District's Financial Woes Reopen Debate on Tax Burden

Maryland, for example, has a gas tax of 23 cents a gallon. If the District matched that rate, the city could raise $4 million in revenue.

Supporters of Graham's so-called millionaires tax, which would raise about $16 million annually, also draw comparisons between Maryland and the District.

Virginia's top tax rate is 5.75 percent, but Maryland has a top income tax rate of 6.25 percent on people with annual income of $1 million. Residents of Montgomery and Prince George's counties also pay a local income tax of 3.2 percent. Virginia has no local income tax.

District homeowners pay lower property taxes than their suburban neighbors on both sides of the Potomac River, according to an analysis by the D.C. Fiscal Policy Institute, a progressive think tank.

According to a 2007 analysis by the Office of the Chief Financial Officer, District homeowners with annual salaries of $100,000 had the lowest overall tax burden compared with those in Montgomery, Prince George's, Fairfax and Arlington counties and Alexandria.

The income, sales, automobile and real estate tax burden in the District that year was $9,072, compared with $9,091 in Fairfax, which had the second-lowest rate.

Ed Lazere, executive director of the policy institute, said "old myths die hard" when it comes to the District's reputation for excessive taxes.

"If you are thinking about how you balance the budget while sparing the local economy, there is a pretty good consensus among economists that raising taxes among high-income folks is probably the best way to go, because it does not tend to affect their consumption," Lazere said.

But Evans said statistics can be misleading. He said that D.C. residents are also socked with secondary taxes and fees, including levies on utilities.

"If you want to compare us to both state and county taxes" in Maryland, then you have "also got to throw in all the other taxes we pay," Evans said.

Instead of looking to taxes, Evans has teamed with Gray to look for cuts in more areas, including the school system.

One idea under consideration is a 2 percent cut, from $8,945 to $8,770, in the basic per-pupil allocation that public schools and public charter schools receive to fund school operations. That would save about $5.3 million. A possible 50 percent cut in the number of summer school slots for next year, from 8,700 to 4,300, would result in a $7 million savings.

Elimination of the ombudsman's office, which has come under heavy criticism by council members and community leaders for ineffectiveness, would take about $360,000 off the books.

The biggest single hit under consideration would be a $17 million reduction in maintenance funds that are included in annual per-pupil allocations. Council members said they want the money to go to the Office of Public Education Facilities Management, which also receives funds for maintenance.

Under the proposal, the council would cut the office's maintenance money and replace it with the $17 million from the schools.

Staff writer Bill Turque contributed to this report.