A major element in Mayor Fenty’s proposal for closing DC’s recently announced budget shortfall includes budget cuts that fall heavily on programs affecting DC’s low-income residents – the very residents that are struggling the most during this economic downturn.
Cuts to programs affecting low-income residents total $52 million – more than half of the $99 million in proposed cuts. Yet these programs only make up about 30 percent of DC’s budget. In addition, the low-income cuts are more than three times as large as the cuts to any other area of the budget (see figure 1).
What’s on the chopping block? Rental assistance, neighborhood economic development, adoption subsidies, and financial assistance to grandparents taking care of grandchildren, just to name a few. Some of the deepest cuts were made to DC’s Temporary Assistance to Needy Families (TANF) program – a program that provides financial assistance to low-income families with children – and to adult literacy and workforce development, areas of the budget that have long been overlooked and underfunded in the District. With the large increase in DC’s unemployed residents – nearly 15,000 in just one year – and the increased demand for public assistance, cuts to these programs will be particularly painful for DC’s neediest families.
It’s a tough job to balance a budget in the midst of an economic downturn. DC’s revenue collections are down, but because of the economic downturn, the need for assistance is rising. So how can officials create a balanced budget that doesn’t rely disproportionately on cuts to programs for low-income residents?
Part of the solution is using DC’s rainy day fund – a $330 million fund that can be used for budget shortfalls – and fixing the onerous payback rules which require us to replenish what we take out within two years. The Mayor has proposed using $125 million of the rainy day fund, but hasn’t addressed the payback rules.
Another part of the solution is raising revenues. DC’s budget shortfalls are almost entirely a result of falling revenues from the economic downturn – not from increased spending. The Mayor’s proposal only includes one $7 million revenue increase. This solves just five percent of the FY 2010 budget gap. A fairer approach would be to balance revenue increases with expenditure cuts.
Relying on these principles can help DC officials create a balanced budget that protects the safety net for DC’s most vulnerable residents.
