Anyone who has followed D.C. governance for more than a few years probably has noticed the boom-and-bust mentality that prevails concerning finances.
Of course, the District has unique limitations. It can tax only about 50 percent of the real estate within its boundaries, and no building can be taller than 130 feet. This makes for a pretty city, but one that is unable to maximize its commercial property. The District also cannot tax commuters, as other cities, such as Philadelphia, can. Even so, in the good years our elected officials are like the person who gets a windfall and rushes out to buy a plasma TV even though the bank account is bare and the roof needs repair.
In the booming 1980s, the District expanded its workforce but didn't put much money into infrastructure improvement, economic development or education reform and facilities. So when the recession arrived, the District went down the tubes: D.C. buildings with no toilet paper, police cars without gas and firetrucks sidelined because the city couldn't afford parts. Everyone was appalled. Congress responded by imposing a control board.
Now we are in "boom" times again. At Seventh and H streets NW the other night, people were swarming into restaurants, shops and MCI Center. It was the best type of commuter tax in play.
Partly because of a strong economy but also because business invested in the District when the city was down. Abe Pollin put his new arena downtown, the hotel and restaurant industries got tax bills passed to build one of the best convention centers in the country, and local developers took huge leaps of faith with their investment dollars.
Sure, they are making money now, but the city benefits as tax dollars from their investments go into the D.C. general fund. Just one downtown hotel paid more than $14 million in taxes in fiscal 2004, and the District has more than 100 hotels.
Who isn't happy to hear that, thanks to such booming enterprises, the District has a surplus ? Yet we still need to be asking prudent questions:
* If we are experiencing a surplus of $200 million to $400 million, does that mean that our tax rates are wrong?
* School modernization and education reform are vital and urgent, so why weren't they a priority for funding when the surplus first appeared in 2003?
* If we have a $400 million surplus next year, why are we considering raising taxes?
* Do we even conduct studies on the damage of tax increases to businesses and residents?
* Does the District have a rainy-day fund and a realistic trigger to use it to cushion years when the economy slows down?
* When will tax increases on businesses -- increases that businesses are experiencing every year -- start driving those same businesses out of town?
The District should stop running out to buy the plasma TV while its roof is leaking. The D.C. Council needs to have a fiscal management plan for the city and not just ride the happy crest of a boom until it goes bust again.
-- Emily F. Durso
is president of the Hotel Association of Washington.