Budget battle that could define a lame-duck year in D.C. politics begins with tense hearing


D.C. officials discuss the city's finances on Monday. (Aaron Davis/The Washington Post)

D.C. Mayor Vincent C. Gray’s final spending plan could force steep budget cuts after he leaves office, D.C. Council members warned Monday, marking a tense start to a budget battle likely to set the tone for the remainder of Gray’s term.

Gray (D), who was ousted last week in the city’s Democratic primary, was challenged by nearly every member of the council about his plan to use more than $100 million of a tax windfall to spend more money next year than the city expects to take in.

Gray said savings from proposed changes to the city’s procurement process would cover the small difference in the $10.7 billion budget. If the District’s recent economic expansion continues, Gray said, tax revenue growth would make the spending a non-issue.

But the council chairman, Phil Mendelson (D), during a four-hour session, said the budget plan set up a potential “time bomb” that could leave the District $200 million in the red — and force 8 percent across-the-board cuts by 2016.

The city’s new chief financial officer, Jeffrey S. DeWitt, backed Gray, saying the city would have time to make adjustments to balance the budget if more revenue or other savings do not materialize. But the council’s first public hearing with Gray since the election made it clear that the budget would be a fight and that little might come easy for Gray during the nine-month lame-duck period. They mayor still hopes to seal deals for a new major league soccer stadium and billions of dollars in other development.

The tension over the administration’s spending plan was magnified in questioning by council members Muriel Bowser (Ward 4), the Democratic nominee for mayor, and David A. Catania (At Large), who is running for mayor as an independent.

Bowser said that Gray’s budget could tie the hands of the “next mayor,” leaving the successor to identify needed cuts and limit the funding for big-ticket projects such as school construction. Bowser said she would work on a measure to increase the District’s use of public-private partnerships, because heavy borrowing under Gray would undoubtedly force the city to look for other ways to fund projects in coming years.

Catania focused on Gray’s two-year plan to cover the higher spending in part with a 50 percent jump in revenue from automated speed cameras by 2016. He called the $50 million in additional traffic tickets “gotcha” fees that undercut Gray’s contention that his budget does not rely on higher fees or taxes.

Gray also faced criticism from council member Jim Graham (D-Ward 1), chairman of the Health and Human Services Committee, who said he would make it the work of his final nine months in office to push the administration to “come to terms” with its need to fix or replace the city’s troubled homeless shelter at the former D.C. General Hospital.

And council member Jack Evans (D-Ward 2), chairman of the Finance Committee, said he was disappointed that Gray’s budget rejected several of the most ambitious and controversial tax changes recommended by a blue-ribbon commission chaired by former mayor Anthony A. Williams.

Williams took on the job, Evans said, on the condition that Gray and the council wouldn’t “put it on the shelf.” Catania jumped in, saying that Gray’s decision to not deal with wide disparities in tax codes between the District and Northern Virginia could cost the city new jobs, especially since the commonwealth has been angling to attract D.C. law firms.

“If we want to look to remain competitive,” Catania said, “we need to get a tax policy that is going to compete with Virginia.”

Gray’s budget proposal for fiscal 2015 includes a new, lower income-tax bracket for residents earning $40,000 to $60,000, a change that would yield $200 in lower taxes annually at the top of the range. Not included are commission recommendations for more dramatic changes in the city’s income and sales taxes.

Gray said he spoke with Williams about not including most of the proposals, and that not implementing most of the commission’s recommendations, which would reduce city revenue, amounted to a “judgment call.”

“I wanted him to understand that this was not a rejection necessarily of all of the ideas advanced by the tax commission, but it was making a judgment call about spending that I thought needed to be done,” Gray said.

Aaron Davis covers D.C. government and politics for The Post and wants to hear your story about how D.C. works — or how it doesn’t.
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