City Council Chairman David A. Clarke lambasted Mayor Marion Barry yesterday for having an extra $41.3 million in city revenues after pressuring the council last year to approve a tax increase, and suggested a simple $25 rebate to each taxpayer might be the best use for the windfall.
"We could have done all the things we wanted to do in the fiscal year 1985 budget without that tax increase," Clarke said to Budget Director Betsy Reveal, who briefed council members on the mayor's midyear financial review and on his proposed revisions in the current budget.
Barry on Monday revealed this year's higher than anticipated revenues and proposed spending the funds on politically popular programs such as summer jobs, public housing repair and drug abuse prevention.
"How about doing something small for the taxpayers? How about mailing every taxpayer a check for $25? It's called a rebate," Clarke said. "I'm concerned that what's happening is that because we're getting more we're spending more."
Meanwhile, council member John A. Wilson (D-Ward 2), chairman of the council's Finance Committee, said he wants to eliminate entirely the city's inheritance tax, which now brings in $21 million a year, because wealthy people are moving out of the city to avoid it.
"We have seen how devastating it can be," Wilson said of the effect of the current inheritance tax. Some people may be moving their assets out of the city, while staying themselves, he added.
Wilson also was highly critical of Barry for his insistence last year that the council had to agree to increase taxes by $32.2 million to balance the budget for fiscal 1985, which ends Sept. 30.
Wilson said at this point he would agree with the mayor's plans for spending the funds, rather than cutting taxes or giving any back this year.
Reveal told Clarke that much of the proposed new spending was for one-time-only costs.
Barry proposed changing the current budget to allow for $5 million more for public housing repairs, $1 million for this year's summer youth jobs, $1 million for filling potholes and added funds for drug treatment, job and health programs for Hispanics and senior citizen nutrition centers.
"We believe the spending we have proposed is required, reasonable and will be supported by the community," Reveal said.
Asked later if he were going to seriously push for the $25 rebate, Clarke said it is "worthy of consideration."
Barry last year proposed a $44 million tax increase, including a 7 percent surcharge on personal income taxes, saying it was necessary to pay for increased spending for schools, job training and social services for fiscal 1985.
The City Council, after a protracted fight with the mayor over the need for higher taxes, eventually included a $32.2 million tax increase in its budget.
It later approved a $31 million package, mainly counting on higher property taxes, and raised vending-machine sales taxes and business franchise taxes.
"We said we were in excess of revenues at the time," Wilson said. "They city administrators always underestimate their revenue projections to be able to give away this Christmas tree . . . . It's a marvelous political ploy."
The inheritance tax proposal, still being developed, would be phased in, Wilson said, and it probably could not be passed in time to affect the current fiscal year's revenues.
The council last tackled the inheritance tax in 1981, when it approved a bill that would have raised taxes on estates of D.C. residents, already an average of 40 percent higher than those in surrounding areas.
After a public outcry, council members quickly backed off, saying they had not understood its impact.
Wilson, who had been a strong supporter of that bill, said yesterday that the city is having "an exodus of people with high incomes" because of the inheritance tax. "We have to take some of the pressure off."
After a phase-in period, this would mean a revenue loss of $21 million a year, he said. He said he was not sure if the council would be able to pass a plan this year.