On Tuesday, DC Council Chairman Phil Mendelson released an amended FY 2014 budget that will be voted on today at 10am. The Council’s final proposed budget includes several changes that emerged from Committee mark-up’s in early May, as well as additional funds for many critical programs including: affordable housing, low-income property tax relief, assistance for vulnerable families with significant barriers to work, services for low-income seniors, and funds to help prevent workplace fraud and wage theft.
The amended budget also adopts Mayor Gray’s proposal to repeal a tax on out-state bonds, funds various tax abatements for affordable housing and other developments, and includes expanded property tax reductions for seniors. In addition, the Council proposes to strip the mayor’s contingent revenue list and use any future internet sales tax revenues to reduce reliance on automated traffic enforcement fines.
Several of the notable program increases that were made since the Committee mark-ups, and that we hope the Council will support, include:
- Protections for Vulnerable Families with Children. The Committee on Human Services identified funds to include protections for vulnerable TANF families. The final proposed budget from the Council Chairman used those resources to fund 6 of 7 exemptions identified by the Committee as critical for funding. These protections, which most states offer, give families a break from the 60-month time limit on benefits to give them time to deal with serious issues that interfere with their ability to work such as domestic violence, illness, or caring for a family member with a disability.
- Low-Income Property Tax Relief (Schedule H). Schedule H is a tax credit for lower-income residents when rents or property taxes are high relative to income. However, Schedule H hasn’t been updated for 35 years and has several problems that result in very few residents claiming it. The DC Council’s budget proposal funds improvements to Schedule H that were adopted last year, including: an increase in the income ceiling to from $20,000 to $40,000 next year and $50,000 in subsequent years; an increase in the maximum credit from $750 to $1,000; and provisions that will make it easier for people sharing housing to claim the credit.
- Permanent Supportive Housing (Housing First). PSH provides housing and supportive services to the chronically homeless, who typically suffer from life-threatening health conditions and/or severe mental illness. PSH is cost effective, reducing reliance on more expensive crisis-related services like emergency rooms, psychiatric hospital, and jail. The Council identified a total of $2.2 million to help chronically homeless families, individuals and elderly residents.
- Local Rent Supplement (tenant-based). The Council’s budget includes $1.75 million to provide rent vouchers that will help approximately 120 low-income families obtain affordable housing. While the mayor’s proposed budget includes critical increases to a number of affordable housing programs, the increases are largely focused on the affordable housing production and a substantial share of these units will not likely be available until at least FY 2015. Tenant-based vouchers, by contrast, will be ready to be used immediately in FY 2014.
- Emergency Rental Assistance for singles. The budget includes $500,000 to create a pilot program for emergency rental assistance for singles. Currently, only families with children, elderly residents and residents with a disability are eligible for the program. ERAP is a very effective at preventing homelessness, and the additional funding will help DC’s leaders decide how to best target this assistance on individuals at risk of homelessness.
- Rapid re-housing for singles. The Council’s budget provides $400,000 to offer services to single homeless residents to help move them out of shelter quickly and into housing with supportive services. With federal funding, DC was able to serve individuals through the program during the Great Recession. But little or no federal funding will be available in FY 2014, leaving individuals un-served. Other cities have implemented rapid re-housing programs for individuals with success. (The budget proposed by Mayor Gray provided funds to support Rapid Re-Housing for families, and those funds remain in the Council’s budget.)
- Services for low-income elderly residents: The budget includes a $5 million increase to the Office on Aging, including $3.5 million in operating funds and $1.5 million in capital funds. The increase will fund and additional 16 social workers for lead agencies, additional meals for homebound seniors, and an increased capacity for the Washington Elderly and Handicapped Transportation Service (WEHTS).
- Funds to prevent workplace fraud and wage theft. The Council’s budget will increase staffing to investigate worker abuse and to implement laws that were passed to strengthen workers protections from wage theft.
- Increased funds for the Housing Production Trust Fund. The Council proposes to finance New Communities Projects using income tax secured bonds, rather than relying on the HPTF to securitize the funds. By shifting this funding for New Communities, a long-term project to redevelop four subsidized housing sites into mixed-income communities, the Council’s proposal will make an additional $8 million available each year for core HPTF purposes by 2017.
These Council wide priorities were funded primarily from $11 million of “salary lapse” savings found in 22 different agencies. Salary lapse refers to personnel funds that go unspent due to staff vacancies.
Other major elements of the Councils budget include:
- Funds to Support Non-Profits: The Council kept a proposal from Mayor Gray to create a $15 million fund that will competitively award grants of up to $100,000 to a variety of non-profit organizations. The Council’s budget creates a new name for the fund, the Innovation Fund.
- Removal of the Mayor’s contingent revenue list. The Council removed the Mayor’s list of priority programs to be funded if revenues increased and instead moved to allow the Council to spend up to $50 million of any increased revenues announced in the June revenue forecast. How those funds would be used would be decided by the second vote on the Budget Support Act and included in the final version of the BSA, as long as the revenue forecast is released in time.
Tax abatements: The DC Council’s budget proposal funds several tax abatements, including many affordable housing tax abatements and a property tax abatement for a mixed-use development in Shaw, the Howard Town Center. The DC Council approved the latter tax break last fall, even though the Chief Financial Officer concluded that a tax break was not needed to make the project viable.
- Expanded Property Tax Break for Seniors: Under current law, senior homeowners with income under $100,000 qualify for a 50 percent cut in property taxes. That income limit has not been adjusted in a number of years, as is the case for many parts of the DC income tax. The Chairman’s budget proposal funds the Age in Place Tax Credit Act, which increases the income limit for this tax credit to $125,000 and adjust it for inflation in subsequent years. The practical effect is to provide property tax reductions for seniors with incomes between $100,000 and $125,000.
- Out-of-State Bonds: Mayor Gray proposed’and the Council budget accepts — restoring a tax break on income from out-of-state bonds. That would reverse legislation adopted in recent years to phase out the tax break for investments made starting in 2013. DCFPI pointed out that much of the tax-exempt income in DC is earned by very high-income residents, including some who earn millions from these investments. We proposed phasing out the tax break for wealthy residents while maintaining the exemption for low- and moderate residents. But the Council has proposed allowing all residents to retain the tax break, regardless of income.
- Use of future internet sales tax collections for WMATA. Earlier this year, Councilmember Cheh and Councilmember Graham introduced legislation directing any future sales tax collected from internet sales to be used to end homelessness in DC via a comprehensive plan to be developed later in the year. Internet sales currently are not taxed, but legislation being considered by Congress would allow DC and the states to apply the sales tax to all online sales. The Council’s final budget proposal would instead direct those funds to reduce the city’s reliance on revenues from offset revenues collected from automatic traffic enforcement and safety based enforcement fines.
Check back to the District’s Dime on Thursday for a wrap up of the final FY 2014 budget and results of the budget vote later today.
