WASHINGTON—On Wednesday, the DC Council cast its second and final vote on the Local Budget Act (LBA), which sets the budget for each DC government agency and program for fiscal year (FY) 2025. Council importantly reverses many of the damaging cuts proposed by Mayor Bowser, including elimination of the Pay Equity Fund, massive cuts to the “baby bonds” program, and cuts to schools and the Earned Income Tax Credit, among others. However, the DC Council still severely underfunds programs to address housing instability and homelessness, even after a 14 percent increase in residents experiencing homelessness over 2023.
Despite Council’s progress toward bridging the gap between revenues and residents’ needs, the remaining holes will destabilize the tens of thousands of residents struggling to afford housing, exacerbate homelessness, and dampen the strength of the local economy. DC’s revenue, when taken as a share of the economy, is already projected to decline to its lowest levels in decades over the next four years.
“The mayor and DC Council chose to not make use of the equitable proposals in front of them to fully fund public services, and it is DC’s most vulnerable residents who will pay the price,” said Erica Williams, Executive Director of the DC Fiscal Policy Institute. “For many residents, ‘the rent eats first.’ By underfunding programs that help folks afford housing, lawmakers will both exacerbate the housing crisis and undermine the benefits of antipoverty investments elsewhere in the budget.
“Councilmembers spoke a lot about the need to find budget efficiencies—which is something they should do as a matter of course—but it’s notable that none of them were able to find major savings in their own committees. Nor did they truly spread ‘the sacrifice’ in this budget, as they expanded tax breaks for downtown commercial property owners before even evaluating whether current incentives are working.
“DC is a place of extreme inequality, with roughly 1,500 households owning nearly half of all wealth in the District, and where white households in the area have 81 times the wealth of Black residents and 2.5 times the median household income. Yet, lawmakers relied on sales and payroll taxes and on safety net cuts—which will, on net, hit hardest at low- and moderate-income residents—rather than meaningful, targeted taxes on wealth.”
For further analysis of the FY 2025 budget, see resources at dcfpi.org.