A Resident’s Guide to the DC Budget

Drivers’ licenses. Cash assistance for families in need. Trash collection. Affordable housing. Teachers, police officers and firefighters. Library books.

All are made possible in the District of Columbia through one thing: the city’s annual budget.

Certainly, a budget that provides this wide a range of goods and services is a bit complicated. In fiscal year 2016, DC’s budget totaled $11.0 billion.[i] It funds 115 agencies performing services from recycling pickups to recreation facilities to rental housing assistance. But in some basic ways, the city’s budget is a lot like your own.

In deciding how to spend your money, you determine your priorities. At the top of the list for many people are shelter, food, and transportation, but you may choose among various options for where you live, what you eat and how you travel. So you want to examine your income, or in city budget lingo—revenue—to figure out how much money you have. Then given the choices you made, you review the expenses you pay every day, month or year—items such as rent or a mortgage, utilities, food, and insurance. Are they exactly equal? Probably not!

If you have more money than your current expenditures, you might be able to pay for some additions without any sacrifice, or build up your savings. But if you calculate that these expenses will cost more than you will earn, you have to make some choices. Perhaps you should cut expenses, such as saving money by exercising outdoors instead of inside a gym, or by eating out less. Or maybe you’ll decide to increase the amount of revenue you bring in, by working overtime or trying to find a higher-paying job. Another option might be to shift expenses from one area to another. For example, next year you might decide to buy a new suit using money you saved by brown-bagging your lunch instead of buying it every day.

Sometimes unexpected events happen—say, a car repair or a hospital visit—and you’ll need to spend additional money. If your situation is an emergency, you might decide to tap into savings you’ve put aside for a rainy day. How much money should you save for such unanticipated events? And when you borrow from your savings, when and how do you pay it back?

If you’ve faced these kind of questions, then you already understand some of the basics of the DC budget and how it is developed. Whether it’s your income or the city’s, there is never enough to purchase everything you want, so choices about spending priorities and revenues need to be made each year.

This guide will help you better understand DC’s budget. We will explain where DC gets its money, how it spends its money, and what happens when there’s no more money left or when there’s a surplus. We’ll outline the process for putting the budget together every year. And we’ll give you ideas on how you can—and should! —get involved in the process. Bolded terms are defined in the Glossary.

How the District Spends Its Money

First, we’ll show you the big picture and take a look at how DC’s financial resources are allocated on a macro level. For fiscal year (FY) 2016, the actual DC budget was about $11.0 billion. This includes money raised locally as well as federal dollars that DC receives.

The DC budget is divided into seven clusters, known as appropriation titles (Figure 1).

• Human Support Services is the biggest chunk of the DC budget, as it is in many other states’ budgets. This sector of the government includes many programs that keep residents safe and healthy, the largest being health care programs that serve more than one-third of DC residents. Other services target youth, veterans, and the elderly. This sector also includes the Department of Parks and Recreation. Human Support Services accounted for $4.4 billion of the city’s budget in FY 2016.
• Public Education includes the city’s traditional public schools and its public charter schools, as well as private school tuition for students who have special education needs that the public schools are not able to meet. The DC Public Library system also is included in this category. The District spent $2.2 billion on Public Education in FY 2016.
• Public Safety and Justice includes the Metropolitan Police Department and the Fire and Emergency Medical Services Department, among others. In FY 2016, the Public Safety sector had $1.3 billion in expenditures.
• Financing includes debt service payments on major capital projects, such as school modernizations, and other types of city borrowing. It also includes various other funds, including for DC government employee’s retirement. Financing took up $1.0 billion of the city’s budget in FY 2016.
• Government Direction and Support includes many of the agencies that help manage, run and support the general operations of the government including the Office of the Mayor, the DC Council, the Chief Financial Officer, and the Office of the Chief Technology Officer. This sector had $788 million in spending in FY 2016.
• Public Works includes trash collection and transportation and motor vehicles. It includes agencies such as the Department of Public Works and Department of Transportation. Public Works accounted for $724 million of the District’s budget in FY 2016.
• Economic Development includes funding for affordable housing, workforce development, and economic development and planning. It includes agencies such as the Department of Housing and Community Development, the Department of Employment Services, and the Office of Zoning and the Office of Planning. The District spent $540 million on the Economic Development sector in FY 2016.

Greater detail of each appropriation title is provided in the Appendix.

Why Should I Care About DC’s Budget?

Very simply, the DC budget is how the Mayor and DC Council set the city’s priorities for the year. The budget pays for the public needs of our 681,000 residents, as well as the hundreds of thousands of commuters and visitors who inhabit the city each day.

The budget determines how frequently trash and recycling get picked up, and how many police and firefighters will protect us. The budget is used to decide how much money will be available for health care and how many teachers will be in classrooms. The budget also dictates whether taxes will be raised or lowered, and who will be impacted by any changes.

The Mayor and DC Council decide how to allocate the city’s resources through the budget based in part on input from residents about what is important to them. Every service the city provides, such as trash collection, appears in the budget every year. New initiatives—such as new programs in public school classrooms, for example—need to be funded through the budget, too.

With so many competing priorities, tough decisions must be made every year. How much do we spend? What do we spend it on? How much do we save? Should we raise taxes to bring additional resources to our city? Or should we lower taxes, which will lighten the city’s treasury but add dollars to the pockets of some residents and/or businesses?

All these questions get addressed in the Mayor’s budget proposal, which is presented to the DC Council each year for review and approval. The DC Council can vote to change the Mayor’s proposal, but it cannot spend more in any particular area than the Mayor proposes unless it finds an equal amount of offsetting cuts or revenue increases. By law, the budget must be balanced, with revenue equaling expenditures (although the city can get some of those revenues by dipping into its savings).

DC’s budget is divided into two parts. The operating budget allocates resources to run the city government day-to-day, paying for things such as the salaries of police officers and librarians, electricity and phone bills for government agencies, and health expenses for residents in one of the District’s health programs. The capital budget supports the costs associated with building and maintaining infrastructure such as roads and schools. This includes planning and supervising these projects, as well as the direct construction costs. Most of the time, when officials speak about the budget, they are talking about the operating budget. This guide also focuses primarily on the operating budget.

The DC budget year is different from the calendar year. It operates in what’s known as the fiscal year, which for DC begins October 1^st and ends September 30^th. DC follows this schedule because it must align its budgetary year with that of the federal government. Most states, including Maryland and Virginia, begin their fiscal year July 1^st.

The basic timeline each year for preparing the city’s budget is as follows: The Mayor’s office spends roughly six months, from September to February, developing a spending plan for the upcoming year. The proposed budget then gets sent in March or early April to the DC Council. The Council reviews the budget and holds public hearings to get input from the Mayor’s administration and the public on those plans. The DC Council usually approves the final budget in May. However, based on revenue projections from the city’s Chief Financial Officer, the budget may be adjusted during the year to stay in balance with the amount of money the city collects. We’ll get into more detail about this process a little later.

In fiscal year 2016, the District collected about $11.3 billion in revenue (Figure 2). The money came from three general categories:

• Local funds. This is mostly tax revenue generated from property, sales, and income taxes, as well as several other taxes and non-tax revenue. Local funds totaled $7.3 billion in FY 2016.[ii]
• Special purpose revenues and dedicated taxes. These are non-tax or tax revenues, respectively, where the funds are designated for a specific use. For example, the District has a nuisance abatement fund which collects fees and fines from property owners who violate building codes, and a certain percentage of the city’s deed recordation and transfer taxes are dedicated to a special fund to finance affordable housing called the Housing Production Trust Fund. The District collected $851 million in special purpose revenues and dedicated taxes in FY 2016.[iii]
• Federal funds. Like all other states and municipalities, the District receives federal funds to meet specific purposes, such as services for residents with HIV or grants for schools with significant low-income populations. These sometimes come in the form of matching funds, where the District and federal government share expenses for a particular program, or as grants fully funded by the federal government. In FY 2016, the District used $3.0 billion in federal funds.[iv]

Unlike the federal government, which is allowed to carry a deficit, DC must balance its budget each year. DC is like nearly all cities and states in this regard. In other words, the money the city brings in (revenue) must be equal to the money the city spends (expenditures), although the city can use money in its savings account to help meet its revenue needs. A budget gap occurs when revenue is less than expenditures; a surplus occurs when revenue exceeds expenditures.

How does a gap happen? The budget adopted by the District each year must reflect a balance of revenues and expenses. But a budget shortfall can arise either because revenue collections turn out to be lower than initially expected or because expenditures are higher than expected, or some combination of both. We will go into more detail about when a gap is determined in the budget timeline.

Many people consider the budget intimidating. Don’t worry! You’re not alone in thinking that the budget is hard to decipher. Even professional budget analysts have a hard time making sense of the numbers at times. Don’t be afraid to ask questions. We’ll give you resources on how to read the budget and who to contact for more information in later sections. By helping residents like you get involved, we hope to improve the District budget’s transparency.

How Do I Read the Budget?

Let’s say you are a devoted user of your neighborhood library. You want to make sure your branch remains open on evenings and weekends, that children’s story hour happens, and that New York Times bestsellers get stocked at your branch.

You want to advocate for the library system at city hall—known in DC as the John A. Wilson Building. What to do?

First, there are certain questions for which you need answers. What is the library system’s budget? Did it get cut last year or did it get enhanced? How does the system spend the money it receives?

These questions can be answered by looking at the library budget, which can be found in the budget section of the Office of the Chief Financial Officer’s website. If you are looking between March and June, you’ll find information on the Mayor’s proposed budget for the upcoming year (in addition to information on the current-year budget and last year’s). Once the budget is approved in June, the documents will reflect the final budget as approved by the DC Council for the year.

The DC budget documents provide a set of information on every DC agency. These are the city departments identified by the service provided: Department of Transportation, Fire and Emergency Medical Services, Department of Housing and Community Development, etc.

Let’s take a closer look at the agency budget chapter for the DC Public Library, using the proposed fiscal year 2018 budget as an example. It is found under the Public Education System appropriation title.

When you find the library chapter, you will see this table, CE0-1. What does it tell you?

• The previous year’s actual spending by the agency, and the number of workers at the agency (full-time equivalents, or FTEs) (FY 2016 Actual).
• The current year budget and FTEs (FY 2017 Approved).
• The proposed budget for the upcoming year and FTEs (FY 2018 Proposed).
• The percentage change in dollars and FTEs between the current year and next year.

FY 2016 reflects the actual dollars spent on the library system, because the city has audited its books to determine the dollar per dollar spending for that year. FY 2017, which was the current fiscal year in this budget document example, denotes approved spending because not all the dollars allocated have been spent and counted. FY 2018 is the upcoming year in this example, so that reflects the dollars proposed to be spent.

You will see that the city spent $56.5 million on libraries in FY 2016. Approved funding was increased by $3.8 million for FY 2017, to $60.3 million. For FY 2018, library funding was increased 2.5 percent, to $61.8 million.

As a library advocate, you might be curious as to why the additional money was allocated. Before we figure out why money was added, it’s helpful to know where the additional money comes from in the first place. There are several key tables that show up in the budget chapter for every agency that help explain the agency’s funding trends. The title of each table also includes a three-letter code for the agency. The code for the DC Public Library is “CE0.”

Table CE0-2 shows the sources of library funding. The table lists all the possible streams of revenue: local, special purpose, federal, private, and Intra-District funds.

First, a few terms: The General Fund is revenue generated by the District. This includes local funds, which reflect the basic collection of taxes and fees, and also special purpose revenues, which are usually fees or fines collected by the agency that are then reinvested in the agency. For example, late fees on overdue books are a library special purpose fund. Gross funds combines all the sources of funding, including federal funds, any private dollars, and resources from other DC agencies; it is the total amount spent. Intra-District funds are services provided by one District agency on behalf of another agency. For example, the library receives help from the Office of the Chief Technology Officer on broadband access. Intra-District funds also reflect federal funds received by one agency but transferred to another. For example, DC gets federal funds for its TANF program through the Department of Human Services, but a portion is transferred to the Office of the State Superintendent of Education to support the child care programs administered by the state superintendent.

For the DC public library system, a majority of funding comes from local tax dollars, which you can see by looking at the Total General Fund line. Total general fund support was $55.5 million in FY 2016, and federal funding was $924,000. The mixture of funds varies from agency to agency. Federal dollars are more available for certain programs in human services, for example, than for public works.

A general guideline for examining budgets is to see how they have changed from year to year. Look for big spikes and big declines. Did costs jump or fall in one area? Why? As you’ll notice, the budget can answer some questions, but it will raise others.

When you compare budgets from year to year, make sure that you compare apples to apples. Sometimes, for example, the general fund amount may change from year to year, but gross funds might remain the same because of an increase or decrease in federal dollars.

Well, what does all this money go toward?

Table CE0-2 also shows how many full-time equivalent positions, or FTEs, in the Library System are funded by various revenue sources. Table CE0-2 shows, for example, that 542 positions were funded with general fund dollars in FY 2016. FTEs include librarians and other staff.

The next chart, Table CE0-3, details spending by personnel services and nonpersonnel services. Personnel services include pay and other costs associated with employees. Nonpersonnel services include the costs of office supplies, rent (if the agency rents space), contracts for services, etc.

Table CE0-4 breaks down the agency at what is known as the program and activity level. These are the detailed line items that show how the library’s budget is spent. For example, one of the programs in the agency is called Library Services (L300). One activity within the Library Services program is Martin Luther King Jr. Memorial Library (L320), which is operations for library system’s main branch. You’ll see that funding for MLK library has fluctuated slightly but maintained relatively stable over the last three years (roughly $5.5 million each year).

Will be there be any new neighborhood libraries opening? What will the library system do differently than last year? These questions are answered in Table CE0-5 and the accompanying narrative. This section highlights the major changes proposed in the budget. That is explained in the narrative under Agency Budget Submission, Mayor’s Proposed Budget, and District’s Proposed Budget. Sometimes the explanations are very clear, and sometimes they are not, in which case a call or email to the relevant DC Council Committee that has oversight over the agency may be in order.

The last part of the agency budget chapter has various performance measurements. These are created by the agencies to measure how well they are delivering services. They also contain general facts about the agency, such as how many books were circulated in the library system that year. The performance information for some agencies is better than for others—that is, more complete and reflective of the agency’s key functions. Pushing for better measures is an important role that residents can play.

How Does the DC Budget Get Put Together Every Year?

Now that you have idea of what is in the budget, we’ll go more in depth into how and when the budget is put together.

As we noted earlier, the District’s fiscal year begins October 1^st. Each October, just as one fiscal year is starting, officials start intensely planning for next year’s budget. In other words, budgeting is a year-round process in DC. There is involvement from the Mayor and the executive branch, the DC Council, the city’s Chief Financial Officer, and residents and interest groups.

By the end of the process of budget building, traditionally, two laws are adopted, and a set of budget documents are produced. The two laws are the Budget Request Act and the Budget Support Act.

The Budget Request Act sets the funding level for each agency and program. This legislation also includes allocations for federal payments for the few local functions provided entirely by the federal government, such as the court system. The Budget Request Act often is limited in detail; it does not show program-by-program funding for each agency. Instead, that information is provided in the budget documents. The District’s recent budget autonomy law has changed the format of the Budget Request Act, as discussed further down.

The Budget Support Act is legislation covering any budget changes that require a change in law, such as a tax change or a change in eligibility for a specific program. Simple increases or decreases in funding for a specific program—such as library collections—do not require legislation. It’s important to look at the Budget Support Act very closely. Sometimes initiatives that are not strictly related to that budget year are placed in the Budget Support Act, such as a proposal for the city to consider online gambling.

The following sections highlight the key events and timeline for the DC Budget process. See also the infographic below.

September/ October: Agencies Receive Instructions for Developing a Budget Request

The budget season kicks off in the fall, when each agency submits a detailed line-by-line budget request to the Chief Financial Officer’s Office of Budget and Planning.

The Chief Financial Officer’s Role: The CFO kicks things off by giving city agencies instructions on how to prepare their budget submission for the upcoming fiscal year. The starting point of discussion is how much it will cost the city to maintain the current level of services and obligations, which is known as the current services funding level (CSFL). The CSFL is calculated for the operating budget and for local funds only. It reflects changes in salary expenses, utilities, and other fixed costs, as well as any changes required by previously adopted laws, but does not reflect any potential new policy decisions. The CFO gathers information from agencies needed to calculate the CSFL and publishes it early in the fall.

The Mayor’s Role: In recent years, the Mayor’s office, through the Office of the City Administrator, has given each agency a target budget number for local funds, which the agency’s operating budget request cannot exceed. Depending on the state of the economy and on preliminary budget decisions made by the Mayor, the agency target number might vary from the CSFL number for that agency. When the city’s economy and revenues are growing weakly, the targets for each agency may require them to identify savings through greater efficiencies or actual cuts in services.

November/ December: Mayor and CFO Review Requests

The CFO’s Role: Agencies submit their budget requests to the Office of Budget and Planning within the CFO’s office. The office reviews the request, ensuring that each agency has accurately calculated personnel and administrative costs and made other appropriate adjustments, such as reducing the budget to adjust for prior-year expenses that were funded only on a one-time basis. The budget then gets sent back to each agency director for comment and reconciliation.

The Mayor’s Role: At this time, the Mayor’s budget review team starts to put the pieces together for the Mayor’s proposed budget. This team includes the City Administrator, Deputy Mayors, staff from the Mayor’s policy office, and representatives from the CFO. The team reviews the baseline budget, agency budget submissions, and the revenue forecasts. It meets with representatives from each agency to discuss their budget request and potential areas for savings. The budget review team then begins to share recommendations and options with the Mayor. Also during this time, the Mayor meets informally with DC Councilmembers to discuss their budget priorities.

January/ February: DC Council Holds Agency Performance Hearings

The CFO’s Role: In February, the CFO issues a revenue forecast, one of four issued during the year to project expected revenue collections for the current year and upcoming three years. The budget that will later be submitted by the Mayor cannot spend more than the revenue projected in the February forecast.

The Mayor’s Role: If the revenue estimate is less than the current services funding level, the budget must be adjusted to remain within the revenue limits. The adjustment can include policies to generate revenue increases, such as additional fees or taxes, or cuts to spending. If the revenue forecast is higher than the baseline, the Mayor can make choices to enhance funding in selected areas.

The DC Council’s Role: While the Mayor is preparing a budget proposal, the DC Council starts holding performance oversight hearings on the performance of each agency, including effectiveness in implementing its budget over the last year. The DC Council is divided into a number of Committees, which have oversight over a set of related agencies. The Committee on Transportation and the Environment, for example, reviews the budgets of more than a dozen agencies, including the Department of Public Works, Department of Transportation, and the Department of Motor Vehicles. In the hearings, Councilmembers ask questions about how the agency spent its money.

The head of the agency also is required to discuss the agency’s performance and expenditures in the past fiscal year and answer oversight questions from Councilmembers. Before each oversight hearing, each Council Committee submits a detailed set of questions to the agencies they oversee. Those questions and the answers are posted on the DC Council website. You can contact the Office of the Budget Director, or the Committee clerk for any Committee of interest, if you need help finding these documents.

The Residents’ Role: DC residents can play a key role in the budget process. This is a great chance to inform the Council about how you see dollars being spent and to make recommendations for improving how an agency is funded—at the same time that the Mayor is putting together the next year’s budget. Residents are encouraged to testify on any aspect of an agency’s performance or budget. Let’s take public libraries, for example. Perhaps your neighborhood branch had to reduce its hours. The oversight hearing presents an opportunity to ask why that decision was made.

Residents can take a further step by helping submit questions to the Committees that can then be passed on to agencies, to better understand how the agencies are performing. As noted, each Council Committee submits a detailed set of questions to the agencies they oversee before each oversight hearing. There is no formal process for residents to submit questions, but you are welcome to share your questions with staff of the relevant Committee and encourage the Committee to include your questions in the Committee’s submission to the agency. You should contact a Committee in January if you have questions to submit to the agencies. DC Council Committees, their chairperson and members, and the agencies they oversee can be found in the Committees tab of the DC Council website.

March/April: The Mayor’s Budget is Released and Reviewed by DC Council and Residents

The Mayor’s Role: The Mayor submits a proposed budget to the DC Council in mid- to late March. Many of the key budget decisions made by the Mayor—whether to cut funds, increase funds, cut taxes, or raise taxes—are made in the few weeks before the budget is submitted. The Mayor submits two proposed budgets: the operating budget, which outlines how funds will be spent to run the agencies, and a capital budget, which is a six-year plan for building and renovating government facilities.

The DC Council’s Role: After the Mayor’s budget is released, each Council Committee holds budget oversight hearings on the portion of the budget the Committee oversees. For example, the Committee on Health and Human Services holds hearings on the budget for the Department of Human Services, Child and Family Services Agency, and the Department on Disability Services, among others.

As in the case in the performance oversight hearings held earlier in the year, each Council Committee submits a detailed set of questions to each agency they oversee prior to the budget oversight hearings. Those questions and the answers are posted in the Budget tab on the DC Council’s website. You can contact the office of the DC Council’s Budget Director, or the Committee clerk for any Committee of interest, if you need help to find these documents.

After the budget oversight request hearings are held, each DC Council Committee meets to markup the portion of the budget they oversee. The markup is the process through which the Committees make changes to the Mayor’s budget. While the Committees can shift funds from one program to another or from one agency to another, they cannot propose spending more than the amount in the Mayor’s proposed budget for the agencies overseen by that Committee, unless they identify a new source of revenue, such as an increase in taxes or fees, or receive a transfer of funds from another Committee.

During this process, the Committees also adopt recommendations on the Budget Support Act provisions that relate to their Committee. The recommendations are compiled and then considered by the entire Council in the Committee of the Whole.

The Residents’ Role: DC residents can play an important role in shaping the DC Council’s decisions on how to alter the Mayor’s budget request. Members of the public are encouraged to testify at the budget oversight hearings about portions of the budget they like or do not like. In addition, residents can submit questions to the Committees that can then be passed on to agencies, to better understand various issues arising from the Mayor’s proposed budget.

At this time, interest groups meet and lobby Councilmembers on funding decisions. You can contact Councilmembers individually, by calling or sending emails. You may also want to join a group that lobbies on your issue.

May/June: Budget Gets Voted on and Sent to Congress

The DC Council’s Role: In May, the entire DC Council votes on both the Budget Request Act and the Budget Support Act. In order to do that, the entire Council meets to reconcile actions taken at the Committee level and to deal with any outstanding issues.

Until recently, the Council held two votes on the Budget Support Act, which is how most legislation is treated, but only one vote on the Budget Request Act. That was because the Budget Request Act had to be approved by the Congress as part of the federal budget. As a result of a budget autonomy referendum passed by voters in 2013, the Council now passes two different Budget Request Acts. The Local Budget Act covers the locally funded portion of the budget and automatically becomes law after a 30-day congressional review period. The Federal Portion Budget Request Act covers the federally funded portion of the DC budget, and still needs to go through congressional budget process. Read more about budget autonomy further down.

The second votes on all three bills—the Local Budget Act, the Federal Portion Budget Request Act, and the Budget Support Act—are held in late May or early June, and the final budget then is submitted to the U.S. Congress for 30-day review.

Because Congress considers the federally funded portion of the DC budget as part of one of its federal appropriation bills, any delays in approving the federal budget beyond the October 1^st start of the fiscal year can affect the DC budget. But passing the federal budget after October 1^st doesn’t necessarily impair the ability of DC to implement its budget, because Congress often passes a provision to enable the city’s budget to move ahead.

The CFO’s Role: The Chief Financial Officer issues another revenue projection in June, often after the budget has been approved. If the June projection is lower than the approved budget—as happened in June 2009 for the FY 2010 budget—the Council has to revise the budget downward. Modifications to the approved budget are known as a supplemental budget. If a revenue forecast shows that the District would collect more revenue than anticipated in the budget, additions can be made to the approved budget.[v]

Does DC Save for A Rainy Day?

What happens when the economy takes a nosedive and revenue collections decrease? Does the District save money for a rainy day? Indeed, we do.

The logic of having a rainy day fund is much like having a savings account emergency fund. Say you get laid off from your job. You might tap into your emergency fund to help pay the bills until you find a new job.

Likewise, rainy day funds help states and cities manage a fiscal crisis. In particular, they can help maintain public services during an economic downturn, when rising unemployment and falling incomes lead to both declining tax collections and increasing need for government services. Rainy day funds also limit the need to raise taxes in a downturn. Finally, spending rainy day reserves provides a stimulus to the local economy that can help mitigate the effects of a recession.

In 2000, the District established two reserve funds, an emergency cash reserve and a contingency cash reserve, as required by Congress. These reserves are similar to the rainy day funds that most states use as a cushion against major crises that might impact the budget, such as a natural disaster or a rapid drop in revenues due to an economic downturn. As of the end of FY 2017, the two reserve funds held $414 million.[vi] (Note that these reserves are not the same as the city’s fund balance, which includes accumulated resources from various reserve funds and other sources. The emergency and contingency reserves are part of the fund balance, but not the whole thing.)

In addition, the District established a new reserve in 2010, called the fiscal stabilization reserve, to augment the congressionally mandated reserves. This fund equaled 2.3 percent of DC’s budget and held $186 million at the end of FY 2017.[vii]

The federal law governing DC’s emergency and contingency reserves includes several restrictions that make it difficult for the District to utilize them. First of all, unlike most other states and cities, the District must repay the money tapped from the fund within two years, with at least half repaid in the first year. Think about it on a personal level: when an unexpected event comes up, like a job loss, you might take money out of your savings account to help with expenses until you start working steadily again. But do you pay the money back right away? Usually not.

The federal rules also set aside a third of the funds for use only in a natural disaster. Yet the fiscal shock that cities will most likely face are economic, particularly recessions. It would make more sense to make all of the city’s rainy day reserves available for either a natural disaster or an economic downturn.

The locally created fiscal stabilization reserve has some, but not all, of the restrictions that are placed on the emergency and contingency reserves. The fiscal stabilization reserve can be tapped only if the city’s tax collections drop sharply in the middle of a fiscal year—most likely in response to an unexpected economic shock—but there is no requirement to replenish those withdrawn within two years. Instead, the fiscal stabilization reserve is replenished with year-end surpluses until it reaches the required level.

The District also has a cash flow reserve, which is used to cover cash flow needs during the fiscal year and is intended to reduce the need for short-term borrowing. Any withdrawals must be replenished within the same fiscal year. The District is required to dedicate the entirety of year-end surpluses to the cash flow reserve until it contains enough funding to cover 60 days of government operations.

Is the DC Budget Process Different From Other Cities and States?

Washington, DC is a city, but it also has to act like a state in a way that’s different from Baltimore, Milwaukee, or San Francisco. The District, which is not a state or located within one, is in charge of many programs that Maryland, Wisconsin, or California would normally administer for their largest cities. These programs include Medicaid, unemployment insurance, and Temporary Assistance for Needy Families (TANF).

While the District has more responsibilities than many cities, it also has less autonomy in many ways, including over its budget. This is because the U.S. Constitution gives the U.S. Congress broad authority to oversee the city. Article One, Section Eight, of the United States Constitution gives Congress the power: “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States.”

In fact, the District did not have an elected city government until the passage by Congress of the Home Rule Act of 1973. The act handed day-to-day administration of the city government to an elected Mayor and a thirteen-member City Council.

While most residents are aware that the District lacks voting representation in the Senate and the House of Representatives, many may not be aware that the city is also deprived of full budget autonomy—the ability to have ultimate authority over how to spend the money it collects, although recent actions by DC policymakers and voters have increased our level of autonomy. Indeed, every law passed by the DC Council and signed by the Mayor can be modified or even rejected by the Congress, with the DC budget being a special case. Until recently, the DC budget could go into effect only after the Congress approved it; in contrast, other legislation passed by the District goes through a 30-day period of congressional review, and then becomes law if Congress fails to modify it.

In 2012, steps were taken toward DC budget autonomy when the DC Council placed a budget autonomy initiative—the Local Budget Autonomy Act—on the ballot in 2013. The initiative deemed the portion of the DC budget funded with local taxes and fees to be approved if Congress takes no action within 30 days, the way other DC laws are treated. In April of 2013, 83 percent of DC voters approved of the initiative, but there were a series of disagreements surrounding the legality of the vote. In March of 2016, the Superior Court of DC ruled that the vote was legal, officially giving DC control of its locally funded budget after a 30-day Congressional review period. Put simply, Congress has 30 days to reject and change the budget, but after that period, DC has the power to begin spending its local funds as outlined in its budget. This remains controversial with some leaders in Congress, but there is no doubt that budget autonomy is current law.

This still means that the Congress can modify DC’s budget any way it wants, even the portion of DC’s budget supported with the city’s own tax dollars. In reality, Congress largely defers to the decisions made by the Mayor and DC Council, which is why budget advocacy with the Mayor and Council is important. Yet signs of federal control are clear. For example, federal law restricts how the city can spend its rainy day fund. Congress also mandates that the city budget not only for the upcoming fiscal year, but for four years out, known in technical jargon as the financial plan. In 2014, Congress acted after the District’s voters approved a ballot initiative to legalize possession of a small amount of marijuana; while they did not overturn that, Congress voted to prohibit the District from spending any money to regulate marijuana use in DC, such as rules for buying or selling or taxing sales.

How to Find Budget-Related Resources and Get Involved in the Budget Process

There are several ways to get involved in the city’s budget process. Voting in local elections is an important way to express your opinions, but there also are many ways to influence budget decisions directly.

As noted, the DC Council holds both agency performance and budget oversight hearings every spring as they prepare to examine next year’s budget. This is an easy way to get involved in the process. You may sign up to speak to the Council at these hearings. The Council is divided into a number of Committees, which have oversight over specific agencies.

You might choose to get involved with groups that advocate directly on budget issues, or you might take an interest in a specific budget area. We encourage you to read the budget and try to make sense of how the city is spending its resources in that area.

Here are some resources to help:

DC’s Budget & Financial Plan

Office of the Chief Financial Officer

The OCFO’s budget page contains links to the current budget, the current services funding level baseline budget, and an archive of prior year budgets dating back to FY 2007.

www.cfo.dc.gov/budget

Quarterly Revenue Forecast

Office of the Chief Financial Officer

Four times a year, in February, June, September, and December, the OCFO issues a revenue forecast for the current fiscal year and next four fiscal years. The February revenue forecast sets the groundwork for the Mayor’s proposed budget.

www.cfo.dc.gov/page/quarterly-revenue-estimates

Budget and Performance Oversight Resources

DC Council

The DC Council website posts the questions posed by each Council Committee to agencies as part of the performance and budget oversight hearings, as well as the agencies’ answers.

www.dccouncil.us/pages/budget-oversight-2019

Committee Reports

DC Council

Each DC Council Committee prepares a report on their agency budgets. The reports are available online on the Council’s website.

www.dccouncil.us/pages/budget/2019

CFOInfo Interactive Dashboard

The CFOInfo page is an interactive web-based budget and expenditures dashboard. In addition to viewing each agency’s budget in depth, users can filter by fund and expense type.

www.cfoinfo.dc.gov

DC Open Budget

This is an interactive web-based tool, similar to CFOInfo, that allows users to generate charts and tables on the DC budget.

www.openbudget.dc.gov

DC Council Committee staff

Get to know them and don’t be afraid to ask them questions and use their resources.

www.dccouncil.us/committees

DC Fiscal Policy Institute Budget Toolkits

Each year, DCFPI writes summaries of what’s in the Mayor’s proposed budget and the approved DC budget for issues including education, homeless services, and health care.

www.dcfpi.org/resource/budget-toolkit/

Glossary

agency: Division of city government in charge of service delivery, such as Department of Public Works.

appropriation titles: The seven clusters in which DC agencies are grouped together based on their general function.

budget autonomy: A law giving DC control of its locally funded budget after a 30-day Congressional review period, which originated with a 2013 ballot initiative.

Budget Request Act (BRA): Legislation that sets the fiscal year funding level for each agency. The BRA refers to two pieces of legislation, the Local Budget Act and the Federal Portion Budget Request Act.

Budget Support Act (BSA): Legislation covering any budget changes that require a change in law, including tax changes, policy changes, and new program rules.

budget: A spending plan that outlines expenditures and revenues for a given period of time.

capital budget: Spending plan for infrastructure, such as roads and schools.

Committee: The DC Council is divided into a number of Committees which have oversight over a set of related agencies.

current services funding level (CSFL): Amount of funding needed to maintain current services.

dedicated tax: A tax whose revenue is directed for a specific purpose. Dedicated taxes are part of the city’s General Fund.

expenditure: Payments for personnel, goods and services, and other expenses needed to carry out the functions of the DC government.

federal funds: Funding received from the federal government.

Federal Portion Budget Request Act: Legislation that sets the federally funded portion of the budget for each agency for the fiscal year. This piece of the Budget Request Act goes through the congressional budget process.

financial plan: Budget for the city’s current fiscal year and three years beyond. The four-year financial plan is mandated by Congress.

fiscal year (FY): Length of time the budget is allocated. In DC, the fiscal year runs from October 1 through September 30.

full-time equivalent (FTE): One or more employment positions in which the combined work is equal to one full-time year-round worker (40 hours and 52 weeks).

fund balance: The District’s accumulated resources, including various reserve funds and other sources. The city’s rainy day fund is part of the fund balance.

General Fund: Expenditures funded with locally raised taxes and fees. Local revenue, special purpose revenue, and dedicated taxes are part of the General Fund.

gross funds: Combines all the sources of funding, including the General Fund, federal funds, and any private dollars.

intra-District funds: An accounting mechanism to track payments for services provided by one District agency on behalf of another District agency.

John A. Wilson Building: DC’s city hall and state house, at 1350 Pennsylvania Avenue NW, which houses the Mayor’s office and the DC Council.

Local Budget Act: Legislation that sets the locally funded portion of the budget for each agency for the fiscal year. This piece of the Budget Request Act automatically becomes law after a 30-day congressional review period.

local funds: Includes tax and non-tax revenue that is generated by the District and is not earmarked for a particular purpose. Local funds are part of the General Fund.

markup: Changes to legislation or the Mayor’s budget proposal made by a DC Council Committee.

nonpersonnel services: In an agency budget, includes costs not associated with employees, such as contracts for services, office supplies, and rent.

operating budget: Spending plan for day-to-day government operations, including programs, services, and government employee salaries.

personnel services: In an agency budget, includes pay and other costs associated with government employees.

rainy day fund: Informal term for financial reserves set aside by cities and states to address unforeseen circumstances. DC’s rainy day fund includes the federally-mandated emergency and contingency cash reserves, as well as a locally-mandated fiscal stabilization reserve.

revenue forecast: The Office of the Chief Financial Officer’s estimate of how much revenue the city will take in, for the current fiscal year and next four fiscal years.

revenue: The annual income or receipts of the District from all sources, including taxes, fees, grants, and investments.

special purpose revenue: Fees and other non-tax revenues where the funds are designated for a specific use. Special purpose revenues are part of the city’s General Fund, along with local funds and dedicated taxes.

tax: A financial charge or levy assessed on income, property or other goods and services to support government services.

Uniform Per Pupil Student Funding Formula (UPSFF): Amount of local funds allocated to each DC public school and t public charter school based on student enrollment and selected student characteristics.

Appendix: An In-Depth Look at the DC Budget’s Seven Appropriation Titles

The following summarizes the gross funding in fiscal year 2016—including both local and federal funds—for each of the major functional areas of the DC budget.

Human Support Services

The biggest slice of the overall budget is Human Support Services, with gross funds of $4.4 billion in fiscal year 2016. This cluster of agencies includes many charged with caring for our most vulnerable residents.

• The largest agency within the Human Support Services cluster is the Department of Health Care Finance (DHCF), which administers the city’s Medicaid program, a federal-state program that acts as a health insurer for many of our city’s poorest residents. It is also in charge of the DC Health Care Alliance, a city-run health care provider for uninsured residents who don’t qualify for Medicaid. Nearly 260,000 residents receive health care services through DHCF. The FY 2016 budget for the agency was $2.8 billion, making it the largest portion of the District’s Human Support Services cluster. Most of its funding comes from the federal government, which covers 70 percent of the city’s basic Medicaid expenses, plus higher shares of certain Medicaid components resulting from the Affordable Care Act.
• The Department of Human Services delivers many services and programs critical to the city’s safety net, including Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), and homeless services. It is a front-line agency that gives direct assistance to the District’s most economically disadvantaged and vulnerable residents. The budget for the agency was $467 million for FY 2016.
• The Child and Family Services Agency investigates reports of child abuse and neglect and provides services to protect at-risk children. Services include foster care, adoption, and programs for at-risk youth. The agency’s budget in FY 2016 was $216 million.
• The Department of Health concentrates on three priority areas: HIV/AIDS prevention and awareness, health and wellness, and public health systems. A majority of the agency’s $206 million budget in FY 2016 came from federal sources.
• The Department of Behavioral Health works with contractors in a variety of settings to provide services for DC residents in need of mental health care, and it operates St. Elizabeth’s Hospital, a psychiatric facility. The agency’s budget in FY 2016 was $256 million.
• The Department of Disability Services coordinates care and housing for city residents with physical or mental disabilities. The FY 2016 budget for this agency was $159 million.
• The Department of Parks and Recreation runs 73 recreation centers and maintains 1000 acres of public park land. The FY 2016 budget for this agency was $45 million.

Public Education

The next biggest chunk of the DC budget goes to Public Education, which includes the DC Public Schools and DC public charter schools, as well as the public library system and the University of the District of Columbia. Gross funds for public education totaled $2.2 billion in fiscal year 2016.

DC Public Schools provides general classroom instruction, as well as vocational, early childhood, English language learner services, and summer school for about 50,200 students in 2018. In FY 2016, DC public schools were allocated $779 million in gross funds.

The District has a vibrant charter school movement, and a growing portion of public education funding is going to charter schools. As of 2018, there are 66 non-profits who operate 120 charter schools, which enroll about 44,300 students. In FY 2016, DC Public Charter Schools received funding of $739 million to meet both their operating and facility expenses.

Both the traditional public schools and public charter schools are funded through the Uniform Per Student Funding Formula (UPSFF). The formula provides a basic amount of money for each student. There are additional weighting factors, such as grade level, special education, and students who are low-income or otherwise at-risk of academic failure. Charter schools also receive a per-pupil allotment for facility expenses, while DC Public Schools gets some support from other agencies, such as building maintenance services provided by the Department of General Services.

The per-pupil funding formula is used to set the overall local funding level for the DC Public School System. The Chancellor then develops a plan to allocate funding among schools and to central office and other functions. For public charter schools, the amount of money each school receives is dependent upon enrollment.

The Public Education sector also includes the Office of the State Superintendent of Education, the University of the District of Columbia, DC Public Library, and the Deputy Mayor for Education:

• The Office of the State Superintendent of Education (OSSE) sets academic policies and requirements. OSSE is also in charge of early childhood care services, school nutrition services, and adult education. The agency’s budget for FY 2016 was $349 million.
• Special Education includes both the category “non-public tuition” and special education transportation. Non-public tuition is the cost of legally mandated special education services for DC residents provided by private schools, when the DC Public Schools are not able to meet a child’s special education needs. (The District also serves many students with special education needs within DC Public Schools and DC Public Charter Schools, and those funds are reflected in the DCPS and DCPCS budgets.) The cost of special education provided through private schools, including transportation to get to and from the schools, was $152 million in FY 2016.
• The University of the District of Columbia received $72 million in FY 2016. This supports both the university-level functions of UDC and its community college.
• The DC Public Library system includes the flagship Martin Luther King Jr. library downtown and 25 neighborhood branch libraries. The system’s budget for FY 2016 was $56 million.

Public Safety and Justice

Two agencies make up most of the Public Safety cluster: the Metropolitan Police Department and the DC Fire and Emergency Medical Services. Gross funds for public safety in fiscal year 2016 totaled $1.3 billion.

• The Metropolitan Police Department has 2,823 police officers who patrol the city, which is divided into 56 police service areas in seven police districts. The agency’s budget for FY 2016 was $507 million.
• DC Fire and Emergency Medical Services (DC FEMS) runs 33 firehouses across the city. Most of the city’s firefighters are also trained as emergency medical providers. DC FEMS answers over 200,000 fire or medial incidents each year. The DC FEMS budget for FY 2016 was $241 million.
• The Homeland Security and Emergency Management Agency concentrates on four areas: preparedness and protection, incident and event management, homeland security, and agency management. In FY 2016, the agency received $61 million.
• The DC Department of Corrections operates the DC Jail and houses inmates at a correctional treatment facility. The department also contracts with private companies that operate two halfway houses. The agency’s budget for FY 2016 was $141 million.
• The Office of Unified Communications answers and directs calls to the District’s emergency number, 911, and non-emergency number, 311. The agency’s FY 2016 budget was $44 million.
• The Office of the Deputy Mayor for Public Safety and Justice coordinates and provides oversight of the various public safety agencies in this cluster. The FY 2016 budget for the Deputy Mayor for Public Safety was $26.3 million.
• The Office of Victim Services and Justice Grants coordinates and funds programs in the District that serve crime victims, prevent crime, and improve the administration of justice for victims and offenders. The FY 2016 budget for this agency in was $28 million.
• The Office of the Chief Medical Examiner investigates and certifies all unexpected deaths and deaths in which violence is suspected. The FY 2016 operating budget for the agency was $11 million.
• The Department of Forensic Sciences provides independent analysis of evidence and samples submitted by agencies within the District of Columbia and its federal neighbors. The FY 2016 budget for this agency was $21 million.

Financing

This appropriation title does not consist of agencies that actually provide services to residents or oversee programs; it includes a variety of funds that are used to make debt service payments for capital improvement projects, payments on loans and interest, settlements and judgments, and funds to pay for the improvement of school facilities, just to name a few. In fiscal year 2016, the District dedicated $1.0 billion in gross funds to financing.

• Debt Service (or “repayment of loans and interest”) includes the interest and principal repayment of bonds the city issues to support infrastructure projects. The District also engages in short-term borrowing to help manage its cash flow during the year. Other debt service costs include the expenses associated with issuing bonds and a school modernization fund. The FY 2016 budget for debt service was $590 million.
• The District Retiree Health Contribution includes funds for the District to make payments for health and life insurance for retired DC government employees. In FY 2016, $29 million was dedicated to this purpose.
• The Convention Center Transfer fund holds a portion of the District’s sales taxes that are automatically transferred to the Convention Center to support its operations. $132 million was transferred for this purpose in FY 2016.
• The Pay-As-You-Go Capital Fund provides the District with funding to do capital projects and improvements without borrowing. The FY 2016 budget for the Pay-As-You-Go Capital Fund was $144 million.
• The Settlements and Judgments fund is a reserve set aside for court judgments and rulings against the District of Columbia. In FY 2016, $33 million was allocated to the fund.

Governmental Direction and Support

This cluster consists of several agencies that help manage, run, and support the general operations of the DC government. In fiscal year 2016, gross funds for governmental direction and support were $788 million.

• The Department of General Services was established in 2012 to centrally manage services related to government facilities, including DC public schools. DGS manages the capital improvement and construction program for District government facilities, acquires and disposes of real property, and provides building services such as custodial, security, utilities management, maintenance, inspection, and repairs. In FY 2016, DGS received $324 million.
• The Office of the Chief Financial Officer (OCFO) provides financial management services to the DC government. The OCFO makes sure spending remains within approved budgets or expected revenues so that deficits do not occur. The FY 2016 budget for the agency was $137 million.
• The Office of the Attorney General (OAG) handles legal matters for the city. The OAG represents the District in civil litigation, prosecutes certain criminal offenses, advises the Mayor, Council, and other agencies, and represents the city in other legal proceedings. The District allocated $73 million to the OAG in FY 2016.
• The DC Council is the legislative branch of District government. It comprises 13 members, including one elected representative from each of the city’s eight wards, four at-large members elected citywide, and one chairman, who is elected citywide. The operating budget for the DC Council in FY 2016 was $21 million.
• The Office of the Inspector General conducts independent audits and investigations into the use of District funds and resources. Its budget for FY 2016 was $15 million.
• The Office of the Mayor is divided into five core offices: executive office of the Mayor, boards and commissions (MOTA), community affairs, volunteerism (Serve DC), and the agency management unit. The operating budget for the Office of the Mayor in FY 2016 was $11 million.
• The Board of Elections and Ethics runs the city’s elections. The board is in charge of voter registration, election administration, and election operations. A three-person board makes policy decisions and supervises the activities of the agency. In FY 2016, the agency’s budget was $9 million.
• The DC Auditor helps the DC Council assess spending and improve efficiency in programs. Its budget for FY 2016 was $4.5 million.
• The Office of the City Administrator provides support, oversight, and leadership over the city’s agencies. The operating budget for the city administrator’s office in FY 2016 was $6 million.
• The Office of Campaign Finance is the regulatory agency policing the conduct of public officials and candidates in regard to campaign finance laws. The Office of Campaign Finance received $2.6 million in FY 2016.
• Advisory Neighborhood Commissions (ANCs) are unpaid, grassroots elected representatives who advise the District on decisions involving planning and zoning in specific areas. The commissioners review and make recommendations on liquor licenses, zoning changes, and permits. The operating budget for the ANCs in FY 2016 was $788,000.

Public Works

The Public Works cluster has some of the most visible, quality-of-life government services agencies. In fiscal year 2016, $724 million was dedicated to public works.

• The Washington Metro Area Transit Authority (WMATA) provides public transportation, under the direction of the Department of Transportation. The District’s contribution to WMATA was $359 million in FY 2016.
• The Department of Transportation maintains the city’s streets and bridges as well as operates the District’s Circulator buses and runs the Urban Forestry Administration. The agency’s budget for FY 2016 was $102 million.
• The Department of Public Works is responsible, among other things, for one service many residents appreciate, and one that some do not: solid waste management and parking enforcement. The department also maintains the city’s fleet of vehicles. The public works budget for FY 2016 was $135 million.
• The Department of Energy and the Environment is the lead agency for creating, promulgating, and enforcing DC environmental standards, in addition to implementing federal environmental laws and regulations. It also provides certification services to the DC government and residents and develops programs designed to improve sustainability in the District. In FY 2016 it had a budget of $83 million.
• The Department of Motor Vehicles (DMV) had an agency budget of $35 million in FY 2016. The department manages 606,000 licensed drivers and identification holders as well as collects fines for approximately 2.7 million parking tickets each year. DMV also conducts 178,000 vehicle emission inspections per year.
• The DC Taxicab Commission regulates approximately 100,000 drivers, 60 taxicab companies, and more than 20 limo companies. The agency’s FY 2016 budget was $10 million.

Economic Development and Regulation

The agencies in this appropriation title set the direction for economic development in the city. Not only does it encompass planning and zoning functions, but it also includes workforce development, affordable housing development, and small business development. Gross funding for economic development was $540 million in FY 2016.

• The Department of Housing and Community Development manages a variety of programs—both local and federal—to finance, develop, and preserve affordable housing and homeownership for low-income DC residents. The agency also contracts with community-based organizations to help provide housing counseling, tenant assistance, and small business technical assistance. The agency’s FY 2016 budget was $62 million.
• The Department of Employment Services provides job skills training, labor market analysis, and enforcement, and it runs the city’s youth summer jobs program. In FY 2016, $120 million was dedicated to the agency.
• The Department of Consumer and Regulatory Affairs is responsible for licensing and permits, conducting building inspections, as well as enforcing building, housing and safety codes. The agency’s FY 2016 budget was $48 million.
• The Deputy Mayor for Planning and Economic Development sets the city’s development priorities and policies, with a FY 2016 budget of $33 million.
• The DC Office of Planning is in charge of developing plans to execute the comprehensive plan, historic preservation, and planning for the city’s public facilities, parks, and open spaces. In FY 2016, the agency received $10 million.
• The DC Commission on the Arts and Humanities provides grants that support arts organizations in the District as well as individual artists. The Commission’s budget was $15 million in FY 2016.
• The Office of the Tenant Advocate conducts education and outreach on city laws involving rental housing and represents the interests of tenants in legislative, regulatory, and judicial matters. The FY 2016 budget for the agency was $3 million.