Mayor Muriel Bowser delivers the State of the District address at the University of the District of Columbia on March 30. (Bill O'Leary/The Washington Post)

D.C. would implement far-reaching tax cuts while making modest investments in programs to address the city’s sweeping income inequality under the new budget proposed by Mayor Muriel E. Bowser.

Released Tuesday, Bowser’s proposed $13.8 billion budget for the upcoming fiscal year would mark an increase of 3.4 percent over the current budget.

Most of the increase comes from rising local tax revenue, which is projected to total $7.6 billion — an increase of almost $300 million, or 4.1 percent, over current levels.

Coming off the current fiscal year’s projected surplus of $128 million, the budget is the latest sign of high fiscal health in a city whose money was once managed so badly that it fell into federal receivership.

But the proposed budget quickly drew attacks from some activists and social-service providers who questioned the mayor’s spending priorities.

(DC Mayor's Office)

Bowser (D) is pitching her budget, which must be approved by the council and ultimately goes to the federal government for review, as key to “inclusive prosperity” in a city with a growing divide between rich and poor.

It includes initiatives to help those left out of the District’s rapid economic growth: The mayor wants to establish a $10 million fund to preserve the city’s remaining stock of low-rent housing — on top of $100 million for an existing affordable-housing trust fund — and increase funding for homeless services by $15 million.

But the budget proposal has no new marquee initiatives aimed at combating poverty, and critics said the measures it does contain are small-bore in a city with a housing crisis and soaring homelessness.

Bowser has also declined to fund a 2 percent increase in the per-pupil allotment that has become standard since the city began investing heavily in education a decade ago. Instead, the mayor is seeking a 1.5-percent hike in the per-pupil payment to schools while she asks for more money for public charter schools to pay for building improvements.

“When you look at the budget, it puts tax cuts ahead of fully funding schools. It puts tax cuts ahead of fully funding homeless services,” said Ed Lazere, executive director of the D.C. Fiscal Policy Institute. “It does feel like the budget isn’t living up to its rhetoric of building ‘inclusive prosperity.’ ”

The tax cuts, enacted in 2014 by the D.C. Council, grew out of the recommendations of a blue-ribbon panel appointed to suggest updates to the District’s tax code.

The cuts were contingent on D.C. revenue continuing to rise, and it has done so more quickly than expected. The last round, triggered more than a year ahead of schedule, will bring income-tax relief to a wide swath of low- and middle-income residents next April by raising personal exemptions and standard deductions.

The tax breaks would also take effect during a mayoral election year. Bowser has not announced her intentions but is widely expected to run for reelection.

Last week, more than 90 advocacy groups and social-service providers sent a letter to Bowser urging her to delay the tax cuts and instead invest the money in areas such as homelessness prevention or a reserve to prepare for possible funding shortfalls from President Trump’s proposals to slash federal programs in his first budget. City officials have estimated that such an action could cost at least $103 million.

At a news conference Tuesday, Bowser said the tax cuts would bring relief to D.C. residents and that she “didn’t hear a raging desire” among council members to roll them back.

She said the effects of the federal budget on D.C. programs were still uncertain and that shifting money into a contingency account would divert money from other programs.

“It would be a hard argument to make to cut services that we need and programs that we need right now for something that might happen,” she said.

Bowser also said she was “very confident that we are responding to the needs of our schools,” despite the criticism from education advocates.

In a statement released Tuesday, the pro-charter nonprofit group Friends of Choice in Urban Schools said it was “profoundly disappointed that Mayor Bowser did not adequately fund D.C.’s public school children in her current budget.”

D.C. Public Schools Chancellor Antwan Wilson, who was appointed by Bowser and started work in February, said he was “confident that we have what we need” and that “the mayor has been very responsive.”

Of the $105 million overall increase Bowser is seeking for education, $22 million would go to traditional public schools and $83 million to public charter schools, according to the mayor’s office. That’s less than half of the amount recommended by a task force created by Bowser.

Bowser called her proposed education budget the largest in D.C. history — an assertion that was attacked as misleading by Catharine Bellinger, a spokeswoman for Democrats for Education Reform. Bellinger said most of the budget growth is driven by rising enrollments, not increased investment in each student.

“It’s a little hollow,” Bellinger said, referring to Bowser’s claim. Anything less than a 2-percent, per-pupil increase could actually feel like a budget cut to schools because of rising costs and inflation, she said.

Several council members said Tuesday that they needed time to study the mayor’s budget before commenting on it in detail. The council will have its first chance to question Bowser about her proposed budget at a hearing Thursday and will hold public hearings over the next month before voting on the budget in late May or June.

Council member Robert C. White Jr. (D-At Large) said he had questions about why the city wasn’t spending more on housing, homelessness and education.

“I do think it should be a priority, while the city has money, to invest in those people who are falling behind,” he said.

Council member Charles Allen (D-Ward 6) said he doubted an effort to halt the coming tax breaks and use the resulting savings elsewhere would win support from the council.

“Those really hit middle-income, lower-income families,” Allen said. “I don’t think there’s an appetite to change that.”