Good Afternoon District Dime readers! As you know from Friday’s blog, the second vote on the Budget Support Act (BSA) is tomorrow. Here are some things that we’re tracking before the vote:
Possible $44 million in FY12 Spending Pressures: On Friday, we learned from DC Council sources of two spending pressures for Fiscal Year 2012 that had not been discussed widely to date: $32 million for the Health Care Alliance program to address managed care contracts and $12 million for the school nurse health program. We’re trying to learn some more about these today.
Change in Future Revenue Restoration List: Mayor Gray asked the DC Council to put these two spending pressures at the top of the list of programs that will receive funding if the Chief Financial Officer forecasts additional revenue. The revised Budget Support Act from Chairman Brown circulated Friday reflects these changes.
That also means, unfortunately, that it is going to be much harder to fund the remaining programs on the list. Keep in mind the Council also put two other things at the top of the additional revenue list that were voted on in the Budget Request Act, which was passed May 26, and unlike the BSA, required only one vote: $21 million to move the remaining expenditures from the capital to operating budget and then 50 percent of what’s left in additional revenue toward reserves. DCFPI’s position is that we need to address these new spending pressures, but what was voted on May 26 should otherwise remain intact. The Council should use additional revenue to prioritize restoring programs over lowering taxes.
Out-of-State Bonds: Right now, the District of Columbia is the only state in the country to provide a tax break to residents who invest in municipal bonds outside their state borders. The Council voted on May 26 to eliminate this tax break and join every state in the way it treats out-of-state bonds. Most DC residents that invest in these bonds are not retired, and most have income above $100,000.
Councilmember Jack Evans sent a letter to Chairman Brown discussing his intention to move an amendment that would place restoring this tax break (for current bondholders) at the top of the future revenue list. This means the tax break would come ahead of hiring more police officers, putting money toward building affordable housing, and helping residents with disabilities who can’t work. Once again, DCFPI believes restoring critical programs should be the priority with additional revenue.
Temporary Assistance to Needy Families (TANF): According to a draft circulated Friday, the BSA the Council will vote tomorrow requires TANF recipients to attend a certain percentage of parent/teacher conferences or risk losing their benefits. This provision is procedurally questionable, because it is not germane to the budget, and it was not brought up during the budget season at all — not even during the first budget vote. There also is no evidence to indicate why TANF parents should be singled out in this way, and no evidence that this would lead to better school outcomes. The Council should strike this from the BSA.
Combined Reporting: Mayor Gray’s budget included language to implement combined reporting, widely recognized as the best way to prevent large corporations from avoiding paying taxes to the District. The Council approved this language on the first reading of the budget. Since then, some business groups have promoted several amendments that would weaken combined reporting and the possible revenue gains. Yet according to the draft circulated Friday, Chairman Brown has rejected these proposed amendments. DCFPI agrees with Chairman Brown’s decision and hopes Councilmembers will not try to add these provisions tomorrow, which will weaken our law.
Stay tuned!
