Mayor Marion Barry called yesterday for $24 million in new and increased taxes and fees during the rest of this year, with no increases in taxes on private homes.
The increases, designed to help erase a budget shortage that could reach $172 million, are aimed heavily at businesses, which would be expected to pass the costs to consumers.
The package includes a new 6 percent sales tax on gasoline that would add more than $1 to the cost of a typical tankful.
Barry said that refusal by the District of Columbia City Council to impose the taxes and fees promptly would force him to make for deeper cuts in city services than those he announced earlier this week.
The mayor called for six separate new or increased taxes. They would go into effect by July 1, raising $20 million in the final three months of this fiscal year and adding $77 million to total tax revenues the next year.
Under the plan, the city treasury would reap a benefit from inflation by taxing the rising costs of commercial real estate, gasoline and a list of professional and consumer services now exempt form taxation.
Although Barry's proposals would not increase taxes on residential real estate, they would add to the cost of buying a home. The tax on recording a deed would be doubled to 2 percent of the home's value, increasing by $700 the cash a buyer would owe on a $70,000 purchase. Barry said he is looking for a legal way to require that the recording deed tax be split between the buyer and seller.
The biggest single from in Barry's tax package would be an increase of nearly 11 percent in the real estate tax on commercial property. This would produce an estimated $7.4 million extra this year and $15.8 million next year.
Under the proposal, the D.C. Finance and Revenue Department estimated, the owner of a small shoe store on 14th Street NW would face a tax increase from $4,900 to $6,172. The tax bill for the Mayflower Hotel on Connecticut Avenue would rise from $290,000 to $490,000.
The decision to raise taxes on business property but not on residences and apartment buildings resolved an earlier division among Barry's advisers.
Barry said yesterday that he decided against a residental tax increase since homeowners must pay tax bills based upon assessments that have increased an average of 23 percent in the past year. Commercial assessments, by contrast, rose only 9 percent.
The owner of an average Washington home assessed at $56,000 already faces a tax increase of $165 if the current residential tax rate remains in effect.
In a letter to City Council Chairman Arrington Dixon, the mayor said his tax package must be approved by the council before May 1 "or I will have no alternative to making massive reductions in programs" beyond those he proposed on Monday.
Barry called then for $20 million in program cuts and freezes, including the elimination of 1,223 jobs from the city payroll, 550 of them by layoffs. This would effect a sweeping array of city operations, but Barry insisted yesterday that "the citizens . . . are still going to receive a high level of services."
"The new taxes being proposed reach beyond the local constituency for solution, Barry declared. "The proposed measures will spread the burden to nonresidents [commuters and tourists] and residents alike.
To meet the deadline on taxes set by Barry, the council would have to short-circuit its usual procedures and enact the measures by invoking its emergency powers. This would sidestep a process that normally requires 30-day review of legislation by Congress. Such a review could be done later. 3
The fate of the tax measures in the council was uncertain. John A. Wilson (D-Ward 2), chairman of the committee that must review and pass upon tax proposals, has voiced sharp opposition to tax increases and has urged deeper budget cuts.
Top officials of the Greater Washington Board of Trade, the city's largest business group, could not be reached for comment, but a spokesman said the organization is "not pleased to hear the business community is being made liable for a revenue shortfall we had no responsibility for creating. The whole idea is cancerous to the idea of job creation in the city."
James L. Denson, president of the D.C. Camber of Commerce, made up of predominantly black-owned small businesses, said "any tax increases for small businesses, particularly in these inflationary times, is going to be difficult -- just very difficult."
City Council member Wilhelmina J. Rolark (D-Ward 8), who represents the far southeast section of the city, attacked the gasoline sales tax proposal, saying her largely improverished area has "a tremendous problem in [a lack of public] transportation . . . So a lot of people have to use their cars, and this would just add on misery."
The 6 percent gasoline sales tax would be levied on the total pump price, which already includes a federal tax of 4 cents a gallon and a District of Columbia tax of 10 cents a gallon. As prices have risen and gasoline consumption has declined, the city actually has received less revenue. g
If the gasoline tax is adopted, a motorist who now pays $18 to fill his tank with 15 gallons of gasoline at $1.20 a gallon would have to pay $19.08.
Barry estimated that the gasoline sales tax would raise $2.3 million during the rest of this year and $13 million next year.
Other parts of Barry's tax package are:
An increase in the commercial real estate tax rate from $1.83 for each $100 of assessed valuation to $2.13, yielding $7.4 million this year and $15.8 million next year.
Doubling the 1 percent tax on recording property deeds, bringing in $3 million this year and $11 million next year.
Raising the tax levied on the market value of machinery, equipment, furniture and fixtures owned by businesses from $2.82 to $3.10 for each $100 of value, bringing in $1.7 million this year and $2.2 million next year.
Imposing a 5 percent sales tax on professional and consumer services, such as those provided by lawyers, architects, engineers, consultants, travel agents, real estate agents, beauty and barber shops and the like, which now are exempted. Medical and dental services would be exempted. This would raise $5.2 million this year and $31.5 million next year.
Increasing the 8 percent sales tax on hotel and motel room rentals to 10 percent. This would raise $600,000 this year and $3.7 million next year. This tax is in addition to 80 cents collected daily on each hotel room rental to help finance construction of the downtown convention center.
In addition to the taxes, Barry estimated that higher minimum parking fines will yield $2.4 million additional during the rest of this fiscal year, and that a proposed increase in license and professional fees would raise $1.5 million this year and $4.5 million next year.
Douglas N. Schneider Jr., D.C. transportation director, said a new regulation increasing the minimum fines for overtime and illegal parking from $5 to $10 will go into effect about April 1.
Carolyn F. Smith, city finance director, said the levels of about 500 various fees charged by the city's licensing office are being reviewed and increases will be adopted administratively or recommended to the council. These include permits for plumbers, morticians, professionals and others as well as alcoholic beverage licenses.
Barry also asked the council to approve a supplemental request to Congress to appropriate the unspent $66.2 million that remains of this year's authorized $300 million U.S. payment to the city. The bulk of the money would pay pension, payroll and energy costs.
As part of the request, Barry asked the council and Congress to reduce the school system's current budget by $6.1 million -- its share of the citywide program cutbacks the mayor has proposed.
With the program cutbacks, the increased taxes and the supplemental, Barry said, "We have solved . . . most of our federal concerns" for this year.