Chairman Evans and members of the Committee, thank you for the opportunity to speak today. My name is Ed Lazere, and I am the executive director of the DC Fiscal Policy Institute. DCFPI engages in research and public education on the fiscal and economic health of the District of Columbia, with a particular emphasis on policies that affect low- and moderate-income residents.
DC law already exempts from theaters from property taxation, providing an explicit exemption for “Buildings owned by and actually occupied and used for legitimate theater, music, or dance purposes” (DC Code, Section 47-1002(19)). Bill 18-204 would extend a property tax exemption to residential properties owned by Studio Theatre, in addition to exempting them from recordation tax on the properties, which have a combined value of more than $3 million.
The need for a specific bill for this purpose suggests that housing owned by theaters does not automatically qualify for the current theater property tax exemption.
The DC Fiscal Policy Institute believes it is legitimate public policy question to consider supporting the arts by providing property tax exemptions for housing provided to theater employees. But we oppose providing this exemption on an ad hoc basis to one theater. If this is a legitimate policy for Studio Theatre, it also should apply to other theater companies. Indeed, adoption of this bill could lead other theaters to seek their own exemption. Thus, this bill, if adopted, should be a tax exemption for housing used for theater employees, with explicit rules for what is included and what is not, rather than as special bill for Studio.
Moreover, I encourage the Council to hold off adopting this bill until it identifies a funding source. The DC Council has rightly focused in the past year on eliminating laws that have been passed without a funding source. DCFPI believes that requiring a bill to be paid for when it is adopted is an important part of making sure that the bill in question is a real priority for the Council. It is simply too easy to vote for a bill that is unfunded and subject to inclusion in a future budget. Voting for such measures is cost-free, and Council members can say that they are not really voting for the bill because it won’t be implemented based on that vote. Yet passing any bill – even an unfunded one – may give the bill’s beneficiaries an expectation that the bill will ultimately be funded, particularly when there is a targeted beneficiary such as in bill 18-204. It would be far better to require a funding source to be identified before a bill is adopted, both to ensure that the Council really is expressing a priority for it and so beneficiaries will clearly understand that adopting the bill means it will be implemented.
Thank you for the opportunity to testify. I am happy to take any questions you may have.