D.C. Mayor Muriel E. Bowser on Thursday proposed raising the city’s sales tax, saying that despite growing revenue, the District needs more money to end the epidemic of homelessness that she says voters elected her to fix.
Bowser (D) called the increase — from 5.75 percent to 6 percent and equal to the sales taxes in Maryland and Northern Virginia — necessary to make a “down payment” on transforming the District’s approach to homelessness. That would include hundreds of new permanent units for the city’s most chronically homeless individuals. She also proposed borrowing $40 million over the next two years to construct a network of new neighborhood shelters to replace the city’s troubled warehouse for homeless families on the former D.C. General Hospital campus.
“While I wish we didn’t have to consider it [a tax increase], residents all across the city — and I mean, literally, in each of our eight wards — say to me, fix the homelessness problem,” Bowser said. “We have to close D.C. General and we have to end homelessness, and the additional revenue will allow us to do that.”
But advocates for the poor cautioned that the $22 million expected annually from the sales-tax bump would cover only a fraction of the price tag of ending homelessness in the District. Bowser’s proposal also drew sharp criticism from members of the D.C. Council, which last year rejected the same increase, calling it likely to hurt the poor.
“It’s the most regressive kind of tax . . . and besides, you save raising the tax for the rainy day,” said D.C. Council Chairman Phil Mendelson (D), noting that local revenue is projected to grow to more than $7 billion next year, an increase of $185 million, or nearly 3 percent. “When revenues are growing by 3 percent, you don’t need to be raising taxes.”
Bowser also proposed increasing taxes on e-cigarettes to the same rate as traditional cigarettes and raising the levy that residents and commuters pay at downtown parking garages, from 18 percent to 22 percent. That boost, Bowser said, would raise almost $10 million and cover a third of the city’s increasing cost next year to subsidize a $323 million share of operations at Metro, the region’s troubled transit agency.
Combined with federal funds, total District spending for fiscal 2016 would grow to $12.9 billion, a 2.5 percent increase. That would be the smallest percentage increase in five years, but the latest in a wave of new revenue over that time that has driven up District spending by a combined $2.4 billion — or 23 percent — since the end of the recession.
Bowser’s first budget plan now goes to the D.C. Council for consideration.
In a briefing before the council and then at a midday news conference, Bowser sought to temper talk of the tax increase, saying that at the same time, she would tighten the city’s belt elsewhere, cutting agency operating expenses by a net of more than $15 million, including “tough decisions” to cut funding for the University of the District of Columbia by $3.5 million, or 5 percent. Bowser also said she would defer almost $5 million in preventive maintenance at city facilities.
The mayor’s budget also cuts $27 million in expenses by eliminating vacant positions and $58 million by reducing budgets to what agencies spent this fiscal year. She also drew the ire of hospitals by reducing Medicaid reimbursement rates to what officials in her administration said was more in line with the national average and would save $9 million annually.
Those cuts made room for Bowser to fulfill a central campaign pledge to direct $100 million to affordable housing projects next year. About half of that is paid for annually by a tax on home sales, but Bowser pulled together another $50 million and promised to continue hitting the $100 million figure each year she is in office.
She also earmarked $20 million over three years for a new education initiative dubbed “Empowering Males of Color,” a support program for black and Latino boys that includes opening a controversial all-boys college preparatory high school east of the Anacostia River.
Bowser also directed $15 million to raise and standardize educational and extracurricular activities at middle schools — another of her top campaign promises.
After three months in office, Bowser said she also had found new goals.
Under a six-year vision, the city would spend $50 million for tree planting, green space, and bicycle and pedestrian improvements; even more on road and sidewalk enhancements; and $115 million for recreation centers, pools and parks.
The city would also in the fall begin spending $5 million over the next 18 months to purchase 2,800 body cameras — enough for every on-duty D.C. patrol officer. The city would also begin purchasing $80 million in new fire trucks and other new public-safety apparatuses for the city’s fire department.
Bowser’s spending plan sets aside $185 million for a complete remodeling of the city’s main Martin Luther King Jr. Memorial Library. That is down from the more than $200 million that Bowser’s predecessor, Vincent C. Gray (D), and the council expected for the cost last year. The mayor’s aides said the city could lower and lock in costs by beginning construction earlier, in the budget year beginning in October.
The mayor also pinched spending for a promise this week to build a new hospital east of the Anacostia River, setting aside $123 million over six years, down from the $135 million that the council approved last year. That’s about a third of what Gray had said last year was feasible to build a new hospital to attract a reputable operator for the facility.
The budget found controversy with some vocal city constituencies, including parents.
Bowser proposed delaying a $67 million renovation of Benjamin Banneker Academic High School, one of the city’s oldest, near Howard University, until 2019.
At the same time, she committed to launching more than $100 million in renovations next year for Northwest elementary schools, including Garrison, which is at the epicenter of a baby boom along the District’s rapidly growing 14th Street and U Street corridors.
And just two days after the mayor took ownership of the city’s troubled streetcar system, promising an end to delays and to complete an east-west line, her budget made clear that she would largely pause all spending on the project next year. Council members said she did not set aside enough money to complete the project before the end of the decade — if ever.
But pleasing advocates for the poor, Bowser proposed a one-year delay in the city’s plan to end welfare payments for those who have received temporary assistance payments for five years or more. The District has been scaling back welfare payments to 6,000 families in that situation for years, and all were scheduled to lose remaining benefits in October.
Bowser’s aides said that the delay was necessary to make sure the city had done all it could to connect those residents with jobs and with other help before welfare is cut off.
But the highlight of the day for many was the mayor’s commitment and new challenge with homeless funding.
By linking a tax increase to solving the city’s homeless problem, Bowser appeared willing to risk raising the stakes for her fledgling administration by training even more attention on one of the District’s most intractable social problems. Tying a general tax increase to the issue, most agreed, would only add pressure on her team to deliver tangible results before the end of her term.
Ed Lazere, head of the liberal DC Fiscal Policy Institute, said he was encouraged but also worried that with an increase of 0.25 percentage points in the sales tax, the mayor had not sought a big enough hike.
“We would have liked more on the revenue side,” Lazere said. “I think $25 on a $1,000 purchase . . . lots of D.C. residents would be willing to pay more to solve the big problem of homelessness.”