By Tim Craig
Washington Post Staff Writer
Wednesday, December 8, 2010; 12:45 AM
The D.C. Council approved a city spending plan Tuesday that avoids higher taxes but includes far-reaching efforts to control spending on welfare programs, including a controversial move to start cutting off direct assistance after five years.
On a day that saw public protests at the John A. Wilson Building and sparring among council members over the city's obligation to care for its neediest residents, the council passed a series of amendments to close a $188 million shortfall in the current fiscal year's budget.
The vote is viewed as a warm-up to negotiations in the spring over the fiscal 2012 budget, when council members and Mayor-elect Vincent C. Gray (D) will face a projected $440 million shortfall. And although the council refrained from raising taxes Tuesday, most members agree that the debate to come will not be about whether to raise taxes but on whom and by how much to raise them.
"The District of Columbia is in desperate straits.. . . The Grim Reaper is at the door," said Gray, the council chairman. "There is hard work that needs to be done at this stage to make this city fiscally solvent."
The District has fared better than many other cities during the economic downturn, but city leaders say the slow pace of recovery has caught up with the city as sales and income tax proceeds decline.
As the council refined cuts proposed by Mayor Adrian M. Fenty (D) in late November, Tuesday's budget session offered a glimpse into how Gray would govern as mayor. He will be sworn in Jan. 2.
Gray fended off efforts to raise taxes, and he had money restored for job training, healthy school lunches, early-childhood education and cleanup crews that serve commercial areas outside downtown. The council can make additional changes to the budget when it meets in two weeks.
Gray also showed a willingness to tackle two areas that in the past have escaped the budget ax: money for city schools and the federal-local Temporary Assistance for Needy Families welfare program.
Fenty - along with former schools chancellor Michelle A. Rhee - has been fiercely protective of school funding, but Gray persuaded his colleagues to put $31 million of the system's $758 million annual budget in a reserve fund until school officials can prove that it's needed. Gray said his approach is a sign that he wants to "scrub" the school budget for potential savings in the coming years.
Gray, who headed the city's Department of Human Services in the early 1990s, stunned advocates for the poor by pushing through a proposal to gradually cut welfare benefits for residents who have been in the TANF program for more than five years.
Following the lead of council members Marion Barry (D-Ward 8) and Yvette M. Alexander (D-Ward 7), who suggested that the welfare program needed to be reigned in, Fenty proposed in November a 20 percent cut in the monthly benefit of anyone in the program for more than five years. About 40 percent of the 17,000 city families enrolled in the program have been receiving benefits for more than five years. They receive an average of $370 a month.
But Gray slipped an amendment into the budget that would greatly expand the cuts, which could force thousands of residents off the rolls. Under Gray's plan, starting next year, a recipient in the program five years or longer would lose 40 percent of the monthly benefit, and the cut would grow to 60 percent in fiscal 2013.
Within five years, all benefits would be eliminated for anyone enrolled for more than five years. Gray proposed half of the savings be diverted to job-training programs.
Judith Sandalow, executive director of the Children's Law Center, said Gray's efforts will "harm this city for many years to come."
"Clearly Mr. Gray knows what the harm will be to families," Sandalow said. "He has a lifetime of experience of working with low-income families, so I don't understand why he felt a need to do this."
Council member Tommy Wells (D-Ward 6), chairman of the Human Services Committee, called Gray's proposal "a fairly crude approach."
As part of the welfare reform act signed into law by then-President Bill Clinton in 1996, the federal government placed a five-year lifetime limit on participation in the TANF program. But states and the District are allowed to keep recipients on the rolls longer if they use local funds, as the District has done.
In an effort to restore up to $41 million for TANF and other social service programs, Wells teamed with council members Michael A. Brown (I-At Large) and Jim Graham (D-Ward 1) to push separate proposals to raise income taxes.
Wells wanted to impose a quarter-percent tax increase on residents who make between $75,000 and $150,000. Residents with higher incomes would pay more. Graham and Brown pushed an initiative that would have imposed higher taxes on residents who earn $200,000 or more.
The council voted 8 to 5 to reject both plans, but only after a heated debate during which some members accused their colleagues of not caring about the poor.
In addition to TANF cuts, the measures approved by the council curtail cash assistance for disabled residents and for low-income grandparents who raise their grandchildren and subsidies to help poor families pay their rent.
"People say this is about soaking the rich, but let's be clear, the budget before us soaks the poor," said Graham, who at one point challenged his colleagues to prove that they are not members of the "tea party."
Lynita Law, director of Kids Are US Learning Center Too, a day-care center in Southeast, brought a half-dozen preschoolers to the council meeting. She said she wanted council members to see who would be hurt by a decision to cut $3 million in child-care subsidies for low-income residents.
"If this goes through, their parents who work will have to pay market rates for child care, which they can't afford," Law said.
But Gray and a majority of council members said more time was needed to consider potential tax increases.
"We will certainly come back and look at all of these considerations when we look at the  budget," Gray said. "And when you look at the  budget, a lot of the stuff that may have gotten replaced here now, would have been vulnerable again."
Still, the cuts were a bitter pill for social service advocates to swallow, especially as they watched the council later approve tax incentives for developers and other corporate interests.
"The council has been discussing a $41 million tax break to give it to a national corporation, and in the same breath they are talking about cutting social services," said Lacy Mackley, after a security guard removed her from the chamber for disrupting the proceedings. "They are hurting people and children."
As Mackley spoke, one of the the security guards muttered, "Hmm, that's sad."