A budget bill set to be approved by the D.C. Council Wednesday will include a cut to the city’s sales tax, representing legislators’ first efforts to roll back tax increases made four years ago when the economic crisis decimated government revenues.
The cut in the general sales tax, from 6 percent to 5.75 percent, was included in a draft of budget legislation issued by Chairman Phil Mendelson’s office late on Tuesday. The tax cut, as well as $50 million in new spending proposals, was made possible by a $92.3 million addition to fiscal 2014 city revenue estimates announced Monday.
The council originally voted to increase the sales tax to 6 percent in the summer of 2009, as city leaders wrestled to close a $660 million shortfall over the two coming fiscal years. The hike was intended to sunset in fiscal 2012, but Mayor Vincent C. Gray (D) proposed continuing with the higher rate, and the council assented.
Since then, the city’s economy has rebounded and government revenues have grown mightily. The 2012 fiscal year ended with a $417 million surplus over projected revenues of roughly $6 billion, and the latest revenue estimates indicate no slowdown is expected soon.
The tax cut is expected to reduce city revenues by $19.8 million in 2014, and the draft legislation carves out another $18 million for future tax cuts expected to be proposed by the city’s Tax Revision Commission in the coming months. But those figures are outweighed by $50 million of new spending initiatives made possible by the revenue upgrade.
They include several initiatives proposed by Gray — such as an expansion of early childhood education and more money for senior programs. But they also include several pet initiatives of council members, such as free Metro fares for students — pushed by Muriel Bowser (D-Ward 4) — keeping the Circulator bus system fares at $1 a ride — a priority of Tommy Wells (D-Ward 6) — and more arts funding — a frequent wish of Jack Evans (D-Ward 2). (You might recall those three have something in common.)
Not on the list: major expansions of education funding including the $43 million effort proposed by David A. Catania (I-At Large) and Marion Barry (D-Ward 8) or the $23 million in new spending proposed Monday by Gray. Instead, each gets a slice of their full request: $4 million for a Catania-backed School Technology Fund, and $2.8 million for a Gray-requested project to update the D.C. Public Schools’ student information computer system.
Here’s the spending list in full:
• $11 million to expand early childhood education programs;
• $2 million to increase grants to organizations serving seniors;
• $1,985,000 to expand school-based mental health services;
• $3.1 million to offer a 100 percent Metrobus subsidy for students;
• $797,000 to expand the Metro subsidy for students from 18 to 21 years old who are still attending high school;
• $4 million for a Schools Technology Fund, to be distributed to D.C. Public Schools and charter schools on a per-pupil basis;
• $2.8 million to fund the upgrade of the DCPS student information computer system;
• $4.5 million to increase grants for the arts;
• $4 million to expand adult literacy and career and technology education programs;
• $1 million for University of the District of Columbia “accreditation activities”;
• $2 million to be deposited in the Film DC Economic Incentive Fund;
• $1.6 million to build a new field and fence at Dwight Mosley/Taft Recreation Center;
• $1 million to improve the Shaed Elementary School field;
• $3 million to enhance the Local Rent Supplement Program;
• $421,000 to eliminate a previously contemplated fare increase for the D.C. Circulator;
• $6.3 million for the renovation of UDC’s campus at the former Bertie Backus Middle School;
• and $480,000 to fund a report on speed cameras, including an analysis of each camera’s “nexus with safety.”