Tomorrow, the DC Council will take a second vote on the fiscal year 2013 budget. To paraphrase the great thinker and New York Yankee Yogi Berra’are you feeling d©j vu all over again? Here’s why: Three weeks ago, on May 15, the Council took the first and final vote on the Budget Request Act’which sets the appropriation amounts for next year’s budget. However, the Budget Support Act’the laws needed to enact the budget’requires two votes.
Because DC’s budget is part of the federal appropriation’even though a majority of our budget dollars are raised through local income, sales and property taxes’the Request Act gets rolled into the federal budget bill and requires congressional approval. That means DC has to wait for the feds to spend its dollars to pay for teachers, police officers and other essential services’and when there’s a congressional impasse’the District could be impacted. That’s one of the reasons DCFPI is supportive of budget autonomy.
Here’s what’s on our radar for tomorrow:
Affordable Housing: During the first budget vote, the Council found nearly $18 million to restore the cut to the Housing Production Trust Fund’ DC’s main source for affordable housing construction and renovation ‘ by redirecting the proceeds from the sale of a building in the NoMa neighborhood initially intended to fund parks in the dense, developing area of Ward 6. The funding to build the parks was put as number four on the contingency revenue list.
With DC’s affordable housing supply vanishing, DCFPI applauds the Council for making funding to build affordable housing a priority. However, the Mayor’s budget proposed to cut $18 million from the trust fund not only next year, but in the outgoing years of the required financial plan as well. This means that by fiscal year 2016, the trust fund could have just $6 million available for core purposes ‘ to build and renovate affordable housing. Since the funding needed to buy the park land in NoMa is a one-time expense, the funding generated by contingent revenue won’t be needed in the out years of the financial plan for the park land. That funding should instead be directed into the trust fund. This could help ensure DC has more adequate funding to keep up with the demand for affordable housing over the next four years.
No Tax Breaks for New Out-of-State Bonds: Last year, the District eliminated the tax exemption for new investments in bonds from other cities and states, joining every state in the U.S. that generally limit tax exemptions to bonds issued within their state. That move seems to be working; the demand from DC residents to buy DC bonds has increased dramatically, helping lower the city’s borrowing costs. Yet some policymakers would like to return DC to lone status as the only jurisdiction to provide an incentive to invest in infrastructure projects outside of DC. Restoring this tax break currently is at the bottom of the contingency revenue list in the budget. It should stay there ‘ or be taken off entirely.
Just Say No to Film Subsidies: The revenue contingency list includes $10 million for film subsidies in hopes that offering subsidies to production companies will bring films and economic growth to DC. Unfortunately, that money may go to waste if used, because studies have shown that these kinds of subsidies are ineffective tools for economic development. DC does have a plan to evaluate the effectiveness of subsidies in the District, but it is listed further down on the wish list, meaning that the $10 million will be spent before DC evaluates if it’s worth the money. Bringing Hollywood to the District sounds glamorous, but it’s not a sound use of our tax dollars.
DCFPI urges Chairman Kwame Brown and his colleagues to fund affordable housing in the future, to not give tax breaks to residents who invest out-of-state and to resist the temptation of giving away our tax dollars for 15 minutes of silver screen fame.
It’s not as difficult as Yogi thinks in one of his other famous lines: “When you come to a fork in the road, take it.”
