-Next week on Wednesday, May 26, the D.C. council will vote on the fiscal year 2011 budget. The District’s next fiscal year runs from October 1, 2010 through September 30, 2011. The current budget was prepared by the mayor beginning in October 2009 and submitted to the council on April 1, 2010.
By law, the council has two months to hold hearings and pass a budget. It is then sent to the mayor for his veto or approval. If approved, it is then sent to Congress for their approval by October 1, 2010.
Because of the slowdown in the economy, the city’s revenues are no longer increasing and, as such, reductions need to be made in our spending. The mayor’s FY 2011 budget is balanced and relies on significant spending cuts and increases in a number of fees and penalties. It also relies on spending additional money from our fund balance, i.e. our savings account.
I have analyzed the mayor’s budget carefully and have the following observations.
The cuts he recommends are painful but necessary. The amount the city spends has increased significantly the past 10 years and now it is time to reduce spending. Tough choices need to be made.
The fee and penalty increases are problematic. Our residents and businesses are tired of being nickeled and dimed to death. People don’t want to pay this government any more money. Thus the proposal to increase parking meter fees and charge more for basic licenses, etc. should be reversed.
Finally, spending more from our savings account to fund agency operations is bad policy. In 2007 our fund balance was $1.6 billion. It is currently $920 million and would be $600 million in 2012. The city would have spent $1 billion of its savings, which will really hurt our position in the credit market.
If the council does not accept the mayor’s increases in fees and does not wish to spend from the savings account, it must identify additional funds to balance the budget. In addition, many members of the council want to add back the mayor’s cuts and unrealistically fund new programs. This also takes new money.
Several council members want to raise taxes to pay for this spending. Nothing could be worse for the city. Increasing taxes in a recession is bad policy because it allows the spending to keep increasing, forcing us to increase taxes again the next year. The proposals put forward include, among other things, a raised income tax, new taxes on tax-free bonds, and extending the sales tax to services. Given that the District is ranked 51st in tax burdens, it is very counter-productive.
I will continue to work hard to balance our budget without further burdening our residents and small businesses.
The author is a city councilmember representing District Ward 2.