DC Council Makes Bad TANF Benefits Cut Worse

December 8, 2010

Talk about robbing Peter to pay Paul!

DC Council Chairman Vincent Gray has pushed through a budget gap-closing plan for this fiscal year that takes cash assistance away from families in the District’s Temporary Assistance for Needy Families program to fund adult job training — maybe some other things as well.

I say pushed through because Councilmembers didn’t get the final plan until the wee small hours of the morning the vote was scheduled. No time for them — or the public — to work through the details or come up with vote-ready alternatives.

I, for one, am feeling hampered by the lack of a clear account of the total package. But the stepped-up raid on TANF is clear enough.

As I previously wrote, Mayor Fenty seized on Councilmember Marion Barry’s now-repudiated proposal to impose a five-year lifetime limit on TANF benefits for poor D.C. families.

Under his gap-closing plan, maximum benefits would have been cut by 20% for all families who’d been in the program for more than five years, whether consecutive or occasionally over a long period of time.

Gray’s version adopts this cut for the current fiscal year, then increases it by 20% each year so that post-five year benefits are fully phased out in Fiscal Year 2015.

No circuit breaker if the planned improvements in the TANF program don’t get fully implemented on schedule or deliver sufficient results. No exemption for victims of domestic violence or other singular hardships, though the District could still have used federal funds to support many, if not all of them.

Half the money saved will be invested in job training programs that target TANF recipients. Maybe Gray used some of the rest to restore the mayor’s proposed cuts to the adult job training programs operated by the Department of Employment Services.

But it’s hard to know how funds freed up in one area have been shifted to undo or mitigate proposed cuts in another.

Not hard at all to know that the phase-out of TANF benefits will work extraordinary hardships on for families who, for various reasons, can’t achieve sustained self-sufficiency. Or to know that it would never have materialized if Gray had decided to balance the budget by a reasonable mix of spending cuts and revenue raisers.

By the time of the vote, Councilmembers had a range of revenue-raising proposals in hand. Councilmembers Michael Brown and Jim Graham reportedly favored the single new top income tax bracket advocated by a large number of local organizations.

Councilmember Tommy Wells had a new income tax reform plan that would have created three new top tax brackets, the first beginning with a minimal increase at $75,000.

Councilmember Barry wanted to revive last year’s proposed expansion of the sales tax — anathema to the health club crowd, but still, I think, a good idea.

He’d also picked up on Councilmember Graham’s thoughts about increasing the tax on commercial parking fees. To these, added an increase in the District’s egregiously low minimum franchise tax.

But Gray decided to postpone any consideration of any sort of tax increase until next spring, when he has to produce his proposed budget for Fiscal Year 2012.

Fat lot of good that will do the TANF families who’ll be pushed out of the safety net.


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.