goes about revising the Mayor’s budget proposals.

Let’s just say, for the sake of argument, that raising certain taxes could, as Jaffe asserts, cause some businesses to flee to the suburbs. Does this mean that all taxes should be off the table?

Take, for example, Councilmember Jim Graham’s proposal to raise the top individual income tax rate. I can’t see why this would prompt businesses to relocate. Nor do I think wealthy residents would take flight.

As the DC Fiscal Policy Institute has reported, the new top tax rate Graham has proposed would still be lower than the top rates paid in both Montgomery County and Prince Georges County. As for Northern Virginia suburbs, the property taxes there offset the lower income tax rate.

Of course, income taxes aren’t the only way to raise revenues. DCFPI suggests eliminating the sales tax exemption for theater tickets and promises more to come. The new message from the Coalition for Community Investment suggests we won’t have long to wait.

The bottom line is that the Mayor has proposed cutting some $52 million from safety net programs. And some Councilmembers seem to be whetting their knives for more. A mix of targeted tax reforms and expenditure cuts that spare our fraying safety net would be smarter.

Sure, none of us likes paying taxes. But do we want to live in a community that doesn’t take care of all its residents? Will the business environment be improved with more homeless people on the streets?

DC Councilmembers Propose Tax Giveaways

June 10, 2009

The DC Fiscal Policy Institute has been blogging on proposed tax breaks for select commercial interests.

First came a posting on proposed tax abatements for six new projects. These include a luxury hotel in Foggy Bottom and two developments at Metro stations–all prime real estate and potentially very profitable. DCFPI estimates lost revenues at $3.3 million in FY 2010 and $13.7 million through FY 2013.

Now comes a posting on a bill to substitute a modest lump sum payment for the taxes the Union Station retail center pays. This one gives away an estimated $2.45 million a year.

I’m simply appalled. Here’s a City Council that:

  • Just congratulated itself for closing an $800 million budget gap while modestly increasing funding for a handful of programs that serve low-income people.
  • But couldn’t find enough funds for TANF benefits to even keep them level with inflation.
  • Couldn’t find enough funds for the Local Rent Supplement Program to support the development of more than 180 affordable housing units.
  • Virtually ignored the dire straits of the Housing Production Trust Fund–another key source of funding for affordable housing construction and renovation.
  • Is well aware that the upcoming revised revenue forecast may reveal a new budget gap.

And yet some Councilmembers are proposing bills that would reduce District revenues. If they really think we’ve got money to spare, then why not use it to shore up programs that help our most vulnerable families meet basic needs?

Doing that would make the city a better place for all of us. Tax breaks for retailers at Union State won’t.

Proposed DC Taxes Would Hit Low-Income People Hardest

April 20, 2009

Mayor Fenty’s proposed budget includes about $120 million in new and expanded revenue raisers. These are to offset the sharp drop in District revenues due to the recession.

In principle, they’re the right approach to the projected shortfall because the alternative would be drastic program cuts. And some of them make a lot of sense. Look, for example, at the discussion of corporate tax loopholes in the DC Fiscal Policy Institute’s budget toolkit.

But, as DCFPI shows, about $26 million of the revenue raisers would disproportionately impact low-income residents. They include:

  • The elimination of the cost-of-living adjustments for three tax benefits–the personal exemption and standard deduction for personal income taxes and the homestead deduction for property taxes.
  • A new fee for streetlight maintenance, to be added to electricity bills.
  • An increased fee for the operations of 911 emergency services, which is folded into our phone bills.

Eliminating the COLAs will affect all D.C. taxpayers. But, for various reasons, they’ll have greatest impacts on low-income residents. For example, most low-income residents take the standard deduction, while many higher income residents itemize because they’ve got mortgage interest and property taxes to deduct.

The fees will also hit low-income people hardest. They may not seem much to residents in upper income brackets, but low-income residents often have to struggle to pay their utility bills. The increase could lead to even more shut-offs or force poor families to cut back even further on other essential needs.

The District has other revenue raising options. As I wrote awhile ago, the Coalition for Community Investment has offered a number of them. One is reflected in a bill introduced by City Councilmember Jim Graham–a new top income tax bracket.

The current top tax rate applies to taxable incomes over $40,000. Graham would create another rate for residents with taxable incomes of $500,000 or more.

The new rate would be only 0.4% more than the current top rate. Seems to me it could kick in at a lower income level–say, $200,000. But even the $500,000 seems to be giving other Councilmembers heartburn.

DCFPI is spearheading a campaign against the tax and fee increases. It’s posted a letter for organizations to collectively communicate their concerns. So if you belong to an organization, you might see whether it would sign on.

The rest of us can raise concerns by e-mailing the City Council, dccouncil@dccouncil.org. Better yet, we can write or call the Councilmembers who represent us.

The Council will vote on the budget on May 12, so they need to hear from us soon.

What’s In the Proposed DC Budget

April 6, 2009

DC Fiscal Policy Institute has once again stepped up to make the DC budget transparent. At last, we can find out exactly what the Mayor proposes to spend next year and how he plans to pay for it.

The just-posted DCFPI budget toolkit includes a summary of the entire proposed Fiscal Year 2010 budget, plus more detailed analyses for a range of key issues that affect homeless and other low-income District residents. And that’s only part of it. There are also links to key budget documents, backgrounders on the budget gap, a spreadsheet that tracks funding for major budget areas since 2004 and more.

As my recent rant suggests, I’ve looked forward to the toolkit to shed light on prospects for critical safety net programs. I know other advocates have too. But the toolkit isn’t just for those who advocate on a regular basis. It’s for all D.C. residents who care how our tax dollars are spent–and what those taxes may be.

So check out the toolkit. Then think about weighing in as the City Council shapes the final budget. DCFPI provides a timeline, hearing schedule and tips from other groups to help you do this.

For a quick and easy way to get involved, you can join the So Others Might Eat Advocacy Network. You’ll receive alerts at key moments in the decision-making process and suggested messages you can send with just a few keystrokes and a mouse click.

The Economic Recovery Package: What’s In It For DC?

March 11, 2009

Ever since Congress passed the economic recovery package, I’ve been wondering what it will do for my home town–Washington, D.C. Now DC Fiscal Policy Institute has provided the answer.

Its  report details the funding that will flow to the District and additional grants the government could apply for. So now we can see, for every relevant piece of the package, how much D.C. will or could  get and for what.

For me, it’s the bottom line that’s most important. As DCFPI shows, the stimulus funding could cover about half the projected shortfall for Fiscal Years 2009 and 2010. This means that the District could balance its budget with less drastic program cuts than would otherwise be necessary.

The stimulus funding could also enable the District to make targeted investments in areas that have long lacked adequate support–for example, affordable housing and workforce development. These, in particular, would improve the lives of poor D.C. residents, who are hard-pressed by the high costs of living here and often without the skills required for living wage jobs.

But, as DCFPI indicates, the District will fully benefit from the economic recovery package only if the Mayor and City Council take advantage of all the funds potentially available and spend them wisely. This will mean, among other things:

  • Spending as much stimulus funding as possible, including what may be secured in competitive grants. Doing this will require top-down leadership and competent administration across a wide range of D.C. agencies–unfortunately, not something we can count.
  • Using stimulus funding to support critical ongoing programs. Some D.C. officials have suggested that the funding should be used only for one-time projects because it’s for a limited term. But this would compel the District to make deep cuts in essential services–something the economic recovery package was enacted to avert. It would also ignore the fact that the fiscal situation is likely to improve in the next several years.
  • Opening the decision-making process to the many individuals and organizations that have relevant expertise and hands-on experience–including those who depend on the District’s safety net programs and other public investments.

The FY 2010 budget season is hard upon us. So the Mayor and City Council will need to make some major decisions quickly. But they shouldn’t short-circuit the public consultation process. DCFPI’s reports and the recent budget advice from the Coalition on Community Investment show how much they can learn from their constituents.

Poor Women and Children Hit By DC Budget Cuts

December 6, 2008

Last month, the D.C. City Council approved a mix of budget cuts and spending freezes to cope with a projected shortfall in the Fiscal Year 2009 budget. Programs serving low-income and other vulnerable residents bore the brunt of the budget balancing act.

The Council reduced funding for two major programs intended to address the District’s affordable housing crisis. It also eliminated a small increase it had approved for the Temporary Assistance for Needy Families (TANF) program.

TANF is supposed to provide poor families with support that will enable them to become self-sufficient. They get a monthly cash benefit for a limited period of time, usually no more than five years. During this time, the adult recipient must work at a low-paying job or prepare for or seek work. A very high percentage of adult recipients are single women with children.

Anyone who has ever looked for or trained for a job knows that you have to be able to focus on those activities. You can’t if you’re scrambling to stave off hunger and homelessness.

Yet, up until very recently, the District’s maximum TANF benefit for a family of three was $428 per month. That’s less than 10% of what U.S. government data and other reliable sources indicate the family needs to live in D.C.

The City Council had voted to increase TANF benefits so that the family of three would receive $437 per month. According to a new DC Fiscal Policy Institute report, that was barely enough to compensate for lost purchasing power due to inflation. Now the Council has wiped the increase out. So TANF families will be even worse off than they were last year.

The Council voted in haste and without considering alternatives. As they say, haste makes waste. In this case, the waste will be in human lives, economic recovery and progress toward a more just, inclusive community.