This testimony was originally delivered on April 24, 2026
Chairperson Frumin and members of the committee, and committee staff, thank you for the opportunity to testify. My name is Shira Markoff, and I am the Director of Economic Policy at the DC Fiscal Policy Institute (DCFPI). DCFPI is a non-profit organization that shapes racially-just tax, budget, and policy decisions by centering Black and brown communities in our research and analysis, community partnerships, and advocacy efforts to advance an antiracist, equitable future.
The Office of the Deputy Mayor for Planning and Economic Development (DMPED) works with Mayor Bowser to develop and carry out her vision for economic development in the District. That role is more important than ever as District residents face difficult economic conditions, including the highest-in-the-nation unemployment, driven largely by the Trump administration’s gutting of the federal workforce. To shepherd DC through these tough economic times and drive inclusive growth, the mayor and DMPED should focus on growing DC’s economy from the bottom up and middle out and shoring up the financial wellbeing of the workers who power DC’s economy. Instead, DMPED directs much of the resources in its proposed budget to the corporate elite using disproven trickle-down strategies.
My testimony highlights changes that Council should make to the budget to redirect funds from ineffective top-down tax breaks into the hands of workers and vulnerable DC residents. Specifically, I will:
- Assess the full cost of the mayor and DMPED’s expenditures on what they classify as economic development strategies, which go far beyond DMPED’s operating budget;
- Show how DMPED continues to disproportionately invest in disproven trickle-down economic strategies within a budget that puts workers and Black and Latino DC residents last;
- Discuss how years of top-down investments have not improved outcomes for DC’s Black and Latino residents; and
- Provide recommendations for putting some of DMPED’s misguided investments to better use, particularly toward underfunded safety net programs in the Department of Human Services (DHS).
The Full Cost of DMPED’s Expenditures Go Far Beyond the Operating Budget
With DC facing constrained revenue over the next few years, the mayor’s budget proposal would cut most agencies’ spending levels compared to the previous financial plan. Although DMPED would face a cut to its proposed operating budget for fiscal year (FY) 2027, that does not tell the full story. The budgetary impact of DMPED’s economic development strategy goes well beyond its operating budget to include hundreds of millions of dollars in capital projects, tax breaks, and reductions in business fees.
DMPED both develops and administers economic development incentives, which often take the form of property tax abatements. In recent years, DMPED has implemented two abatement programs—Housing in Downtown and Office to Anything (officially known as the Central Washington Activation Project)—to purportedly incentivize developers to convert downtown office buildings to new residential and non-residential uses. In the mayor’s proposed Budget Support Act (BSA) for FY 2027, DMPED would advance three new tax abatements, including for development near certain Metro stations and former federal properties.
DMPED also leads the mayor’s charge to make DC more business friendly. The mayor and DMPED included several fee reduction proposals in the BSA, including decreasing corporation fees and certificate of occupancy fees. All told, DCFPI identified tax abatements and fee reductions totaling $13.8 million in forgone revenue in FY 2027 and nearly $191 million over the financial plan (Table 1). Even if the FY 2028 operating budget for DMPED were to stay flat, the cost of these expenditures would increase by 278 percent from FY 2027 to FY 2028, with continued sizeable annual increases thereafter.
TABLE 1.
DMPED’s capital budget for FY 2027 includes more than $131 million for Capital One arena (plus $40 million in the FY 2026 supplemental) and $42 million for the RFK campus, which together total 58.6 percent of DMPED’s $296 million in capital expenditures for FY 2027. The capital budget also contains an additional $220.6 million for RFK campus redevelopment in FY 2027 outside DMPED’s budget. The mayor and DMPED argue that these costs should be thought of in a separate category from spending pressures in DC’s operating budget, because they are in the separate capital budget. However, capital projects have a significant impact on DC’s overall budgetary bottom line, because DC has to pay annual debt service on the borrowing it incurs for these projects. Generally, for every $13 million in borrowing, $1 million is incurred in annual debt service in the operating budget.[1] Regardless of whether the debt service falls under the Local Fund budget for some capital expenses or outside the General Fund for other expenses that have special purpose revenue, such as the Ballpark Fee to pay for some RFK funding, the fact remains that the mayor and DC Council have made choices to allocate a significant amount of local dollars to the pay for the debt incurred for these large projects.
To understand the full scope of DMPED’s expenditures, it’s also important to bear in mind that DMPED has a history of spending beyond its budgetary authority. The DC Auditor found that DMPED exceeded its Council-approved budget in 13 out of 20 years examined, including spending more than double the approved budget in FY 2024.[2] Given this history, DMPED’s budget proposal should be viewed with a healthy dose of skepticism, as the agency may be looking at its budget as a rough guideline rather than a set amount.
The Mayor and DMPED Are Investing in Disproven Trickle-Down Strategies and Putting Workers Last
The mayor and DMPED are continuing to bank on disproven trickle-down strategies to grow DC’s economy, diverting millions in tax expenditures to attract businesses or spur business activities that typically don’t result in better outcomes for residents. For example, their focus on increasing the sports and entertainment industries in DC—including massive capital investments in RFK stadium and Capital One Arena—are likely to result in mainly permanent low-wage jobs once construction concludes. These jobs, such as food service, cashiers, security, and janitors, typically pay low wages that would not be enough to afford the cost of living in DC and therefore not decrease the need for income supports, such as child care subsidies and housing assistance, to fill the gap.[3]
DMPED wants to significantly ramp up investments in tax abatement programs for developers without demonstrating—at least not through any information released publicly—that these incentives are necessary to achieve the desired outcomes and aren’t instead subsidizing development that may have taken place absent the abatements. In the BSA, Mayor Bowser proposes three new property tax abatement programs—Workforce Housing Opportunity, WMATA Joint Development Properties, and Federal Property Development Tax Incentives. The Workforce and WMATA abatements would cost $12 million over the financial plan, according to the Fiscal Impact Statement (FIS) for the BSA.[4] While the FIS does not provide an estimate for the federal property tax abatement because these properties had not been subject to property tax before, given the extensive footprints of these properties, it is clear that the District would be forgoing a significant amount of potential new property tax revenue through these abatements.
DMPED also plans to put significantly more resources into the Housing in Downtown (HID) abatement program over the financial plan, including increasing the abatement cap eight-fold from $5 million in FY 2027 to $41 million in FY 2028 and 4 percent each year thereafter. This increase is happening despite DMPED conducting no third-party assessments on whether the abatement is primarily subsidizing activity that would have happened regardless of the incentive, nor evaluating the overall impact of the program on DC’s economy.[5]The mayor and DMPED are also proposing changes to HID in the BSA that would weaken requirements for property owners to contract with Certified Business Enterprises (CBEs), which are businesses located in the District and either primarily owned or staffed by District residents. The mayor often touts investments in CBEs under her administration, yet this change suggests that she is willing to put the interests of HID developers above those of DC-based businesses.
While directing significant resources toward corporations and developers, DMPED is simultaneously weakening policies that support DC workers. In the BSA, DMPED proposes stripping First Source requirements from both the Office to Anything (O2A) program and the Vitality Fund, which provides grants to incentivize companies to relocate to or expand within the District. First Source sets requirements for hiring District residents in government-supported projects or contracts above $300,000; for contracts from $300,000 to $5,000,000, 51 percent of new hires must be District residents.
DMPED has not had any take-up so far for O2A, which provides tax abatements for developers to convert downtown office buildings into commercial, entertainment, retail, or other non-residential spaces. DMPED received only two applications as of December 30, 2025, and one of the applicants declined to participate after DMPED conditionally approved it.[6] Instead of admitting that O2A program is an inefficient and ineffective use of funds and redirecting the funds toward a more impactful program, the mayor and DMPED want to change program rules in the BSA to try to entice take-up. In her budget presentation, the mayor presented changes to the O2A program as streamlining the program, when she is just rejiggering a failed program at the expense of District workers.
It is particularly striking that the mayor and DMPED are sinking so many resources into these top-down strategies while the mayor is simultaneously decimating critical safety net programs and worker supports. Among many other cuts, the mayor is severely reducing Temporary Assistance for Need Families benefits, failing to fund any new housing vouchers for unhoused individuals, and cutting Rapid ReHousing for individuals. The mayor proposes eliminating the Pay Equity Fund that boosts wages for primarily Black and Latina women who make up the bulk of the child care workforce. She aims to cut DC workers off from accessing paid leave benefits if they or a loved one has a serious medical condition in FY 2027 and permanently end annual inflation adjustments for paid leave benefits—meanwhile the abatement caps for HID and O2A increase automatically by 4 percent a year. Once again, the mayor is asking DC’s lowest wage workers and most vulnerable residents—who are already struggling to absorb cuts in the FY 2026 budget along with federal cuts to SNAP and Medicaid—to bear the brunt of budget cuts, while funneling millions toward corporate interests.
Trickle-down Investments Don’t Produce Widespread Economic Benefits—They Exacerbate Inequality
Mayor Bowser and DMPED argue that the hundreds of millions of dollars allocated to sports facilities in the capital budget, along with millions more for tax abatements and business fee reductions in the financial plan, are needed to position DC for growth and will eventually result in more revenue available for programs serving residents with low incomes. However, many of these strategies, such as HID and O2A, are unproven, and others are already disproven. For example, the preponderance of evidence shows that football stadiums are not a significant driver of local economic growth.[7],[8]
Years of top-down investments pushed by the mayor and DMPED have not resulted in widespread economic benefits for DC residents. In fact, by multiple measures, DC’s economy is highly unequal:
- The Gini coefficient for DC—which is a measure of income inequality where zero means perfect equality (everyone has the same) and one means total inequality (one person has everything)—was .52 in 2024. This figure is statistically tied with Puerto Rico and New York for the highest in the nation.[9]
- The top fifth of earners in the District receive nearly 55 percent of aggregate household income, while the lowest fifth of earners receive less than 2 percent of aggregate income.[10]
- Black and Latino DC residents have chronically worse outcomes by every employment measure, such as wages, unemployment, and underemployment due to systemic racism.[11]
- In 2024, child poverty spiked by 11.2 percentage points in DC.[12]
While the harm of lost federal jobs to DC’s economy is outside of the mayor’s control, the economic disadvantages facing Black and Latino residents are not new. These are chronic disparities, and the mayor’s policies have not closed these gaps. It’s clear that the mayor’s trickle-down economic strategies have not actually trickled down to DC’s Black and Latino and lower-income residents.
High inequality is not only a matter of unfairness. It hampers economic growth and mobility, and as some research indicates, can destabilize democracies, as the wealthy amass undue power over policy decisions. This means that the highly uneven distribution of income and wealth in DC is a drag on the economy, at the least, and potentially impedes the ability of workers and residents with low and middle incomes to shape their future.[13],[14]To tackle the underlying disparities in DC’s economy, economic development investments in DC need to foster inclusive growth and focus on growing worker, family, and small business income. DC also needs policies that deconcentrate wealth, including improving the way the District taxes its outsized concentration of wealth. Unfortunately, on the whole, this budget proposal does the opposite. It puts hundreds of millions of dollars into tax breaks, stadium construction, and other giveaways to wealthy corporations and developers. And it undercuts programs that are proven to boost workers’ incomes like the Pay Equity Fund (while harming small child care businesses) and help workers weather medical crises like paid leave.
The Committee Should Reallocate Several Wasteful DMPED Expenditures to Help Close Critical DHS Budget Gaps
As the Committee reviews and makes changes to the mayor’s budget proposal, DCFPI urges the Committee to focus the District’s limited resources on proven programs that invest in workers, support the most vulnerable residents, and address economic and racial disparities. Specifically, DCFPI recommends the Committee to consider the following:
- Eliminate the failed O2A program and reallocate funds. Rather than loosening program requirements in ways that harm workers to try to make this wasteful program work, the Committee can pull $27.3 million in tax expenditures over the financial plan from a program that is not working and put it toward proven programs. Potential savings: $27.3 million over financial plan.
- End new HID approvals and reallocate funds. HID will cost the District nearly $133 million in tax expenditures over the financial plan at the current abatement cap levels, even though DMPED has not given proof that this program is needed or cost effective. While not all that money can be recouped, since DMPED has already approved some abatements for future years, pausing new expenditures under HID could save the District a significant amount of money. Potential savings: at least $48 million over financial plan.[15]
- Remove the WMATA Joint Development Properties abatement from the BSA. The mayor is trying to create a new policy through the BSA without providing a full rationale or explanation of its merits. Council should thoroughly vet this proposal to determine if it is an effective and cost-efficient use of limited resources that will spur inclusive economic growth before allowing it to remain in the Committee budget. The public should also have the opportunity to debate its merits once the mayor shares more information. Potential savings: $3.1 million over financial plan.
- Strike proposed fee reductions from the BSA. The proposed reductions to corporate fees in the BSA are small compared to the cost of doing business and are unlikely to impact companies’ bottom lines or decisions around doing business in DC. For example, the cost for a corporation to change its registered agent would drop by only $15 from $50 to $35. Despite the minimal impact for businesses, all the fee reductions in the BSA would cost the District $12 million over the financial plan. Potential savings: $12 million over financial plan.
Making these changes could free up a total of $90.4 million over the financial plan, which can be used to close gaps in the budget, particularly in critical DHS safety net programs.
DCFPI also urges the Committee to closely examine two other BSA subtitles: the Supermarket Tax Incentive Amendment Act and the Workforce Housing Opportunity Amendment Act. Before putting an additional $6.6 million toward the supermarket incentive program, the Committee should determine if the proposed changes are well targeted and would increase grocery store access East of the River, or if they would sink more money into a program that has failed for years to adequately address grocery store deserts. Although the District needs more affordable housing, it is unclear if the Workforce Housing Opportunity tax abatement is well designed and targeted to achieve that end. The abatement only requires developers to ensure that 20 percent of units are affordable to households at 80 percent of median family income and 20 percent of units are affordable to households at 100 percent of median family income, rather than increasing the number of deeply affordable units.
DC will never achieve transformational growth by doubling down on ineffective, inequitable, and disproven economic development strategies. We urge the Committee to redirect millions in DMPED’s trickle-down tax breaks and fee reductions toward urgent safety net gaps in the DHS budget or to other Council committees to reverse significant reductions, such as in early education and housing programs. We also urge the Committee to push DMPED to rethink its economic growth strategy and invest instead in inclusive economic development strategies that will grow DC’s economy from the bottom up and the middle out.
Thank you for the opportunity to testify. I am happy to take questions.
