If nothing else, the D.C. FY 2016 budget reflects the urgent need for our work. Mayor Bowser’s first budget seeks to close a revenue gap with regressive taxes that hurt low-income communities without asking for any sacrifices from the wealthiest individuals and corporations.
In addition, the mayor’s budget uses funding for homelessness services as a “progressive” smokescreen to hide inadequate spending on housing and continue a clearly failed approach to “job training.” In short, the mayor’s budget keeps the District on the track it has been for the past decade—rapid gentrification and growing income inequality. Further, despite the unprecedented attention on unjust police practices in the United States, this budget continues to fund the broken model of militarized policing.
You will find below our take on the FY 2016 budget, broken down into sections. We touch on some of the major areas of the budget and also some of our ideas on what the Council can do to not just remedy this budget but to take real steps to actually solve the problems we face.
The mayor’s plan seeks to raise revenue through cuts and taxes. On the tax front, the mayor is proposing to increase the sales tax from 5.75 to 6 percent. Sales taxes are of course regressive, so even though this is a “modest” rise in tax rates, it will be much more significant for low-income households.
Most crucially, this tax increase is not necessary. The easiest way to solve this problem would be to roll back the $27 million in cuts to the franchise taxes from last year that most benefited the wealthy. Other sources of funds for this purpose could be:
- $8.8 million in assets sales devoted to the corporate giveaway at McMillian Park, which is still under a legal cloud
- $9 million slated for the street car project
- $2 million from the street car-related H St. Bridge project.
The impact of the sales tax increase is even clearer because the budget does not propose any higher taxes on the wealthy. This speaks to a much broader issue: The District’s tax code is far too regressive and lets significant amounts of corporate tax revenue flow out of D.C.
The approach by Mayor Bowser to tax policy is fully in line with the general thrust over the past year, with the tone being set by the Tax Revision Commission, a government-sponsored commission heavily weighted toward the corporate world that not surprisingly recommended lower taxes for the richest people and corporations. Last year they voted to amend D.C.’s very regressive tax code in a move that even the TRC admitted would reduce revenue—this reduction passed at the Council-level.
At the end of the day, the goal is to slow the growth of the budget not based on actual needs and means but by fiat, to force the District into a fiscal crisis that will mean budget cuts to “slow down growth in the budget” and to set the stage for significant assaults on pensions of public-sector workers.
In other words, it is an attempt to create a manufactured revenue crisis purely to benefit the wealthiest people and businesses. In reality, there is plenty of money: In 2012, those with incomes over $1 million had $5.3 billion in taxable income; those making more than $100,000 have $15.3 billion in taxable income. Further, there are roughly 3,000 businesses with over $5 million in sales that pay the minimum tax—$1,000—in what is clearly a mass exercise in tax avoidance by businesses with plenty of cash to afford skillful lawyers.
The Council needs to immediately scrap the sales tax increase. They could very easily find the money, as indicated above, and should do so immediately.
Mayor Bowser’s most notable housing initiative that is highly touted in this budget is to fund the Housing Production Trust Fund with $100 million, an amount that has historically created just around 1,000 units per year This is woefully inadequate. There are roughly 60,000 families who live at or below 30 percent of the Area Median Income and 71,000 on the public housing waiting list.
This actually understates the need, as it doesn’t count the tens of thousands facing serious burdens on their ability to pay rent because of the very high housing costs as literally thousands of market rate units come on line each year and “affordability” is defined in such a way that many units called “affordable” are not.
At the end of the day, affordable housing funds are not only inadequate, but the District’s policy of leaving all affordable construction to the market means the problem actually increases each year because of the ratio of market-rate to affordable units.
However, these funds can be augmented this year.
First and foremost, the office of the Deputy Mayor for Planning and Economic Development (DMPED), the agency that facilitates much of the gentrification in the District, is seeing a $10 million increase from FY 2014. We feel that the District’s entire development strategy is vastly flawed (see here) and that this increase is unjustified and likely will facilitate further policies that displace the low-income and see giveaways to developers. . This is made completely clear when you see that two DMPED employees are being shifted to bolster the staff working on “economic development financing.” The $10 million increase for DMPED should be sent to the HPTF.
The mayor’s budget proposes $2.2 million in cuts from the District Department of Housing and Community Development’s property acquisition and disposition budget. $18 million from the street car-related H St. Bridge project should be repurposed to restore the cuts and augment the budget in what could be a key tool to increase our affordable housing stock.
As part of generalized budget cuts across the government, the mayor’s budget cuts are seeking to push through deep cuts in program monitoring at the District Department of Housing and Community Development—11 positions are cut from contract compliance and one from homelessness prevention compliance. Further, while the Portfolio and Asset Management portion of DHCD saw an increase, the budget still projects just half of the required financial reviews being completed. This speaks to a deeper problem of enforcement in the agency and makes it no wonder that developers consistently game the system in affordable housing.
This is amazing considering the tip-of-the-iceberg corruption that DHCD was involved in, as revealed by Justice First and the admission by their own director that DHCD had done a poor job making sure it actually met its legal obligations regarding the disposition of funds from the Housing Production Trust Fund. If anything it seems DHCD needs more monitoring, not less.
Clearly, given the double-digit unemployment East of the River and our status in the top five most unequal cities in America, creating jobs and improving wages should be a major priority for District government. The current approach, which centers on the Department of Employment Services, is massively flawed. While the entire system should be junked, that is outside of the scope of the current budget process, so we offer these observations and recommendations.
The number of administrative law judges and related personnel has been vastly inadequate to meet thesheer volume of wage and worker protection complaints, rendering enforcement entirely ineffective. The Office of Administrative Hearings received a paltry $81,000 increase in this budget. Labor Standards offices overall actually lose one employee! The $5.2 million increase related to allowing young people aged 22-24 to participate in the Summer Youth Employment Program is clearly poorly spent. It is crucial that young people in that age range make meaningful contact with employers, which SYEP does not do well. The whole proposal feels like a smokescreen for the lack of job opportunities available for younger Black residents who have the greatest trouble becoming employed.
Clearly, the $5.2 million dollar expansion of SYEP should be repurposed to address the reduction concerns above. Helping to monitor compliance with First Source and all workforce programs, making it easier for businesses to hire District residents and reducing the massive backlog in labor rights cases will have a much more significant effect in improving the labor market for the most affected.
Black Lives Matter
The mayor is proposing $2.9 million in funds for 48 new police officers. Justice First is supporting the call by the DCFerguson movement for these funds to be repurposed for community-led security and restorative justice efforts. The strategy of increasing police presence to address social ills is not only ineffective, but highly threatening to our communities, particularly those who already suffer constant harassment and occupation of their neighborhoods by law enforcement.
As such, we believe the time is right to try something new. As close as Baltimore and as far as Brazil, communities across the Western Hemisphere are creating new, community-led initiatives to reduce violence and ease re-entry. In Baltimore, the “Safe Streets” program has been widely credited with having a significant impact on decreasing community violence by employing “violence interrupters” who mediate disputes in “high-crime” areas, including many where one or both parties are armed. In one neighborhood, Safe Streets reduced murders by 56 percent! Unsurprisingly, cities like Richmond, California, and New York City employ similar programs.
We are calling on the D.C. Council to appropriate that $2.9 million dollars for similar initiatives.
This is simply a small summary of how money could be re-purposed to help promote key human rights needs without actually raising a dime in new revenue. However, this is still extremely limited, in particular because the structure of the government and its revenue raising formula is so.
For instance, as noted above, a significant amount of revenue from wealthy corporations and individuals slips out of our grasp due to a regressive tax code and pro-business loopholes.
Secondly, the District’s “job training” is based not off of the jobs that are actually available or will become so, but giving away large sums of money to “training” programs who do not actually train.
These examples are just a tip of the iceberg. If we really want a D.C. for the people, we need to move aggressively to build a political movement focused on people’s needs and not corporate greed.