The Battle of the City Budget

They argued about it some and they fussed about it some, but in the end the much anticipated city council debate over Mayor Vincent Gray’s controversial proposal to raise the DC income tax on earners over $200,000 didn’t really have much of a chance.

Ward 2 City Councilman Jack Evans had said as much a couple of weeks ago, when he described the proposal as “dead” and “not going to happen,” along with several other parts of the mayor’s budget proposal that attempted to bridge an estimated $300 million budget gap for the Fiscal Budget 2011-2012.

While some new tax proposals were part of the 2011-2012 budgets recently, given a preliminary approval by the city council, the income tax raise 0.4 percentage increase (which was expected to raise an additional $18.7 million) did not survive the vote.

With Council Chairman Kwame Brown opposed to the measure along with most of the rest of the council, the council approved the budget minus the income tax raise. Still, several council members—at large councilmen Phil Mendelson and Michael Brown among them—noted that it seemed unfair that a resident making $40,000 was taxed at the same rate as someone making over $200,000. Evans, who voted against the increase, agreed that the council should address the imbalance of the individual rates at some future date.

The council also dropped the mayor’s proposal to initiate a tax on theater tickets, which was heavily lobbied against by local performance arts groups, including the Helen Hayes Awards.

While some of the debate became a little intense, there seemed to be less of a sense of urgency on the budget and its shortfall, with much talk of expected additional revenues that were not specifically identified.

Additional taxes—instead of the income tax increase—were expected to restore funds for homeless shelters, affordable houses and other social services, which had been scheduled for big hits under Mayor Gray’s budget proposals. The vote hearing was heavily attended by housing and homeless advocated and activists from all over the city.

Chairman Brown appeared to be a key figure in the debates. Not only did he vote against the income tax hike and the theater tax hike, but proposed other tax measures to offset the cuts, including a complicated, obscure but very real plan to tax non-D.C. municipal bond. Those are bonds for other jurisdictions held as income by DC residents, including seniors living on fixed incomes. The proposals appeared confusing to many in attendance, and its passage remains in doubt.

A proposal to tax drivers using parking garages appears to remain in the budget, on which the council will hold a final vote

Noticeable in the running commentary on individual issues during the morning discussion of the debate was the profuse praise for Chairman Brown, who has been seen by many observers in the city as being in a weakened leadership position. Agree or disagree, almost every council member praised Brown for his work and effort on the budget and working with the council as a whole and individual members.

Some of the social programs for which funds were found were in Ward 2, which Evans represents. “I worked closely with the Washington Interfaith Network, and fought hard for preservation of the Housing Protection Trust Fund, the Community Benefits Fund and the Neighborhood Investment Fund, “ Evans said. “I am grateful to my Council colleagues for recognizing their importance to my Ward and the city.”

The budget at $11 billion plus, is the largest in the city’s history.

Michael Brown, Councilman at large, said, “I understand the need to balance the budget. But I still feel that when there is considerable pain felt throughout the city because of the economy and the deficit, then it should be shared equally. And the tax rates are not shared equally. It just doesn’t seem right that someone, say, who makes $400,000, should only pay the same rate as someone making $40,000.”

Several council members questioned the bond taxes. Ward One Councilman Jim Graham, who advocated strongly for not cutting programs for “those who have the least,” including the homeless, said that such legislation was passed in other years but never implemented, “So I don’t see any point in doing it again.”

Phil Mendelson also questioned the feasibility of implementing such a tax. “Where’s the infrastructure to do that?” he said. “However, I’m glad we chose to defend and support critical services for the homeless and those in need.” Evans also questioned the tax on the interest on municipal bonds.