Jack Evans Report: A Crucial Time in the City’s Financial Life

It is now time to consider the fiscal year 2015 budget, which will be the District’s 18th consecutive balanced budget. As I write this, I am still reviewing the mayor’s proposal, but I will discuss a few key items I have already seen.

First, the mayor’s budget proposal includes much that I agree is important. For example, the mayor is committed to fully funding 4,000 sworn police officers, a critical item on which I introduced legislation several years ago. I also support many of the mayor’s transportation initiatives and full funding of the Housing Production Trust Fund at $100 million. Overshadowing many of these good ideas, however, is the list of things that are not in the budget. In each year of the economic recovery, the mayor and the Council have created a contingency list – known as the “wish list” – of items we want to fund but have not been able to put in the budget. Then, as revised revenue projections show more income, we have moved some of them from the list to the budget.

Relating to tax policy, our Tax Revision Commission identified several areas of potential reform that are on the wish list rather than in the budget. My top priority is to recouple the District’s estate-tax level to the federal level, which adjusts with inflation every year. This change is particularly important for our seniors, many of whom cross the District’s threshold simply by owning a home here. Several other items of particular importance to me are additions to the Earned Income Tax Credit, which helps working families, and business tax relief, which helps encourage businesses to locate in our city, expanding our tax base. I also hoped the mayor would fund expansions to the personal exemption and standard deduction.

On the positive side, the mayor has funded a new tax bracket of 7.5 percent for individual income between $40,000 and $60,000. Though the change targets middle-income earners, it actually will reduce taxes for anyone making over $40,000 (because of the incremental way that state income taxes are calculated). The budget also includes a proposal to lower the business franchise tax rate from 9.975 percent to 9.4 percent.

Finally, the budget includes allocations for projects of importance to Ward 2, such as $38 million for Garrison Elementary School.

Also in need of our attention is enhanced funding for the arts. Last year, I established a dedicated funding mechanism for the arts, tied to the sales tax. Due to our balanced budget requirements, it will not become fully effective until fiscal year 2018. This year, the mayor has proposed an operating budget of $16 million for the arts, along with $10 million on the wish list. I support this funding level, but believe the extra $10 million should be included in the fully funded budget to ensure that our arts community continues to benefit the District both educationally and economically.

This is a crucial time in the financial life of our city, particularly in light of the recent transition to a new chief financial officer. I will continue to review the budget proposal in the coming weeks. Please share your views with me and with my colleagues.