Panel Hears Pros, Cons of Tax Rise for Schools

Session Gives D.C. Council Members Firsthand Look at Building Conditions

The spacious auditorium was chilly. The ceiling in a nearby bathroom was crumbling.

It was against that backdrop that four D.C. Council members held a four-hour-plus public hearing at Roosevelt Senior High School in Northwest Washington yesterday on a proposal to increase hotel, parking and cigarette taxes to generate $1 billion in revenue over the next decade to repair and modernize the city's schools.

In groups of three and four, speakers sat before the Committee on Education, Libraries and Recreation to support or oppose the measure. Most of the money would be generated by delaying the final phase of an income tax reduction. The rest would come from increasing the city's hotel tax to 15.5 percent from 14.5 percent, the parking tax to 18 percent from 12 percent and the cigarette tax to $1.50 a pack from $1.

William Hanbury, president and chief executive of the Washington, D.C., Convention and Tourism Corp., warned that an increase in the hotel tax would chase away tourists and conventions.

"We're fooling around with a piece of the economy you don't want to be fooling around with," he said, urging the council to explore all options, including ways to extract money from a broader coalition of businesses.

In an alliance not often seen, John Boardman of the Hotel and Restaurant Workers, Local 25, sided with the hotel industry, saying the tax increase could hurt.

"That means my members don't work as much or don't work at all," he told committee members Kathy Patterson (D-Ward 3), the chairman; Adrian M. Fenty (D-Ward 4); Jim Graham (D-Ward 1); and Vincent C. Gray (D-Ward 7).

Boardman suggested that the council tax commercial real estate to generate funds.

But Ed Lazere, executive director of the D.C. Fiscal Policy Institute, said he had researched hotel tax increases in other major cities and found no clear evidence that they chased off business.

Lazere said an increase was "unlikely to change people's minds" about staying in D.C. hotels.

Deferring the income tax break is acceptable, he said, because the city's taxes are now in sync with neighboring jurisdictions, and an increasing number of people are moving to the District.

The committee last week tabled the proposed legislation after several council members complained that the affected industries had not been given a chance to comment.