New Revenue Goes To Schools, Services
By Eric M. Weiss
Washington Post Staff Writer
Wednesday, May 11, 2005
The D.C. Council unanimously passed a $4.94 billion budget yesterday that boosts overall spending for fiscal 2006 by 18.8 percent, including additional funds for schools and social services.
The spending increase, the largest since the city was run by a financial control board, is possible because of the city's large spending reserves and additional tax revenue. Council Chairman Linda W. Cropp (D) characterized the new budget as fiscally prudent.
"This is a citizen-based budget that has something in it for everyone," Cropp said.
The council included much of what Mayor Anthony A. Williams (D) proposed in March, including $94 million in tax breaks and $500 million in new programs and services, but Williams, in a written statement, said he was concerned that the council was spending most of $40 million in new revenue to "add permanent programs" to the budget.
Of the $40 million in new revenue identified by Chief Financial Officer Natwar M. Gandhi, the council voted to spend $10 million to pay for a new schools renovation program and $19.8 million to avoid the layoffs of 280 teachers and staff in local schools.
The council did not include money requested by school officials to pay for anticipated raises being negotiated as part of collective bargaining, arguing that the school system's budget of nearly $1 billion should cover any raises.
Several members said they voted to spend more money on schools to support Superintendent Clifford B. Janey but were skeptical of the last-minute spending requests and the threat of layoffs.
"They proposed dismissing the [280] positions because they knew that programmatically and politically we wouldn't do it," said council member Marion Barry (D-Ward 8). "The school system is playing games. They should stop that."
The additional spending was allowed by the dramatic growth in city tax revenue, thanks to economic good times and a real estate market on a roll. A majority of the council agreed that the bulk of additional revenue should be spent on social programs and neighborhood investments that were put off during the last 20 years.
The budget includes a provision to increase the homestead deduction, giving homeowners a $211 tax break. But most homeowners' tax bills will increase due to higher property assessments. Council members favoring tax relief had to settle yesterday for promises.
Council members Jack Evans (D-Ward 2) and Phil Mendelson (D-At Large) were assured that if Gandhi certifies additional revenue for fiscal 2006, $21 million would go to easing the burden on taxpayers. The plan would include reducing the property tax cap from 12 percent to 10 percent and cutting the tax rate -- something that hasn't been done since the early 1990s -- from 96 cents per $100 of assessed value to 94 cents.
The council also voted to automatically lower the property tax rate in future years if tax revenue exceed anticipated growth in revenue and spending for a budget cycle. According to Barry, Gandhi has projected revenue growth between 8.7 and 9 percent in the next few years, so there could still be large increases in city spending.
In recent years, the city has had large budget surpluses. Anticipating a 2006 surplus, some council members expect to have money for both tax relief and new spending.
The council also agreed that as much as $21 million of any surplus, after tax relief, will go for additional social programs.
The council also stripped out of the budget Williams's proposal to combat chronic unemployment by dramatically expanding the number of employers required to hire D.C. residents, and compelling city contractors, grantees and others who receive city benefits to pay workers a "living wage" of at least $9.25 an hour.
At the request of city business leaders, Cropp pulled the so-called "Way to Work" initiative from the budget support act and introduced it as a separate bill. A hearing on the measure is set for June 10.
Mayoral spokesman Vince Morris said the mayor was disappointed by the move. But Bob Peck, president of the Greater Washington Board of Trade, said business leaders just want more time to study the proposal.
Staff writers Lori Montgomery and V. Dion Haynes contributed to this report.