The planned cuts worried advocates of social service programs, which have already been reduced in recent years. Meanwhile, the business community was readying to push back on Gray’s plan to raise the parking-garage tax to 18 percent from 12 percent and to require multi-state corporations to report all income when filing taxes in the District. Both actions would generate nearly $40 million in revenue, according to the proposed budget. Gray is scheduled to meet Saturday with business leaders.
Gray is also proposing a change to the way employers are required to withhold city income taxes, by no longer accounting for standard deductions when calculating withholding rates. The measure is expected to generate nearly $41 million in fiscal 2012, but much less would be collected in subsequent years.
The average District resident would see an additional $160 withheld yearly from paychecks under the proposal, according to the office of the chief financial officer. The withholding change would not otherwise affect taxpayers’ total liabilities.
No one was completely satisfied Friday, though.
Council Chairman Kwame R. Brown (D-At Large) said he would not vote for Gray’s budget as it stands, and he would be “very, very, very unlikely” to support any income tax increase.
Although Gray appeared to strike a balance between cuts and tax and fee increases to help close a $322 million budget gap, the reductions targeted social services, said Ed Lazere, executive director of the D.C. Fiscal Policy Institute. The $113 million accounts for 60 percent of the $187 million in proposed cuts, according to the budget proposal. Health and human services represent about 26 percent of the budget, Lazere said.
And the cuts appear to be at odds with Gray’s goals of improving education. Children cannot learn “if families are put under stress,” Lazere said. Public education would see an $18 million reduction, though no layoffs are planned under the budget proposal.
Council member Jim Graham (D-Ward 1) balked at planned reductions to the Temporary Assistance for Needy Families (TANF) and the city’s interim disability assistance program, which provides pending recipients of Social Security with local assistance until they are approved.
But Graham agrees with increasing the parking garage tax, which he said has not been changed in three decades. With about 60 percent of consumers coming from outside the city, parking garage taxes could be the closest the city could come to a commuter tax, which is prohibited by Congress, he said.