Gray introduces ‘very difficult’ budget

D.C. Mayor Vincent C. Gray on Friday announced plans to levy higher taxes on the city’s wealthiest residents while steeply cutting human services programs in a fiscal 2012 budget proposal that favors education and keeps public safety funding steady.

Mr. Gray’s $9.6 billion spending plan is composed of nearly 57 percent local funds, or $5.5 billion, and calls for $187 million in spending cuts, $127.2 million in revenue increases and $7.9 million in additional income to cover a $322 million budget shortfall.

The D.C. Council has 56 days to review the plan and offer changes before they vote on the budget, but some members were openly critical of either the tax increases or the spending cuts in the moments after Mr. Gray delivered the plan.

Council member Jack Evans, Ward 2 Democrat and chairman of the powerful Committee on Finance and Revenue who opposed income tax increases, was outraged by the mayor’s proposal, calling it “one of the worst I’ve seen in my time here.”

Mr. Gray touted his proposal as the first structurally balanced budget — not spending more than what comes in — in four years, noting that failure to restore stability could downgrade the District’s bond rating, increase congressional interference in D.C. affairs and erode home rule over city finances.

“This is a very, very difficult budget,” Mr. Gray told council members in a morning briefing. “I have said that repeatedly.”

His plan calls for $1.54 billion in public education funding, or 27.8 percent of the District’s local budget. The budget increases funding $51.2 million to public schools and $25.7 million to charter schools compared to fiscal 2011.

“Education reform is the mayor’s No. 1 priority,” said Eric Goulet, director of the mayor’s Office of Budget and Finance.

Mr. Gray appropriated $917.4 million in local funds to public safety and justice, an $18 million reduction from the baseline budget that he described as holding to current spending levels while requiring agencies to absorb inflation costs.

The Metropolitan Police Department, whose ranks have been eroding from attrition, will receive funding for 120 additional recruits.

Health and Human Services faces the brunt of spending cuts, with a proposed funding reduction of $113.4 million, or 8 percent. Cuts include $4.9 million less in Temporary Assistance for Needy Families (TANF) cash assistance — a 40 percent reduction for 60-month-plus participants when coupled with cuts from last year.

Council Member Marion Barry, Ward 8 Democrat, said he favors the “teach a man too fish” approach, because too many generations have leaned on TANF funds.

“We want to break this cycle of dependency,” he said after the briefing.

The troubled Department of Youth Rehabilitation Services is slated to receive $16.7 million in additional funding to meet an expected growth in the number of committed youth. The mayor said the program had been underfunded, so his proposal would “address a problem that already exists.”

Mr. Gray’s capital improvement plan totals almost $845 million, highlighted by $267 million in school modernization projects, transportation funding of $255.5 million and a $126.7 million contribution to Metro.

Among the increases, a tax on alcohol purchased in stores would rise from 9 percent to 10 percent to raise about $3 million, and the city’s sales tax would remain at 6 percent instead of reverting to 5.75 percent in October 2012 as was scheduled.

Businesses that operate in the city and in other states would be required to pay D.C. taxes in order to raise about $23 million.

Council members offered piecemeal support for the mayor’s proposal, but the primary sticking point was a series of revenue initiatives that would raise a parking garage tax from 12 percent to 18 percent, raise the fare on the Circulator bus from $1 to $2 for $1.1 million in revenue, expand the sales tax to include live theater tickets, and tax income above $200,000 at 8.9 percent (up from 8.5 percent) to raise an additional $35.4 million.

Mr. Evans, the lone dissenter on last year’s budget, called income tax increases a “deal-breaker” that flies in the face of common sense during the economic recovery.

“I would not, under any circumstances, vote for this budget as long as some of these things are here,” he said.

Jim Graham, Ward 1 Democrat, praised the mayor for restoring taxes to higher levels.

“We had this and more a few years ago,” he said. “We need to do this.”

Yet Mr. Graham raised concerns about the proposed cuts to TANF funding and $1.5 million in savings by suspending the Interim Disability Assistance Program that provides temporary assistance to those unable to work because of disability.

Council Member Michael A. Brown, at-large independent, also expressed concern over the cuts to human services, saying overall funding has gone down since 2007 — a response to Mr. Evans’ use of a longer period to say the services had been inflated to unreasonable levels.

“We are going this way,” Mr. Brown said, gesturing downward.

Mr. Gray faces the daunting task of pushing a budget amid a shaky start to his mayoral term. His administration faces allegations of nepotism in the political appointment process and has been dogged the claims of Sulaimon Brown, who says he received a $110,000-a-year D.C. government job to stay in the mayor race and badmouth incumbent Mayor Adrian M. Fenty.

Responding to questions at a press briefing, Mr. Gray acknowledged a heightened level of public scrutiny in light of ongoing probes into his personnel practices and inquiries about luxury sports utility vehicles leased and then returned by the council chairman.

“Of course, there’s a perception,” he said. “There’s always a perception of government spending more than it should.”

The mayor said he looks forward to working with the council, while acknowledging that changes are part of the process.

“I’ve never had unequivocal support from the council on anything,” he quipped.