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D.C. Council approves final vote on city budget

D.C. Council Chairman Phil Mendelson.
D.C. Council Chairman Phil Mendelson. (Toni L. Sandys/The Washington Post)
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The D.C. Council passed a final vote on the city’s 2022 budget Tuesday, but not without some last-minute debate and changes — notably, an amendment that would significantly boost monthly tax credits for low-income families in the coming years.

Council members unanimously approved the second of two votes on the Budget Support Act, which contains changes to the law necessary to implement measures within the $17.5 billion fiscal 2022 budget that was approved last week. But lawmakers rejected a pitch to include a 35-year, $140 million tax abatement for developers to convert vacant downtown office buildings into housing.

Mayor Muriel E. Bowser (D) on Tuesday told reporters that she planned to sign the council-approved budget, even though lawmakers partly rebuffed her request last week to reallocate more than $11 million to ultimately expand the city’s police force by 170 officers. She had also asked the council to reconsider a budget measure that raised taxes on residents making more than $250,000 per year, which lawmakers said would help fund housing vouchers and subsidize wages for day-care workers. Funds from the tax increase also allowed the council to raise the city’s local match of the federal earned-income tax credit — already among the highest in the country — from 40 percent to 55 percent starting in 2023.

Enacted in the 1970s, the earned-income tax credit offers a tax break or increases refunds for low-to-moderate-income workers on a sliding scale, based on the money they make and the number of children (a married couple with three children can qualify for the credit if they make $58,000 or less). Council member Charles Allen (D-Ward 6) successfully pitched an amendment to the Budget Support Act that went even further, raising the value of D.C.’s match next year to 70 percent.

That percentage will increase to 85 percent in 2026 and reach a full 100 percent match beginning in 2027, to be paid out in monthly installments. That means the most needy families would receive a monthly check of about $560 from the city when the legislation is fully implemented, according to Allen’s office. The credit is available as long as families meet the threshold requirements and file their taxes.

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“In the simplest terms, we created a monthly basic income for low-income workers — people who have been essential workers in places like our child care centers, health care, and the service industry,” Allen said in a statement after the vote. “A little extra cash relieves pressure on parents deciding on buying school supplies, putting food on the table, or paying the rent.”

Council Chairman Phil Mendelson (D) proposed several other tweaks, including a measure necessary for the city to move forward with legislation that splits up the oft-criticized Department of Consumer and Regulatory Affairs into two new agencies: the Department of Licensing and Consumer Protection and the Department of Buildings.

But not all of the last-minute changes were approved: Lawmakers passed an amendment from council member Elissa Silverman (I-At Large) by a vote of 9 to 4 that removed a provision to the Budget Support Act that would have given developers a tax abatement worth about $140 million over 35 years to convert office buildings into housing in the downtown and Golden Triangle business improvement districts. City leaders have long discussed using increasingly vacant office buildings to boost housing units.

Silverman and several other lawmakers expressed concern with the tax abatement proposal from council member Brooke Pinto (D-Ward 2), arguing that it was introduced at the last minute and didn’t go far enough to create affordable housing units. Just 20 percent of the new housing would be affordable to residents making 80 percent or less of the Washington region’s median family income (equal to about $100,000 for a family of four). Critics called for a more robust legislative process and an increased focus on “deeply affordable” units that are accessible to people with significantly lower incomes.

“Because it lacks robust affordability requirements, this proposal will yield nothing to market realities, resulting in downtown units that will very likely be studios and one-bedrooms occupied by government and nonprofit office workers,” Silverman wrote in her amendment. “Nothing in the text of this last-minute proposal does anything to require downtown affordable housing suitable for families or at rents that are truly affordable for workers in lower-wage industries, like retail and hospitality.”

Tazra Mitchell of the DC Fiscal Policy Institute, a left-leaning budget advocacy group, in a tweet criticized Pinto’s provision as a “handout for developers disguised as ‘affordable housing tools.’ ”

Pinto, whose ward includes downtown, asserted that the area is in dire need of more affordable housing options. She said that requiring 20 percent affordable units was the only way to have “buy-in” among developers because converting the buildings would be so expensive.

“Ward 2 needs to do our part in having affordable housing here,” Pinto said. “This will not solve all affordable housing needs in the city, but it will make a dent — with the added benefit of addressing some of our office vacancies.”

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Also on Tuesday, Bowser urged lawmakers in a letter to reconsider legislation related to a judge’s ruling last year that the city violated procurement law when it awarded three Medicaid contracts, which are collectively among the city’s largest expenditures.

The judge ordered the District to redo the procurement, which is worth about $1.5 billion. But the Bowser administration has not yet done so. Instead, Bowser proposed adding language to the Budget Support Act that retroactively changes a rule that the company MedStar violated during the procurement process, in the hope that MedStar could keep the contract.

Although all of the major health-care providers in the District, including MedStar, have agreed to treat patients covered by any health insurer providing managed care to D.C. Medicaid patients, Deputy Mayor for Health and Human Services Wayne Turnage has said that he fears if MedStar were kicked out of the program, the health-care network might not work with other insurers to allow their Medicaid patients to see MedStar’s doctors.

During the first budget vote in July, council members narrowly voted down an amendment pitched by Vincent C. Gray (D-Ward 7) that would have retroactively condoned MedStar’s procurement actions. Opponents of the idea argued that changing the rules midstream would send the wrong message for future city contracts. Weeks earlier, the council approved a measure that compelled the Bowser administration to comply with the court decision, but Bowser vetoed the legislation late last month.

Bowser asked the council to reconsider Gray’s legislation, asserting that removing MedStar as a Medicaid provider would be too disruptive for patients.

“Without your action there will unquestionably be an immediate, adverse impact on the lives of over 60,000 of the city’s most vulnerable residents whose access to important health care needs may be denied, delayed or otherwise compromised,” Bowser wrote in a letter to the council ahead of Tuesday’s vote.

But no member of the council, including Gray, heeded Bowser’s request, and the measure was not reintroduced.