D.C. Mayor Muriel Bowser on Thursday introduced a $12.9 billion budget that includes increases to sales and parking taxes but slows the annual growth of city spending.
The proposal drew praise from D.C. Council members for its focus on reducing homelessness, boosting funds for education and setting aside money to beef up the fire department’s beleaguered apparatus fleet.
But members took issue with the tax increases included in the proposal.
The mayor’s plan would increase the city’s sales tax by a quarter of a percent, to 6 percent.
“While I wish that we didn’t have to have any enhancements, this is one such that puts us on par with the region,” Ms. Bowser said Thursday at a briefing on the budget. “It’s one of those taxes that allows us to spread the base of the tax to many more people.”
Over the last 11 years, the city’s sales tax has stood at 5.75 percent for seven years, increasing to 6 percent in 2010 and falling back in 2014, according to city data.
The increase would net the District $22 million that Ms. Bowser said she would devote to combating homelessness. As part of her plan, the mayor allotted $40 million in capital funds over two years to begin the replacement of the city’s homeless shelter on the campus of the old D.C. General Hospital with four smaller 50-unit shelters.
Despite the good intentions for the revenue, D.C. Council Chairman Phil Mendelson expressed displeasure with the proposal to increase the sales tax.
“You don’t need to raise taxes when revenues are growing,” said Mr. Mendelson, at-large Democrat.
Ms. Bowser noted that an increase in the sales tax was one of several recommendations proposed last year by a tax revision commission assigned to review the city’s overall tax structure. The D.C. Council considered several of the proposals but ultimately did not include the sales tax increase in the reform package it passed.
Ed Lazere, director of the D.C. Fiscal Policy Institute, said the effect of the sales tax on families is likely to be modest, noting that a family that buys $10,000 worth of taxable goods would only pay an extra $25 in sales tax due to the increase.
“At the same time it’s a tax that falls mostly on low and moderate income families,” Mr. Lazere said. “All things begin equal in a city that is marked by increasing income inequality, it probably would have been reasonable to raise revenues by asking those with the highest incomes to pay a little more.”
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Ms. Bowser’s plan also would increase the tax that motorists pay to park in downtown parking garages from 18 percent to 22 percent. She said that revenue would be set aside to provide an increase in funding requested from Metro.
The city will contribute an additional $29.5 million increase to Metro, which will pay for the city’s share of local subsidies to the transit agency as well as the mayor’s $7 million plan to allow children to ride Metro for free. As a council member, Ms. Bowser successfully pushed for a similar program to allow students to ride Metro buses for free during the school year.
The head of the council’s finance committee said he is skeptical of the tax increases.
“The sales tax at 5.75 percent was a selling point because it was lower than Maryland and Virginia,” said D.C. Council member Jack Evans, Ward 2 Democrat.”The parking tax, we just raised it from 12 to 18 percent three years ago. And then we raised the minimum wage, which are a lot of the parking attendants. If you’re in the parking business, this will be a triple whammy.”
Local spending accounts for $7.9 billion of the $12.9 billion spending plan — an increase of 3.2 percent over the previous year’s budget — with federal dollars accounting for the remainder.
“The fact the budget is only growing by 3 percent is really good, in the past it was 4, 5, even 12 percent,” Mr. Evans said of the local revenues.
The D.C. Council will consider the mayor’s plan, hosting a series of hearings with city agencies over the next several months before offering any changes.
The plan also reinvigorates the city’s bungled streetcar project, committing $355 million over the next six years in an effort to expand the line down Benning Road into Ward 7. The city already has spent $190 million on a 2.2-mile segment that has yet to carry riders.
Other major funding initiatives or changes over the previous budget year include:
⦁ $100 million to the Housing Production Trust Fund, which will enhance affordable housing initiatives.
⦁ $80.8 million to the D.C. Fire and Emergency Medical Services department for new equipment and apparatus.
⦁ $20 million over three years for the Empowering Males of Color initiative, which aims to help close the educational achievement gap for black and Hispanic male students.
⦁ An additional $25.1 million over last year’s budget for the Metropolitan Police Department to pay for cost-of-living increases and a $5 million plan to outfit all officers with body cameras.
• Andrea Noble can be reached at anoble@washingtontimes.com.
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