The District would raise taxes on sales, commercial property and ride-hailing services such as Lyft and Uber to increase funding for Metro under the 2019 budget Mayor Muriel E. Bowser (D) proposed Wednesday.
Bowser’s plan, which must be approved by the D.C. Council, spells out for the first time how the city would pay for the District’s $178.5 million share of a regional strategy to improve the transit system.
Her proposed $14.5 billion budget for the fiscal year that starts Oct. 1 increases per-pupil funding by 3.91 percent, a source of contention last year and higher than what some education advocates expected.
Bower’s spending plan also includes $100 million for a trust fund for affordable housing — as she has proposed annually since taking office — as well as $300 million in starting costs for a new hospital east of the Anacostia River and $860,000 for publicly financed campaigns approved by the council but initially opposed by Bowser.
The mayor presented the budget in a briefing with the D.C. Council, which will hold public hearings and vote on the spending plan before June. The first formal hearing is scheduled for Friday.
The city has been flush with tax revenue as the economy booms.
“Our finances are in great shape in our city,” said Bowser, who is seeking a second term without any credible challengers in the June Democratic primary. “We are also positioned to make very critical investments in all of the areas that continue to make our city excel.”
Maryland, Virginia and the District are on the verge of approving a historic deal to provide permanent funding for improvements to the beleaguered Metro transit system.
Little more than half of the District’s $178.5 million share would come from savings elsewhere in the budget, and about $80 million from higher taxes in Bowser’s proposal.
The commercial property tax rate would increase 2 cents from $1.85 per $100 of assessed value.
The sales tax would rise from 5.75 percent to 6 percent, smaller than the regional 1 percentage point sales tax increase that District leaders proposed as a permanent Metro funding source. The restaurant and hotels tax would also rise by a quarter- percentage point.
And the tax on gross receipts on “for-hire” vehicle services, passed onto customers as city fees on trips, would rise from 1 percent to 4.75 percent. That would mean a dime charge on a $10 trip would become a 47-cent charge.
While Bowser previously said ride-hailing companies aren’t responsible for Metro’s problems, she defended the fee increase as bringing ride-hailing companies on a par with taxis, which are taxed at 50 cents per trip. But a spokeswoman for Lyft contended the increase would hit low-income riders the hardest, noting than nearly four in 10 D.C. trips begin or end in low-income areas.
“While we are supportive of efforts to improve transit options, it is also critical that ride-share remains affordable for the tens of thousands who rely on Lyft in D.C. — particularly those who live further from transit or need a ride when public transit doesn’t operate,” Lyft spokeswoman Campbell Matthews said.
An Uber spokesman said the company was reviewing Bowser’s proposal.
Bowser brushed off the possibility that customers who turned to ride-hailing because of Metro’s unreliability would be frustrated by higher fees collected to fund the transit system.
“Everyone benefits from a safe and reliable and functioning Metro whether you ever get on a Metro or not,” said Bowser in a call with reporters. “Having a safe and reliable and functioning Metro means we have less congestion in our city, we can attract more residents and businesses, and everyone benefits.”
Bowser’s proposal follows another major city, Chicago, that turned to for-hire vehicle services to fund its struggling transit system. Last fall, Chicago Mayor Rahm Emanuel (D), citing ride-hailing’s drain on mass transit, successfully pushed for a 15-cent fee increase on Uber and Lyft trips to fund a modernization plan for the Chicago Transit Authority.
Bowser’s latest budget proposal comes at a time when the school system is dogged by scandals over inflated graduation rates and enrollment fraud. Her budget proposal also boosted funding to early child-care and study-abroad programming.
In announcing a 3.91 percent hike to per-pupil funding for students in traditional public and charter schools, Bowser seemed to skirt much of the criticism she received last year, when advocates accused her of underfunding the schools. Under her 2019 plan, the city would spend $10,658 per student.
“We are pushing down targeted investments at the school level that will allow principals in coordination with the chancellor to put in place graduation coaching, enrollment support, home visits and other curriculum interventions that are needed at the school level,” Bowser said.
While some education watchdogs celebrated the per-pupil spending increase, Marlana Wallace, a policy analyst with the D.C. Fiscal Policy Institute, said it’s not as high as it appears. According to Wallace, part of that increase covers raises for teachers that came after the union reached a contract agreement with the city for the first time in five years.
“It’s keeping with the status quo,” Wallace said. “It’s too tight to provide the resources we need to provide a quality education.”
Bowser is also proposing $300,000 to expedite case processing for residency fraud in D.C. public schools. It comes after a secret probe uncovered signs of widespread enrollment fraud at the Duke Ellington School of the Arts, one of the city’s most celebrated public schools.
But Bowser says the increased funding is because fraud is now investigated by the Office of the State Superintendent of Education instead of D.C. Public Schools. “We recognize they need more resources,” she said.
The District also benefited this year from an unexpected $50 million windfall under the federal tax overhaul. Roughly half of taxpayers are paying more to the city because of a loss of deductions on the local level.
Bowser is also proposing tax relief in some areas.
Residents would no longer have to pay sales taxes on feminine hygiene products but would still pay taxes on diapers, in accordance with a 2016 law that hasn’t yet been implemented. Senior citizens would see smaller increases in property taxes. And parents can receive a $1,000 refundable tax credit if children are enrolled in licensed child-care facilities without the help of city subsidies.
Other highlights of the mayor’s proposed budget:
• $900,000 for legal services for undocumented immigrants, nearly doubling funding for a program that drew the ire of Congressional Republicans last year.
• $6 million relief fund to help low-income residents deal with rising water bills.
• $10.9 million for the second phase of demolition of the notorious D.C. General megashelter for homeless families.
• $1.7 milion to add 30 additional police cadets and $4.6 million to hire 80 additional corrections officers