The consensus budget and tax package recently adopted by the D.C. Council was a major victory for residents and businesses in Washington. This responsible financial plan has the potential to dramatically improve city services, provide long-awaited tax relief and ensure long-term fiscal stability.
In the past three years, the District has made a remarkable financial recovery -- faster than any other city that has faced a similar fiscal crisis -- and it has done so without having to borrow. In FY '97, the D.C. government posted a $185 million surplus. That was followed by a $445 million surplus in FY '98. The District used that surplus to pay off a $332 million deficit and still had $112 million left over. By the end of FY '99 on Sept. 30, the accumulated surplus is expected to grow to more than $300 million.
The reasons for this recovery, surplus (and upgraded bond rating) are several: legislated reductions in programs and personnel throughout the government; tight controls on expenditures and improved tax collections; and a strong national economy. The president's revitalization plan for the city was also a big plus. It transferred costly functions related to the criminal justice system from the District to the federal government and increased the federal Medicaid share from 50 percent to 70 percent, which is closer to what other local jurisdictions receive.
The budget and tax package adopted by the council makes the short-term investments necessary to deliver immediate improvements in services and the long-term investment in tax relief necessary to achieve parity with surrounding jurisdictions.
The District can compete for its fair share of residents and jobs only if services -- especially schools, public works and public safety -- continue to improve, and only if its tax and regulatory structures continue to be reformed.
To that end, the FY '00 budget makes specific investments, which include:
A $55 million increase to public schools from current funding.
A $13 million addition to the Department of Public Works for rat control, street and alley cleaning, tree trimming and planting, trash-container replacements, leaf collection and neighborhood cleaning crews.
An increase in the number of authorized uniformed D.C. metropolitan police officers from 3,600 to 3,800.
A provision of $5.8 million for neighborhood stabilization and the remediation of nuisance properties.
Increases in critical areas of human services, including $15 million for the mayor's children and youth initiative; $3 million more for substance abuse and treatment; $5 million more for shelter services; $2 million more for recreation; and $1.2 million more for programs for the elderly.
The budget package also endorses the mayor's initiatives to promote managed competition and productivity savings in the delivery of governmental services.
The tax-cut package, authored by Jack Evans and David Catania, helped focus discussions about the budget and the city's short- and long-term priorities. The final package, while not as broad as originally proposed, is affordable and in some areas more progressive than the original version. Lower- and middle-income taxpayers will receive a much bigger percentage reduction than will upper-income taxpayers, with the highest income bracket being raised from the existing $20,000-and-above bracket to a $40,000-and-above bracket. All taxpayers, residents and businesses alike, particularly commercial (including residential rental) property taxpayers, will receive significant relief under the approved proposal.
The tax cuts will be phased in across five years; none of the cuts will be paid for out of the District's accumulated surplus; and provisions tie the timing of the tax relief to certified annual audits of the city's revenue/expenditure ratio. Thus the tax reforms will neither threaten the District's long-term financial stability nor crowd out needed new investments to improve services to citizens.
In the end, the council, the mayor and the financial authority found themselves on the same page, approving a budget and tax plan that makes critical short-term investments in service delivery, continues management reform and moves toward tax parity for residents and businesses. All agreed that we must continue to build a government that works and that lives within its means.
The D.C. Council will continue to have strong oversight of executive operations and expenditures and will continue to be responsive to the residents and businesses who call Washington their home or headquarters. At the same time, the council members know how to collaborate with the mayor, the financial authority, Congress, the president and the surrounding governments in the region to achieve mutually shared goals. We may not always agree with our partners, but the council will continue to be at the table, asserting itself as an institution and working for the betterment and future of the citizens of the District.
-- Linda Cropp
is chairman of the D.C. Council; her views are shared by the other 12 members of the council.