Reasonable people can disagree on important issues, particularly something as complex as the DC budget. But a recent Washington Post editorial on Mayor Gray’s proposed 2012 budget makes me wonder if we are looking at the same document.
The Post editorial board argues that the budget is growing too fast and doesn’t cut enough. The editorial quotes Councilmember Catania’s comment that it is a “joke” to suggest that the budget creates “a world of pain.” The Post also opposes proposed tax increases, particularly a provision aimed at multi-state corporations that often pay little in taxes on the profits they earn in DC.
Yet a DCFPI review of the 2012 budget finds just the opposite ‘ that the overall budget would grow modestly in 2012, and that within it there are numerous cuts that would cause pain to thousands of DC families. The lean 2012 budget follows three years of shrinking resources and budget cuts following the aftermath of the Great Recession. The proposed revenue increases in the 2012 budget are generally reasonable, and closing corporate tax shelters makes particular sense.
A Lean Budget for 2012: The proposed locally funded budget is $6.3 billion. After accounting for new local dollars needed to replace expiring federal Recovery Act funds and $50 million in existing DC employees whose salaries are being shifted from the capital budget to the operating budget, the budget is 1.5 percent higher than in 2011. That is basically an inflation increase. Yet some areas of the budget would grow faster than inflation ‘ for example, funding would grow $100 million beyond inflation for DC Public Schools and Public Charter Schools alone ‘ which means that other areas of the budget face significant cuts.
Painful Budget Cuts: Two of every three dollars of budget cuts proposed by the Mayor would affect housing, health and basic supports for low-income residents. The budget would, for example, eliminate Interim Disability Assistance, which helps residents with disabilities whose application for federal disability benefits is pending. Some 37 states offer this aid, because the wait for federal benefits can be up to two years and because all applicants have disabilities that prevent them from working. Oddly, the Post editorial lauds the elimination of IDA ‘ which helped 2,900 DC residents in 2008 ‘ as reducing “long-term dependency on government support.”
Mayor Gray’s budget also would cut homeless services next year, even though funding is so tight this year that the city is closing its largest shelter for families with children and turning families away. Gray’s budget also would cut eviction prevention assistance — some 2,000 fewer families would get help next year than were getting help at the start of the recession.
For these families, the cuts will mean a world of pain.
Reasonable Revenue Increases: Mayor Gray proposed implementing “combined reporting,” a corporate income tax provision that prevents large multi-state corporations from being able to avoid paying taxes in their DC earned profits. Half of all states with a corporate income tax require combined reporting, and both Dr. Gandhi, DC’s CFO, and Jack Evans, the DC Council Finance Chair, support combined reporting. The Post editorial board does not, worrying about its effect on DC’s business climate, even though it offers no evidence that combined reporting would hurt it. The editorial refers to a multi-state corporation-backed study saying DC has a bad business climate, but common sense suggests otherwise. The Washington Business Journal reported earlier this year that the District is the second most popular city in the world this year for real estate investment among foreign investors.
The Post also seems to oppose Mayor Gray’s proposal to raise income taxes, even though they are relatively modest. The combined effect of these income tax provisions would mean an average tax increase of $391 for families between $200,000 and $350,000, according to the CFO. That is less than one-fifth of one percent of income.
The reality is that the District, overall, is recovering from the recession and that investment in areas such as schools and transportation are making our city a more attractive place to live. The real challenge facing the District is managing the needs of a growing population and making sure that all residents can recover with DC’s economy and can continue to afford to live here and take advantage of the city’s progress. Meeting those challenges requires public investments.
