The Washington Post

Gray proposes raising income taxes on wealthy households to close budget gap

Mayor Vincent C. Gray, faced with a $322 million budget gap in fiscal 2012, is proposing more than $127 million in fee and tax increases and is slashing more than $113 million in health and human services programs.

Gray (D) submitted his first spending plan to the D.C. Council Friday — an aggressive proposal expected to draw an outcry from advocates for low-income residents, the business community and anti-tax groups.

It is a $9.6 billion budget that includes $5.5 billion in local funds.

Gray’s proposal estimates $35.4 million in revenue from an increase on tax on income above $200,000 annually, from a rate of 8.5 percent to 8.9 percent; nearly $23 million in a requirement that multi-state corporations file taxes in the District; and another $18.2 million in a 6 percent hike in the parking garage tax. Other tax increases could affect off-premise alcohol, cigarettes and sales tax on live theater.

Under Gray’s proposal, Circulator riders would pay $1 more, spending $2 to travel on the city-subsidized bus — for a predicted $1.1 million in added revenue.

The downtown Martin Luther King Jr. Library would also close on Sundays, and funding to buy new books would be reduced under Gray’s proposal.

Cuts appear to hit health and human services the hardest. The city would crack down on eligibility requirements for the Healthcare Alliance program, disability compensation and other programs, while Temporary Assistance for Needy Families would continue to be slashed.

The summer youth employment program would also see a $4.1 million cut.

Gray told council members Friday that he did not dip into the city’s fund balance, which had been used in recent years to fill budget gaps.

Gray, a former director of the Department of Human Services, called his budget “incredibly difficult.”

The budget must be approved by the D.C. Council. Gray is scheduled to hold a news conference on his proposed budget later Friday morning.

Go to the D.C. chief financial officer’s Web site to see the complete budget.

This post has been updated since it was first published.

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