Metro Needs a Pension Trust Plan, Too

November 5, 2015

Two weeks ago, the representatives from Maryland on the Washington Metropolitan Area Transit Authority board of directors invoked a jurisdictional veto to prevent a proposal to create a trust to address WMATA’s $1.5 billion unfunded Other Post-Employment Benefits liability. This action, while claimed to be done in the name of safety, is an irresponsible risk for the future viability of the system.

As a bit of history, the board initially voted to establish a trust to fund this OPEB liability in 2010. However, after five and a half years, the trust still hasn’t been created. In March 2014, the board voted to allocate $4 million to a still-unestablished OPEB trust as part of the fiscal 2015 budget. Then, in May 2015 the board voted to allocate an additional $11 million to the unestablished trust.

I’ve read comments of support for Maryland’s veto that WMATA shouldn’t be funding pensions when the reliability issues are so great. While I agree that WMATA has significant work to do to improve the reliability of the system, this action doesn’t save any money by “sticking it to retirees” or something absurd like that.

WMATA is bound to continue to pay tens of millions of dollars a year out of fare revenue and jurisdictional subsidies towards these OPEB obligations. In fiscal 2014, WMATA paid $38 million in OPEB liabilities directly from operating funds. That pay-as-you-go number will continue to rise quickly, unless an irrevocable trust is established to dedicate and invest funds to meet future liabilities.

The reason for the safety and infrastructure issues that WMATA is facing, is a lack of required funding five and even 10 years ago, not the use of several million dollars this year to address the ticking time bomb of a future pension liability. The lack of funding from all of the jurisdictions, and the lack of responsible fiscal management from the board of directors over the past decade, has left us in the crippling position we are in today.

The solution is not to again delay the responsible management of future liabilities, as we have done for many years on the preventative maintenance side, as well as the pension liability side. Refusing to commit a small amount of money to a known future problem, is every bit as much a failure in leadership as not funding preventative maintenance at a station because we haven’t experienced any problems there this year.

Public transit is a critical component of our region’s future. As chairman of the Finance Committee, I have asked WMATA staff to present a budget proposal for the next 20 years that expresses future costs for unfunded pension liabilities, deferred maintenance, safety recommendations, and implementation of the Momentum plan. Funding the future OPEB liability is the issue at hand today, but preventative maintenance, infrastructure improvements, and system expansion are all similar actions that will require us to be responsible stewards of both current and future taxpayers’ and riders’ money.

Jack Evans is the District Council member for Ward 2, representing Georgetown and other neighborhoods since 1991.

Bringing Down Tax Rates

October 26, 2015

The District of Columbia had been fortunate over the past several years to collect tax revenue in excess of the amounts we’ve budgeted for. That’s good news for you as taxpayers, because I’ve been able to keep my colleagues from spending all that excess money. Instead, it has gone into our city savings account to make us financially stronger, increase our credit rating and, as a result, make it cheaper for the District to undertake capital projects such as rebuilding schools, roads and bridges.

While financial reserve funds are critical to a strong municipality, there’s an even better use for excess revenue for taxpayers: lowering tax rates.
At the end of September, D.C.’s chief financial officer, Jeffrey DeWitt, certified that our revenue was $39.3 million more than we budgeted — despite attempts by some of my colleagues to delay tax cuts already promised to residents and businesses.

Specifically, beginning next year, personal income between $40,000 and $60,000 will be taxed at 6.5 percent, rather than 7.5 percent; the tax rate on income between $350,000 and $1 million will drop from 8.95 percent to 8.75 percent; and the business income tax rate will drop from 9.4 percent to 9.2 percent.

These cuts follow even more substantial cuts implemented this past year, including the creation of that $40,000 to $60,000 income bracket and an expansion of the Earned Income Tax Credit for low-income residents.

Some of you may remember that the District Council passed a sweeping tax reform package in 2014 based on recommendations from an expert Tax Revision Commission, led by former Mayor Anthony Williams.

The tax package was a broad-based adjustment to our tax structure, making it fairer and stronger. It included some provisions that I didn’t like (expanding the sales tax to fitness classes) and others that some of my colleagues didn’t like (lowering the business tax and personal income tax rates), but the commission made principled recommendations based on sound tax policy. It was a compromise that we agreed to implement over several years, as we saw increased revenues.

Implementing these tax cuts now is responsible public policy. It puts money back in the hands of the individuals and business who earned it, makes us more competitive to attract and retain residents and businesses and reminds people that the District government is able to make good on its promises.

We’re got more work to do to improve our tax structure, but this is an excellent start. We need 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.

We also need to expand the personal exemption and standard deduction and continue to implement the commission’s recommendations about lowering the business tax rate. This will help to attract and retain businesses in the city, employing more District residents.

The tax cuts were hard fought, unfortunately, but they were well earned by D.C. residents and businesses. I will continue to fight to ensure that our growth in prosperity can be enjoyed by all residents who want to live, work and operate a business in Washington, D.C.

St. E’s and Advisory Board Deals Mean New Jobs

September 23, 2015

Last week, we saw big headlines as the District of Columbia agreed to two economic development deals. One, with Wizards and Mystics owner Monumental Sports & Entertainment, will bring an entertainment complex to Ward 8. The other, with the Advisory Board Company, will see the relocation of the company’s headquarters to Mount Vernon Triangle and create at least 1,000 new jobs.

While the costs to the District were widely reported, the details — and ultimately the long-term benefits — are perhaps the more interesting parts of the deals.

The Ward 8 sports and entertainment complex will finally bring the job-creating investment that has occurred in many other parts of the city to the St. Elizabeth’s site in Congress Heights. This is the fulfillment of a promise made long ago.

Additionally, while news stories have focused on the city’s contribution of approximately $50 million, $27 million is coming from Events D.C., our local tourism bureau, which consistently runs an annual surplus in the tens of millions of dollars from hotel and ticket taxes. The remainder is coming from a dedicated capital fund that the Council approved several years ago to improve and invest specifically in the St. Elizabeth’s site.

These two accounts were created to fund projects just like this, to promote tourism in the District and spread prosperity to Ward 8.

The St. Elizabeth’s deal will create approximately 600 construction jobs and 300 permanent jobs to operate the facility. It will begin the process of development of hotels, restaurants and other mixed-use projects in the heart of Ward 8 and continue to build bridges of engagement across the District.

The agreement with the Advisory Board Company will likewise continue to build a strong, diversified economic base in the District.

The Advisory Board Company is a technology and consulting firm that works primarily in the health care and education sectors. The company regularly hosts events that attract a high number of visitors to the District. Its new headquarters will be well-located, just blocks from the Walter E. Washington Convention Center.

The important details of this agreement are that the company will receive a $6-million property tax abatement each year from 2019 to 2029, if and only if they employ an additional 100 District residents that year. If the company doesn’t add a cumulative 100 new resident workers in a given year, they receive less or even none of the tax abatement.

Because of a provision in our Home Rule Charter, the District receives no income tax from workers who live outside the District. We are the only jurisdiction in the country with such a limitation. This agreement is specifically intended to ensure that the District is reaping benefits from these tax abatements.

Additionally, the office will be the company’s headquarters, meaning business taxes will be paid to the District.

The company has also agreed to a community-benefits package that will require it to partner with the Department of Employment Services or a nonprofit to provide skills-based training to at least 250 District residents. It will participate in the D.C. Summer Youth Employment Program and provide 25,000 hours of volunteer services each year to District nonprofits.

These two agreements, robust public-private partnerships, are designed to create jobs for D.C. residents and strengthen our communities. Beyond increased tax revenues and greater economic opportunity, these economic development plans will help to maintain the District’s position as the most dynamic city in the country.

Metro: In Worse Shape Now Than in the 1990s

September 17, 2015

In January, I rejoined the Washington Metropolitan Area Transit Authority Board of Directors. Almost immediately, I realized that Metro was in worse shape than when I previously served on the board during the 1990s.

Last week, however, was truly troubling. Jack Requa, WMATA’s interim general manager, announced that the cause of a train derailment on Aug. 6 was essentially that a section of the track had become too wide. The biggest problem? The track issue was discovered in early July, but not fixed.
This is unacceptable. Quite frankly, I’m furious.

I’ve been calling for months for WMATA to encourage employees to be looking constantly for problems in the system, reporting problems when they are discovered, then getting them fixed. This is the type of culture and these are the types of people we want working for Metro. It’s a critical piece of making the system better: constant improvement and commitment to safety.

Requa said as much in his announcement. He, unfortunately, didn’t know about the rail deformity, but someone did. The board demanded an immediate and rapid investigation into the incident and reiterated Requa’s call for the agency, following the investigation, to undertake “organizational changes or any appropriate personnel actions — and that may include termination.”

This maintenance issue was a failure plain and simple. It has appropriately received substantial media attention.

Another issue of concern that I want to bring to your attention is WMATA’s financial condition.

I was elected by my colleagues on the Metro board to chair WMATA’s Finance Committee this summer. I will be in charge of overseeing the agency’s budget process during the coming year. To those of you who know my record as Finance Committee chair on the D.C. Council, it may not come as a surprise to hear that I’m already making substantial changes to restore responsible financial management to WMATA.

WMATA just finished its 2014 fiscal year audit nine months late. This past year, the agency’s credit rating was downgraded and its pension liabilities became unfunded to an even greater extent. I’ve instructed WMATA’s CFO and inspector general to ensure that we have enough resources to get our audit done in a reasonable amount of time. I told management that any budget presented to the Metro board must indicate our total actuarial pension responsibilities for the year and our unfunded maintenance needs. I’ve put the CFO to work evaluating the total cost of making Metro a first-class system and funding its pension and operating obligations. A rough estimate is in the range of $25 billion over the next 10 years.

These improvements on the operating and budgeting side are things we must do. The jurisdictions — D.C., Maryland, Virginia and the federal government — have to step up to the plate with the required funding if they want the system that so many politicians are now demanding and that riders deserve.

This won’t be easy, but for those of you who remember the mess the District was in 20 years ago, you know that the hard work and laser-focus that I and others committed to rebuilding our government paid off. I intend to bring that same focus and leadership to WMATA.

To Fight Crime, More Police, More Opportunity

September 2, 2015

The District government is taking an all-hands-on-deck approach to address the increase in crime we are seeing across the city.

I speak frequently with Police Chief Cathy Lanier. The Council’s Judiciary Committee is planning a public safety roundtable as soon as the next Council session starts in two weeks. Mayor Muriel Bowser released several policy proposals to address the increase in crime we have seen this year.

The first pillar of her plan is to increase the number of police officers in D.C. and to improve pay and benefits to retain more experienced officers. I’ve been calling for additional resources for our police force for many years, and I appreciate that the mayor recognizes this as part of the solution.
Her proposal also increases resources to “give law enforcement more tools to protect our citizens.” This includes incentives for businesses and property owners to install security cameras. Additionally, the plan would increase the rewards for citizens sharing information about illegal guns and crimes, helping police work with communities to keep us safe and catch criminals.

Her proposal also focuses on supporting communities by providing social services and investment to help neighborhoods affected by violent crime.

The city has been successful at providing wrap-around social, employment and health services to individuals and families who were identified as being particularly high-risk. The plan she released last week will expand those wrap-around services and provide grants to community groups that work to strengthen communities.

The other area we must continue to focus on is job creation and economic growth across our city. We’ve heard all too often in the past months from some of those who have committed crimes, as well as many young people in our city, that what they want are jobs and opportunities.

We’ve been successful at significantly reducing crime in Ward 2 over the past two decades because we’ve replaced vacant buildings with grocery stores and blight with active retail and commercial activity. Those stores and businesses have created jobs and training opportunities for people in the District.

I’ve continued to advocate for making it easier for small and local businesses to get started in the District by lowering taxes and simplifying regulation. I was successful in lowering the business franchise tax and keeping our sales tax at the same rate in this last budget cycle. Those actions will mean that businesses will choose the District over Virginia or Maryland to locate, and business will have more money to pay employees.
Now we have a chance to bring a large develop project to the St. Elizabeth’s site in Ward 8. I’ve been working for months to get the Wizards to build a practice facility in the District (rather than alternate plans to build one in Maryland). A facility like this in Ward 8 could become a center of community activity, from youth basketball camps to concerts to Washington Mystics games. It would bring some of the community investment and activity to Ward 8 that the Verizon Center brought to Penn Quarter.

Our first priority is to make sure our neighborhoods are safe, that we have appropriate police and community resources to be vigilant against crime, and to get illegal guns and criminals off our streets. But we have to continue to work to build our communities up and create every opportunity possible for people to succeed and prosper.

Jack Evans Report: Strengthen and Increase the DC Tuition Assistance Grant

July 22, 2015

The DC Tuition Assistance Grant (DCTAG) is a program, created and funded by the Federal government, that provides grants to high school graduates from the District to pay tuition rates similar to in-state students at public universities across the country.
By all accounts the program has been successful in achieving the original goal of creating more high-quality, affordable college options for students from D.C. However, the program’s current grant limit of $10,000 per year no longer fully funds the difference between in-state and out-of-state tuition.

As tuition rates increase, and the grant amount stays the same, the program’s ability to promote affordable college options for DC students is significantly hampered.

That is why I introduced a resolution this week to call on Congress to expand funding for the DCTAG program to fund the entire difference between in-state and out-of-state tuition for DC students at four-year public colleges and universities throughout the US, Guam and Puerto Rico.

The DCTAG program was established by the District of Columbia College Access Act in 1999. The legislation capped the grant amount $10,000 per year and $50,000 per student over a lifetime. Additionally, the program provides up to $2,500 per academic year towards tuition at private colleges and universities in the District and private Historically Black Colleges and Universities (HBCUs) and two-year colleges nationwide.

My resolution calls on Congress to authorize grants up to the full difference between in-state and out-of-state tuition and fees at four-year public colleges and universities, and to increase the amount available for tuition at other colleges and universities. In order to continue to achieve the success that this program had over the past 15 years, it’s time to raise DCTAG.

A D.C. Sports Renaissance

June 4, 2015

Doesn’t it seem like it was only a few years ago that sports teams in the District were more a source of embarrassment than of civic pride? Those days seem like a distant memory right about now.

The Wizards and the Capitals aren’t just in the playoffs; it looks as if both may extend their run beyond the second round. With the first playoff-series sweep in franchise history, the Wizards breezed by Toronto and appear to have the advantage over top-seeded Atlanta. The Caps are keeping it more interesting with a seven-game win against the Islanders, and what looks to be a back-and-forth series with the Rangers.

Even the Nationals, who got off to a startlingly rocky start, have turned things around after taking three out of four games in New York against the Mets this weekend. It’s been ten years since baseball returned to the District, and every day it seems like an even greater benefit than any of us imagined at the time.

And potentially besting all three of their more publicized neighbors, D.C. United is tied for first place and off to the best start in franchise history (5-1-2). With the opening of a new stadium in a few years’ time, the team will have an excellent facility in which to continue to set milestones.

Beyond just offering laurels, I want to follow up on a previous column dealing with a college basketball series for some of our local teams: a D.C. Big 6 Tournament. Our neighborhood team, the Georgetown University Hoyas, announced a few weeks ago that they will play the University of Maryland Terrapins in a home-and-home series beginning in the 2016-17 season.

This is great news to be sure, reconnecting the region’s two top men’s college basketball teams for the first time in seven years (and the first time on either’s home court since 1993). But there’s a longer drought that continues. On December 16, 1981, Georgetown beat George Washington 61-48 at the Capital Centre in Landover, behind star senior “Sleepy” Floyd and freshman Patrick Ewing. Since that game, the two neighbors have stayed silent.

Two weeks ago, I introduced a “Sense of the Council” resolution calling for a D.C. Big 6 Tournament. Even before a regional tournament, I think it’s finally time for a “Downtown Game” between the Georgetown Hoyas and the George Washington Colonials. It’s been 35 years since the teams played each other in the District, on December 13, 1980, at McDonough Arena. These two schools, which I’m proud to note are both in Ward 2, would provide their communities and the entire District with a long-overdue reunion.

Let’s hope the good sports vibe happening now extends to a “Downtown Game”; our continuously dominant local World TeamTennis team, the Washington Kastles (who will welcome back Serena Williams this season as they look to win a fifth straight WTT Championship); and to the Washington Redskins.

Go Wizards! Go Caps! Go Nats! Go United! And, most of all, Go D.C.!

Jack Evans Report: Taxes, the Arts, Alleys and Body Cameras

May 21, 2015

April and May are busy months for the D.C. Council. Mayor Bowser released her budget request for fiscal year 2016 early in April, and the Council has been undertaking a complete evaluation. Much of the initial review is finished, and I’m happy to share some of the Council’s recommendations.

I’ll start with the Finance and Revenue Committee, which I chair. The committee recommended that the sales and parking tax not be increased in the upcoming budget (as the Mayor had proposed). Our economy – and the revenue that the District government collects in taxes and fees – continue to grow. At a time when the government has more money to spend than ever before, we shouldn’t be raising taxes on residents, instead making sure we are utilizing those funds as appropriately and effectively as possible.

The committee also recommended that the Council find $4 million in additional funding for the DC Commission on the Arts and Humanities (DCCAH). Currently, DCCAH is scheduled to receive just $16 million to support programs for our children, artists across the city and the diverse community that makes Washington the most dynamic city in the country. In the nation’s capital, we should commit more than $16 million to this valuable work.

In addition to chairing the Finance and Revenue Committee, I also sit on the Judiciary and Transportation Committees. Both panels have submitted their recommendations to the full Council for review and approval.

I was disappointed that the Transportation Committee suggested reducing funding for alley and street rehabilitation, while we have alleys all across the city that are literally crumbling. I proposed an amendment to increase the funding by $5 million next year, but despite my vigorous lobbying on the dais, my colleagues rejected the increase. There is still some funding available for alley rehab, and I will continue to push the D.C. Department of Transportation to make sure Ward 2 alleys are being fixed as quickly as possible.

On the Judiciary Committee, the most notable change from the mayor’s proposal was a reduction in funding for police body cameras in the upcoming budget year. Council member Kenyan McDuffie, who chairs the Judiciary Committee, and I both fully support the body cameras. The recommendation is based on limited planning for how the cameras would be deployed and the still-undecided policy on how the footage would be made available to the public and the press.

The mayor has proposed to exempt all of this footage from the District’s open records law, but this significantly undermines our goal of greater accountability and safety. I’ll continue to work to make sure we have a fully funded, accountable body camera program for the District’s police officers.

The next step in the budget process is a review and vote by the entire Council on May 27 at 10 a.m. in the Council Chambers. The hearing will be open to the public and available on television and on the Council’s website. I’ll continue to keep you apprised of updates to the planned use of your tax dollars.

Jack Evans is the Ward 2 Councilmember, representing Georgetown since 1991.

D.C. Gets a Thumbs-Up from Moody’s

April 23, 2015

I am very pleased to report that just one week after I joined Mayor Bowser, Chairman Mendelson and CFO Jeff DeWitt to meet with the major credit-rating agencies, Moody’s Investors Service upgraded the District of Columbia’s General Obligation (GO) bonds to Aa1 from Aa2, one notch below AAA, the highest level. This is a very exciting, and long overdue, move by Moody’s that will make it easier for us to make the strategic capital investments that will benefit the District for years to come.

The rating increase affects $2.8 billion of outstanding GO bonds. In addition to upgrading the rating on our general bonds, Moody’s raised the Tax Increment Funding (TIF) rating to Aa3 for $43.5 million of rated tax-increment financing bonds.

In my last note to you, I talked about all of the reasons I believe we deserved this upgrade. I won’t list them all again, but I will say that the District is in a very strong financial position. Our leadership is committed to financial discipline, our reserves are strong and the District economy continues to grow and diversify.

In their report, Moody’s stated, “Financial governance is particularly strong, including multi-year financial plans, debt affordability analysis and mandated reserves, which provide a robust framework for the District to maintain a healthy financial position going forward.”

The report continued, “The general obligation upgrade to Aa1 reflects a variety of strong credit features and a degree of resilience in the District’s economy to federal downsizing. The District’s fund balances have continued to strengthen in recent years and are on a trajectory to continue to increase in the next several years.”

This is very good news for the District, but the work of financial stewardship is never done. I’ll continue to provide the strong oversight of our financial agencies and budget processes that I have for the last 15 years as chair of the Finance Committee. I look forward to writing to you in the not-too-distant future about our bond rating achieving AAA status.

On a related note, Mayor Bowser will submit her first budget request to the Council in the coming weeks. I will be sure to share the highlights of the budget and my thoughts on the mayor’s proposal to fund critical items such as school improvements, street and alley repairs and affordable housing. I also want to encourage anyone who is interested to watch or testify at the budget oversight hearings that the Council will hold over the next month. A full schedule can be found on the D.C. Council website.

Jack Evans is the Ward 2 Councilmember, representing Georgetown since 1991.

Time for a D.C. College Basketball Big 6

February is an exciting time for college basketball. Conference play is well underway. Rivalry games are taking place. And while Georgetown vs. St. John’s in Madison Square Garden and Maryland vs. Wisconsin are sure to be exciting games, February will also mark the end of another season without a great local basketball rivalry.

I first proposed a Ward 2 Championship (Georgetown vs. George Washington at the Verizon Center) in 2006, then wrote about the benefits of a regional basketball rivalry – like the Philadelphia Big 5 of Penn, Temple, St. Joseph’s, LaSalle and Villanova – in a Washington Post column a year later.

Nine years later? Still no D.C. Big 5.

To be sure, the recent addition of George Mason to the Atlantic 10 Conference and annual games with George Washington have begun to bring our local schools together, but Georgetown, Maryland, American and Howard are still out of the picture. Think about it: We have the makings of an even greater Big 6.

I believe we’re missing the opportunity to unite our region through our shared love of college basketball. In Philadelphia, the entire city comes together on one Saturday in December to support their teams and play for bragging rights for the entire year. Sports have a powerful way of uniting people and communities.

John Feinstein wrote a Washington Post column in December about bringing our local teams together for a D.C. series. He highlighted some of the history that ended the Georgetown-Maryland annual challenge in 1979, and explained how the Philadelphia teams overcame scheduling problems in the 1980s to keep the Big 5 going. Despite the challenges, his message was clear: Just Play.

We saw regional interest from individuals connected to all our local universities in a D.C. 2024 Olympic Bid. While that bid was unsuccessful, those leaders should use the bonds of community and sports that brought them together to encourage the universities to commit to a regional basketball tournament – perhaps through a modified BB&T Classic.

As conference realignment and television contracts make college basketball an increasingly national competition, now is the time for our local institutions to come together and create a D.C. Big 6 tournament for seasons to come.

Jack Evans is the Ward 2 Councilmember, representing Georgetown since 1991.