On Tuesday, The DC Council cast the first of two votes on their fiscal year (FY) 2021 budget, which moves the District’s fiscal policy and investments in the right direction. The Council budget would raise over $61 million—including $26 million from amendments—to boost funding for vital programs and services, but it would still fall short of what these unprecedented times require.
DCFPI applauds the Council for rejecting wasteful corporate subsidies and slightly increasing estate taxes for the wealthy to help meet the spike in the community’s needs that have emerged from the pandemic, including affordable housing, school-based mental health supports, and homeless services. Yet, we are in the middle of a once-in-a-lifetime crisis that requires bolder revenue solutions to meet the enormity of our challenges. We’re disappointed that the Council failed to approve very modest personal income tax increases on well-off DC residents, further scale back the police budget, and put forward or approve bolder revenue changes.
The DC Council will give final approval to the FY 2021 budget at the end of the month. We’re calling on Councilmembers to build on these improvements and address the shortcomings that remain—particularly funding for child care centers to stay afloat and reopen safely. Some of the most meaningful changes that the Council approved after the markup budgets are described below.
Revenue Changes
To better meet immediate needs resulting from the pandemic as well as long-term needs, the Council budget would raise $61 million in the next fiscal year by:
- Rejecting corporate tax giveaways by scaling back nearly all of the ineffective Qualified High Tech Companies tax breaks (saving $28.2 million) and delaying an unwarranted income tax break for publicly traded corporations (saving $7.4 million). Total savings would be $35.6 million in FY 2021.
- Strengthening the city’s most progressive tax by lowering the exemption threshold for the estate tax to $4 million from $5.6 million, raising nearly $1.8 million in FY 2021.
- Imposing a 3 percent sales tax on the sale of advertisements and personal information, raising $18.4 million in FY 2021.
- Raising the motor fuel tax to 28.8 cents from the current effective rate of 23.5 cents per gallon effectively immediately and raising the tax again, to 33.8 cents per gallon, in FY 2021. Thereafter, the tax rate would grow with inflation. Total new revenue would be $5.56 million in FY 2021.
The Council voted down an amendment from Councilmember Allen that would have raised high-end personal income tax rates, making well-off DC residents pay more of their fair share of taxes, despite 83 percent of the city’s voters supporting this approach. On average, the additional cost to residents with $350,000 in taxable income would have been $125 a year, which amounts to about the same cost as two espresso drinks a month. (See how each Councilmember voted here.)
Early Education
The DC Council FY 2021 budget would:
- Provide $5 million in a mix of non-recurring and recurring funding to continue the District’s child care subsidy program at FY 2020 levels.
- Add $1.4 million to support and enable child care providers across the city afford to implement new health measures and safety guidelines. However, the Under 3 DC Coalition (U3DC) called for at least $10 million in grant funding to meet these needs to keep children, providers, and educators, safe.
- Fail to provide sufficient stabilization funding for child care providers who are struggling right now to afford rent, personal protective equipment, cleaning supplies, and classroom modifications that are needed to reopen safely. UD3C is calling for at least $10 million in emergency stabilization grants for child care businesses but, to date, no budget allocations from the Mayor or Council have been put toward this ask. The Council approved legislation separate from the budget that could partially address this need, but it still awaits action from the Mayor to make this spending priority real.
- Invest $900,000 for early literacy grants that improve the reading outcomes of young children.
PK3-12
The DC Council FY 2021 budget would:
- Authorize District’s adult and residential public charter schools’ annual UPSFF payment to be based on the projected enrollment rather than the October audit. This would scale back an earlier proposal for all charter schools to be paid based on projected enrollment, saving the District millions of wasted dollars.
- Provide $4.1 million to support the expansion of school-based mental health, meeting advocates’ ask.
- Redirect $4.1 million intended for school security guards for DCPS for investments in the social and emotional learning of students.
- Revoke the Metropolitan Police Department’s (MPD) management of DCPS’ school security contract, giving that responsibility to DCPS.
Homelessness
The DC Council FY 2021 budget would:
- Increase the Emergency Rental Assistance Program by $6 million. Combined with the $1.26 million added during markups, this would be just over half of the $12 million increase that advocates called for.
- Add $600,000 for 14 transitional housing units for LGBTQ youth.
- Add $450,000 to street outreach programs. Combined with the $1.6 million added during markups, this would fully meet the need.
- Add $2 million for 68 Permanent Supportive Housing (PSH) units for homeless individuals, bringing the total new units to 214. This would fall far short of the 586 units that the District added last year.
- Increase the PSH budget for families by $2 million. This would add approximately 53 units, bringing the total number to 107, compared to last year’s total of 180 units.
- Add $1.5 million for 60 units of Targeted Affordable Housing for families—less than one-third of what was funded in FY 2020.
Affordable Housing
The DC Council FY 2021 budget would:
- Add $25 million for public housing repairs in the capital budget for a total of $50 million and no further funding on top of the Mayor’s proposed $15 million in FY 2022, falling short of advocates’ ask of $60 million for both years. The Council voted down an amendment that would have moved money from the streetcar project—a non-pressing need in the middle of a pandemic—to public housing repairs.
- Allocate $5 million of local matching dollars for the federal Community Development Block Grant to leverage $88 million in federal funds through HUD’s Section 108 program, which provides low-cost, flexible financing for development. The funds would be used for specific projects or to launch loan funds.
- Restore $5 million for project-based Local Rent Supplement Program (LRSP) to support approximately 258 new units of housing for households earning less than 30 percent of area median income to meet a statutory requirement.
- Allocate $1.05 million for tenant-based LRSP for 43 new vouchers for special populations including 18 for returning citizens, 15 for seniors, and 10 for seniors who identify as LGBT.
- Add $1.4 million for tenant vouchers for families with children on the DCHA waitlist.
- Reauthorize rent control for ten years. Councilmember Nadeau introduced but later withdrew an amendment to remove the reauthorization from the Budget Support Act because of the ongoing public debate about the need to strengthen the laws.
- Allocate an additional $1.07 million for the Housing Preservation Fund and $1 million to the Office of Victim Services and Justice Grants for a new pilot program for housing for returning citizens.
Inclusive Economy
The DC Council FY 2021 budget would:
- Add $9 million to the cash assistance program for excluded workers, $14 million in total when combined with the $5 million that Events DC approved in April. This would still be $16 million short of advocates’ $30 million request.
- Add $6.6 million to improve the recertification process for Alliance healthcare benefits. Rather than requiring recipients to recertify in person every six months, this allows them to recertify by phone, making it much easier to keep benefits.
- Invest $2.19 million in the remaining provisions of the I-77 repeal/Tipped Wage Worker Fairness Amendment Act of 2018.
- Add a total of $6.2 million for grants, programs, and services that support disadvantaged enterprises and foster inclusive growth.
Other
The DC Council FY 2021 budget would:
- Reverse the $9.5 million cut to the Behavioral Health Rehabilitation Program at the Department of Behavioral Health and add $300,000 for community-based mental health responses.
- Enhance funding for DC Public Libraries by $4.2 million to keep libraries open seven days a week to purchase new books.
- Keep the Judiciary Committees’ reductions to MPD, including an additional $1 million cut to the MPD cruisers project to fund a public Wi-Fi network in two DCHA properties.
