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.

Barry/Alexander Public Assistance Bill Beyond Just Bad

November 11, 2010

As I recently wrote, DC Councilmembers Marion Barry and Yvette Alexander have introduced a bill that would adopt the five-year lifetime limit established in the federal TANF statute.

Joni Podschun at Bread for the City points out that the bill reaches far beyond the District’s TANF program.

It would apply the time limit to all public assistance as defined in the DC Code. The relevant part of the code defines public assistance as “payment in or by money, medical care, remedial care, goods or services to, or for the benefit of, needy persons.”

Medicaid, insurance through the DC HealthCare Alliance, homeless services, child care subsidies, housing vouchers, publicly-subsidized legal assistance, financial aid for low-income grandparents who are raising their grandchildren ….

All these and who knows how many other forms of direct services and income support all cut off after five years, whether consecutive or intermittent.


DC Council Tackles TANF Program

November 4, 2010

I thought about headlining this posting “good bill, bad bill” because the DC Council now has pending two starkly divergent proposals for reforming the District’s TANF program.

Good Bill. Councilmembers Michael Brown and Tommy Wells have introduced a bill to address some key weaknesses that the DC Fiscal Policy Institute and SOME (So Others Might Eat) identified as part of their in-depth assessment of the District’s TANF program.

The Temporary Assistance for Needy Families Educational Opportunities and Accountability Act would, as its name suggests, expand the crucial work preparation component of the program and lay the groundwork for more comprehensive evaluations and oversight.

It would:

  • Include regular attendance at a secondary school or GED program in the definition of “education directly related to employment” — the only kind of education federal regulations permit. Another related section would allow enrollment at a postsecondary education institution in a program leading to a bachelor’s or advanced degree, provided it developed skills required for employment or advancement. This condition also tracks the federal rules.
  • Align the District’s TANF law with federal rules governing the work-related activities that most adult recipients must perform. The expanded definition would shift the program from its current “work first” orientation by permitting more activities that prepare recipients for full-time, decent-paying jobs. Vocational education courses, “soft skills” training, substance abuse treatment, mental health and rehabilitative “activities” would all count. And vocational education could include adult basic education, literacy and English as a Second Language courses so long as they’re embedded in a vocational training curriculum.
  • Require a detailed standardized assessment of all new participants. The object here is to ensure that caseworkers systematically identify job-relevant skills and experience, potential barriers to work and needs for supportive services.
  • Establish more meaningful outcome measures and require that results be published, both for the program overall and for each contract service provider. For example, the Income Maintenance Administration would have to collect and report figures on the percentage of participants who secure employment and, very importantly, the percentages of them who are still employed and earning 100% and 200% of the federal poverty level both six months and twelve months later. Other provisions address, in detail, how the program and each vendor handle certain portions of the caseload, e.g., victims of domestic violence.

Bad Bill. Councilmembers Marion Barry and Yvette Alexander have introduced a bill that would adopt the federal government’s five-year lifetime limit on TANF participation — or more precisely, adopt its time limit on the use of federal funds as the time limit for District residents to participate.

In other words, no matter what the circumstances, TANF recipients would lose their cash benefits and access to services gained through the program at the end of five years. Recipients who successfully “graduated” from the program, but later suffered setbacks would be out of luck — if not immediately, then fairly soon. Here too circumstances would be irrelevant.

The intent, of course, is to cut local spending for one of the District’s major safety net programs. And the District does have a budget gap to close.

But the timing could hardly be worse. The unemployment rate in the District is 9.8% — undoubtedly much higher for residents with no postsecondary education. As DCFPI has reported, last year the unemployment rate for residents with only a high school diploma or GED was 19%. For those with less, 20.3%.

Even if the participants who’d lose their eligibility didn’t face a labor market that’s still in the doldrums, they’d be kicked out of the program before reforms envisioned in the Brown/Wells bill could have a chance to equip them for sustained self-sufficiency.

On November 8 at 11:30 a.m., the Committee on Human Services will hold a hearing on the Brown/Wells bill. Yes, it will be considered in the same session as the proposed amendment to the Homeless Services Reform Act.

A hearing on the Barry/Alexander bill has been scheduled for November 15 at 11:00 a.m. The Committee on Human Services needs to hear from us on this one — loud, clear and firmly negative.

UPDATE: I’ve learned that the Barry/Alexander bill reaches far beyond the District’s TANF program. I provide the relevant statutory language and some examples indicating its huge potential impacts in a brief followup posting.