Some members of the D.C. Council are sending out signals that they will consider higher taxes or fees to help close a $666 million revenue shortfall over the next two years.
The latest council deliberations on the budget are just now getting started but members hope to approve a new spending plan next Friday.
At a council hearing this afternoon to hear testimony from Chief Financial Officer Natwar G. Gandhi and City Administrator Neil O. Albert, council members began to offer clues on their strategies for balancing the budget.
Council Chairman Vincent C. Gray (D) said the revised budget submitted by Adrian M. Fenty (D) does not do enough to address the District's long-term fiscal challenges. Gray said Fenty is counting more than $100 million as one-time revenue, even though those programs are not likely to be eliminated in fiscal year 2011 or 2012.
"All of my colleagues agree it is prudent to address the problems now and not push the problems off to some later date," Gray said.
Later, Gray made it clear some taxpayers may be asked to pay more to prevent deep cuts to some services. "I intend to look at revenue enhancements as well as expenditure cuts," Gray said. "This council is up to meeting the challenges before us in a responsible way."
Council member Jack Evans (D-Ward 2), chairman of the Finance and Revenue Committee, will likely be an obstacle to any effort to raise taxes or fees. Evans said today spending cuts are the only way to meet the District's revenue challenges.
"It is incumbent on us to identify, not one time money, not tax increases, but identify expenditures that go out into the out years," Evans said.
Council member David A. Catania (I-At large) said he also wants to focus on spending. But Catania appears to be leaving the door open on taxes and fees.
"It is the predictable trajectory of this government to tax their way out of their problems instead of looking at the spending side," Catania said. "I think there will be some of both, but my focus will be on the spending side because I don't think we can tax our way out of this problem...If we end up with more tax increases than spending reductions, we will have failed."
Council member Marion Barry (D-Ward 8), however, said its not practical to balance the budget through spending reductions.
"I don't believe there is any way we can cut our way out of this budget, if we cut this much, it believe it will cause a revolution," Barry said.
So what tax or fee increases could be on the table?
Council member Jim Graham noted today that he still has a proposal to raise income taxes on the wealthiest households. Graham's proposal would set an 8.9 percent tax rate on people who make more than a half-million dollars. The current top rate is 8.5 percent, and by raising it, Graham said some social programs could be spared from deep budget cuts.
"As we craft a new set of priorities in the light of the serious budget shortfall we are facing, I think we need a special consideration for those who need governments help the most," Graham said.
Council member Tommy Wells (D-Ward 6) also appears ready to explore a tax increase. Wells asked Albert why Fenty hasn't considered an increase in the 20-cent a gallon gax tax. Wells noted that Maryland has a 23.5 cent a gallon gas tax.
"My concern is we will look at cutting subsidies for grandparents who take care of grandchildren, but at the same time we are not looking at revenue enhancements areas like a gas tax," Wells said.