What’s in store for the Fiscal Year 2013 budget? Yesterday we got some clues.
Late yesterday afternoon, Chief Financial Officer Natwar Gandhi released the February revenue forecast which informs city leaders on exactly how much money we have to spend. The FY2013 estimate showed that DC will collect $36 million more than was anticipated in the last revenue forecast. This was welcome news, because the additional dollars help reduce an approximately $200 million budget gap to $164 million or so to maintain current services.
The boost in revenue was due to two factors: $23 million more was from the revision of a less severe impact on DC’s economy from federal sequestration’the across the board cuts that were supposed to go into effect after the Congressional Supercommittee failed to reach agreement on deficit reduction’and $13.1 million more resulting from the revenue enhancements put in place last year. The current fiscal year also saw an uptick in revenue’an increase of $35 million’largely due to stronger than expected collections in estate and economic interest transfer taxes.
So what to do with these unexpected dollars? As Gandhi noted, he remains cautious about the future and in fact in the near future, such as FY2014 and FY2015, he sees overall revenue growing more slowly than in the current fiscal year. That means that it would be tough to spend the extra dollars on on-going programs, because when you take the cost of maintaining services into account there may not be the revenue to sustain the spending in future budgets. But it is a reasonable approach, given the large cuts taken in the budget last year, perhaps to use this windfall to fund critical programs that have been hit by the budget ax, such as the Housing Production Trust Fund or TANF. These are programs that had severe cuts in last year’s budget.
Earlier in the day, DCFPI hosted some of the biggest players involved in the FY2013 budget for a preview discussion: Deputy Mayor for Health and Human Services Beatriz “BB” Otero; Deputy Chief of Staff and Budget Director Eric Goulet; and DC Council Budget Director Jennifer Budoff. Both Goulet and Budoff gave presentations that are available here and here. In response to several questions about revenue, Goulet cautioned that he does not anticipate Mayor Gray proposing a rate increase on what’s known as the big three: income, sales and property taxes. He said the Mayor wants to continue to take a balanced approach and would consider additional revenue options. On the cuts side, he hinted that human services would likely see significant reductions.
DCFPI Executive Director Ed Lazere also made a presentation, emphasizing a balanced approach to the budget that included revenue and a more even distribution of cuts. Last year, about two out of three cuts came from housing and human services. And Lazere presented various options for revenue, which are found on page 6 of the presentation. They include the foregoing of spending on “paygo;” applying the income tax to households by eliminating the married filing separately option; and expanding the sales tax to additional goods and services.
Want to see What’s In Store? Catch it on DCFPI’s YouTube Channel.
