The chairman of the D.C. City Council's tax committee said yesterday that any tax increases could drive businesses and jobs out of the city. He urged instead "massive budget cuts" to prevent the city from falling into financial disgrace.
"It is time for the District government to stand up and say, There are just some services we cannot afford to provide,'" said council member John A. Wilson (D-Ward 2), chairman of the Finance and Revenue Committee of the council.
Wilson made his remarks on the eve of Mayor Marion Barry's scheduled announcement of a $24.1 million tax and service fees increase package that Barry contends must be exacted to solve the District's current budget crisis.
Without the tax increases, Barry said, as many as 5,000 city workers would have to be laid off. Under the mayor's plan, 1,223 jobs would be eliminated from the city payroll -- including 550 through layoffs -- and city services would be reducted by the most severe levels ever proposed in the short history of the District's elected government.
Wilson said that cuts must be made selectively to avoid wholesale reductions in vital city programs. He also urged a change in the city's bookkeeping system, a comprehensive approach to taxing and better enforcement of the city's current tax laws in order to collect more revenue.
Wilson has been one of the most vocal critics over the last six-weeks of the mayor's handling of the disclosure that the District faces a budget gap now estimated to be as much as $172.4 million.
Earlier this week, the mayor told members of the city council at a closed door meeting that he was considering an increase in the city's property tax rates -- now among the lowest in the metropolitan area -- as a major source of more revenues.
However, Barry told council members then that he had not yet decided which rates to increase. Sources have said that there is sharp division among the mayor and his aides over whether to raise the rate for commercial properties only or to levy the higher taxes against all types of real estate in the District.
One of the proposals under consideration, sources said, would raise the rate for commercial properties from $1.83 to $2.13 per $100 of assessed value. A second proposal would raise that rate to only $2.03, while raising the rate for residences from $1.20 to $1.32 and that for apartment buildings from $1.54 to $1.69.
The higher tax rates would come on top of property assessments that climbed by an average of 23 percent throughout the city this year. If, for example, the 10 cent rate increase were adopted for residential properties, the tax bill for an owner of an average city home, now assessed at $59,100 would increase by $225.
Barry also is considering a new tax on professional and trade services, Council members said that tax could be levied at a rate of 5 percent -- the same rate as the city's general sales tax.
The mayor also is said to be considering a doubling from 1 percent to 2 percent of the city tax levied for recording deeds at the time of property sales and transfer, an increase from 8 percent to 12 percent in the District's hotel tax and an increase in the tax on gasoline.
The mayor is scheduled to formally unveil the tax package at 2 p.m. today.
Last night, Barry discussed his proposals to balance the budget at an open meeting attended by about 85 persons, many of whom were invited from a list of the mayor's political supporters.
Barry said he believed deeper cuts in the budget suggested by Wilson and other members of the council are unrealistic. "My own feeling is that we have gone as far as we can go," Barry said.
Barry blamed much of the District's financial distress on the size of the federal payment authorized by Congress. "If we get a federal payment of less than $300 million next year, I'll be back again talking about the same kinds of problems," he said.
In response to a question about his directive that the D.C. public school system cut its budget by $6 million, Barry replied, "I just don't see how you can justify in a tight budget year keeping the same number of teachers."
Barry told another questioner that his staff had explored the possibility of imposing a gross receipts tax, but had decided that the issue was too complicated to be dealt with this fiscal year. He predicted that eventually a tax on gross receipts would be imposed.
Barry said he had made his decision to close 21 recreation centers in the city because he felt that action would be less disruptive than other possible cutbacks, such as greater reductions in the summer job program for D.C. youths or more layoffs of District employes.