DC Council finalized a fiscal year (FY) 2027 budget and four-year financial plan that reversed major cuts in the mayor’s proposal but still underfunds programs that support residents struggling to make ends meet and sinks scarce public resources in disproven “trickle-down” economic growth tactics that further benefit the corporate elite.
Instead of raising recurring revenue by increasing taxes on wealth, Councilmembers used largely one-time funds to patch programs that Mayor Bowser proposed gutting, including health care for immigrants with low incomes and vouchers that help families afford child care. While these investments are meaningful, funding for many critical programs falls short of what’s needed to maximize their effectiveness and reach. And, failing to raise recurring revenue this year means that the new mayor and Council will face the same dire choices next year—either bring in new resources to stabilize the budget or make even more harmful cuts.
Wealthy households continue to benefit from the economy and the growth of non-wage, or passive income (e.g., income from the sales of stocks) and are receiving windfall tax cuts at the federal level at the same time that households with lower incomes struggle to afford their basic needs. DC’s revenue growth is also slowing, due to multiyear drops in commercial property tax collections and the effects of federal layoffs on the economy. This structural slowdown in revenue growth will make it harder for the District to pay for the normally occurring increases in the cost of maintaining programs and services over time. The mayor and DC Council must find new or increased sources of revenue to sustain the budget in the coming years.
The table below details how the DC Fiscal Policy Institute’s budget recommendations fared in the mayor’s proposed budget and the Council-approved budget. DCFPI advocates for budget recommendations rooted in the belief that the budget can and should be a tool to disrupt longstanding racial and economic inequity and build a future where everyone has what they need to live to their fullest. Recommendations with an asterisk (“*”) were not included in DCFPI’s original list of budget recommendations.
Early Childhood Education
| DCFPI’s Recommendations | What the Mayor’s Budget Proposed | What’s in the Council-Approved Budget |
|---|---|---|
| Fully fund the Pay Equity Fund (PEF) at $94.2 million in FY 2027. Costs of the program are growing due to more educators entering the field and acquiring higher credentials, as intended. This amount is needed to provide a cost-of-living adjustment to help maintain the value of educator salaries. | The mayor fully eliminated the salary component of the PEF and proposed flat funding at $12 million for the HealthCare4ChildCare program within PEF, which provides affordable health coverage to educators. | The Council restored $61.5 million in funding for the salary component of the PEF, for a total of $73.5 million when combined with the health care component. This falls short of what is needed to ensure early educators in the childcare sector achieve pay parity with public school teachers, as intended. However, this amount holds educator pay steady and does not require additional cuts. |
| Enhance the childcare subsidy program by $81.3 million, for a total of $177.1 million in FY 2027, to eliminate the need for a waitlist and ensure every eligible family can receive a subsidy. | The mayor proposed an $18.1 million enhancement to local funding, for a total of $113.9 million for the childcare subsidy program and requiring a waitlist. | The Council enhanced funding by another $39 million, for a total of $153.2 million, which falls short of the funding needed to eliminate the waitlist but at a level likely sufficient to eliminate the current enrollment freeze and allow the many families currently on the waitlist to receive subsidies. |
Affordable Housing & Ending Homelessness
| DCFPI’s Recommendations | What the Mayor’s Budget Proposed | What’s in the Council-Approved Budget |
|---|---|---|
| Allocate $120 million to the Housing Production Trust Fund (HPTF). Increase investment in the HPTF for building and preserving more affordable housing units. Enforce the statutory requirements that the HPTF produce deeply affordable housing at 30 percent of the area median income. | The mayor reduced the HPTF from $100 million in FY 2026 to $62.6 million in her proposed FY 2027 budget. She did not include any local fund transfers into the HPTF beyond its dedicated revenue sources, such as the 15 percent deed and recordation tax. | The Council maintained the mayor’s budget. |
| Allocate $10 million towards the First Right to Purchase Program (FRPP) to sustain tenant ownership. Increase funding for residents who have successfully created affordable ownership opportunities through limited-equity cooperatives and to support tenants seeking to use the Tenant Opportunity to Purchase Act to purchase their buildings. | The mayor proposed no funding. | The Council maintained the mayor’s budget. |
| Set aside 30 percent of the HPTF for the preservation of existing affordable housing. Make the one-time preservation set-aside in the FY 2026 budget into a permanent 30 percent preservation set-aside. Allocate approved contingency funds for preservation in FY 2026, including $10 million for HPTF and $1 million for the Housing Preservation Fund. | The mayor did not set aside funding for preservation, nor meet the other asks. | The Council’s budget included the “Housing Production Trust Fund Amendment Act of 2026,” which requires 15 percent of HPTF funds in FY 2027 to go to preservation of affordable housing. They failed to meet our other asks. |
| Allocate $17.3 million to the Local Rent Supplement Program (LRSP) to improve housing affordability for residents with extremely low incomes who are on DC Housing Authority’s (DCHA) waiting lists. This would create about 600 new housing vouchers. | The mayor did not fund new LRSP vouchers. She put existing vouchers at risk by not funding rent increases or the cost of turning over vouchers from households exiting LRSP or other voucher programs to new households. | The Council funded the cost of turning over vouchers but did not add funding for new vouchers for households on DCHA’s waiting lists. |
| Fund 1,260 new Permanent Supportive Housing (PSH) vouchers for individuals experiencing chronic homelessness, annually for three years. For families experiencing homelessness, fund 782 PSH vouchers and invest in Targeted Affordable Housing (TAH), LRSP, and DC Flex. | The mayor failed to fund any new housing vouchers for households experiencing homelessness or exiting Rapid ReHousing (RRH). | The Council did not fund new vouchers for individuals in shelter or living outside. For families exiting RRH, the Council added $4.5 million for 100 TAH vouchers, $345,000 for 45 DC Flex shallow subsidy slots, $2.5 million for 45 PSH vouchers, and $1.1 million for LRSP vouchers. |
| *Add $28.2 million to sustain or turn over 495 locally funded vouchers that DC previously underbudgeted; $9 million to sustain 512 expiring federal Emergency Housing Vouchers (EHVs); and funding for 200 federal Shelter Plus Care (S+C) slots that DC is likely to lose. | The mayor did not allocate funding for any of these programs. | The Council added $28.2 million to sustain the 495 local vouchers. If there is revenue growth later in the year, the budget will allocate an additional $9 million for the federal EHVs. The Council did not allocate funding to sustain federal S+C slots. |
| Fully fund Emergency Rental Assistance Program (ERAP), which helps households avoid evictions by helping to pay overdue rent and legal costs. Also allocate $2.95 million in approved contingency funds for the FY 2026 supplemental budget. | The mayor failed to allocate contingency funding for ERAP in her FY 2026 supplemental budget, and she reduced the ERAP budget to $7 million in FY 2027 from $8.6 million in FY 2026. | The Council maintained the mayor’s budget, except they approved a provision that will allocate an additional $3 million to ERAP in FY 2027 if DC experiences future revenue growth. |
| Allocate $1.75 million to Project Reconnect to prevent homelessness among single adults. This would ensure all who qualify can find alternatives to shelter, such as reuniting with friends and family. | The mayor allocated $850,000 for Project Reconnect and did not meet our full ask. | The Council maintained the mayor’s budget and did not meet our ask. |
| Restore 300 Rapid Rehousing Program (RRH) beds for individuals that Council cut last year and create an additional 100 slots to eliminate the wait list. | The mayor cut the RRH program by $3.1 million, reducing the caseload to 100 individuals. | The Council maintained the mayor’s budget and did not meet our ask. |
| Invest $1.5 million to provide storage space for unhoused individuals so they can keep their belongings in a safe place until they find housing. | The mayor did not meet our ask. | The Council did not meet our ask. |
| Allocate $500,000 for the Personal Needs Allowance (PNA) to improve living standards for chronically unhoused residents who now call DC’s first assisted living facility home. Raising the monthly PNA will improve the ability of facility tenants with Medicaid to purchase essentials such as hygiene products and clothing. | The mayor failed to fund PNA in her revised FY 2026 budget, despite the Chief Financial Officer’s (CFO) approval of contingency funding. She also failed to fund it in her FY 2027 budget. | The Council did not meet our ask. |
| Maximize capacity at the Aston, a non-congregate shelter for individuals, also known as bridge housing. | The mayor did not meet our ask. | The Council allocated $1.6 million to maximize capacity by adding up to 90 beds. |
Inclusive Economy
| DCFPI’s Recommendations | What the Mayor’s Budget Proposed | What’s in the Council-Approved Budget |
|---|---|---|
| Restore local Temporary Assistance for Needy Families (TANF) funding in FY 2027. This would prevent the elimination of TANF’s annual cost-of-living adjustment (COLA), more punitive work sanctions, and a harmful time limit. | The mayor did not meet our ask. Her proposed budget maintained cuts to TANF cash assistance across the financial plan, including eliminating the COLA and increasing sanctions for enrollees who do not meet work readiness requirements. The mayor also accelerated and deepened cuts for families who have received TANF for more than 60 months. Instead of gradually reducing benefits by up to 75 percent from FY 2027 to FY 2029, the mayor’s budget eliminates benefits entirely for these families beginning in FY 2028. | The Council restored some of the TANF cuts by delaying the reinstatement of TANF’s time limit and increased sanctions for not meeting work readiness requirements until FY 2028. However, the Council did not restore funding for TANF’s annual COLA, meaning cash benefits will remain frozen at current levels throughout the financial plan. |
| Fund the reparations taskforce under the Insurance Database Amendment Act of 2023. | The mayor did not meet our ask. | The Council did not meet our ask. |
| Fund a balanced economic growth strategy with emphasis on Wards 7 and 8. | The mayor did not meet our ask. She proposed changes to existing abatements and subsidies that favor developers over DC residents, such as removing First Source requirements from the Vitality Fund and partially removing Certified Business Enterprise requirements from Housing in Downtown. Her proposed expansion of the Supermarket Tax Incentive also failed to specifically support communities East of the River. | The Council did not meet our ask. The Council lowered the Office to Anything abatement cap throughout the financial plan and made some limited investments in Ward 7, such as allocating a small amount of one-time funding for creating a new Main Street on Benning Road. But overall, the Council largely kept the mayor’s unbalanced economic development strategy. |
| *Maintain the current level of paid family and medical leave benefits. | The mayor proposed raiding $95 million from the Universal Paid Leave Fund by eliminating all new medical and family caregiving claims for FY 2027, reducing the maximum number of weeks of leave from 12 to eight for medical leave and six for family caregiving leave after benefits resume in FY 2028, and permanently capping maximum weekly benefits at $1,000 (with no annual inflation adjustments). | The Council restored some of the mayor’s cuts but still permanently reduced the maximum number of weeks workers can take from 12 weeks to 10 weeks for medical leave and to six weeks for family caregiving leave. The Council set the maximum weekly benefit for FY 2027 at $1,100—a decrease from the current maximum of $1,190 but higher than the mayor’s proposed cap of $1,000—and restored annual inflation adjustments. |
| *Improve public transparency of the fines and fees collected by the Department of Corrections. | The mayor did not meet our ask. | The Council did not meet our ask. |
Health Access and Equity
| DCFPI’s Recommendations | What the Mayor’s Budget Proposed | What’s in the Council-Approved Budget |
|---|---|---|
| Provide funding for dental and vision benefits in the Basic Health Plan, now known as the Healthy DC Plan, to minimize harm to those moved out of Medicaid. | The mayor met our ask with one-time funding. | The Council met our ask with one-time funding. |
| Reverse planned FY 2027 cuts to the DC Health Care Alliance, remove the FY 2026 enrollment cap that limits new enrollment to individuals under age 21, restore income eligibility to 210 percent of the federal poverty line, and preserve the current benefit package. | The mayor failed to restore the benefit package in her revised FY 2026 budget, despite the CFO’s approval of contingency funding. The mayor reversed planned cuts to the DC Health Care Alliance program in FY 2027 but failed to remove the enrollment cap or restore the income eligibility to 210 percent. The mayor allocated $3.9 million to restore dental and vision coverage in FY 2027 but did not restore other vital benefits, such as home health services and podiatry. | The Council allocated $38.3 million to remove the enrollment cap and $907,000 to restore other vital benefits. The Council did not allocate funds to restore income eligibility to 210 percent. |
Tax and Revenue
| DCFPI’s Asks | What the Mayor’s Budget Proposed | What’s in the Council-Approved Budget |
|---|---|---|
| Adopt a Business Activity Tax (BAT), or at minimum, require the Office of Chief Financial Officer (OCFO) to conduct a BAT feasibility study. | The mayor did not meet our ask. | The Council required the OCFO to conduct a study to inform the design and implementation of a BAT, but the design of this study—and the description of the BAT itself—falls short of the recommendations DCFPI proposed. |
| Tax DC’s outsized concentration of wealth to reduce wealth inequities and raise revenue by creating a wealth proceeds tax or a progressively tiered surcharge on capital gains, and/or by eliminating the stepped-up basis for capital gains bequeathed at death. | The mayor did not meet our ask. | The Council did not meet our ask. |
| Protect the expansion of DC’s Earned Income Tax Credit and the restoration of the DC Child Tax Credit to support workers’ and families’ economic security. | The mayor did not meet our ask. | The Council did not meet our ask. |
| Eliminate or further delay the planned increase to the sales tax to 7 percent, from 6 percent, in October 2026. | The mayor met our ask by delaying the sales tax increase by one year. | The Council met our ask by maintaining the mayor’s budget. |
| Save tens of millions of dollars by rejecting poorly designed tax breaks that fail to advance racial justice. | The mayor doubled down on poorly designed tax breaks by proposing three new property tax abatements without providing compelling justifications for them. For example, the Workforce Housing Opportunity abatement would only require developers to make some housing units affordable to households at 80 or 100 percent median family income (MFI) even though research shows that the primary gap in DC’s rental housing market is for households below 50 percent of Area Median Income. This abatement will subsidize units likely to be created by the market without government intervention. | The Council retained all the new abatements proposed by the mayor. Although the Council added clawback provisions to Housing in Downtown and Office to Anything during markup, it did not add sunset dates. The Council also did not add clawback provisions or sunset dates to any of the new abatements. |
