The Washington Post

Gray vetoes tax-cutting D.C. budget, ask council to forge compromise over summer

D.C. Mayor Vincent Gray (Alex Brandon/AP)

Mayor Vincent C. Gray (D) rebuked a D.C. Council that passed a city budget gutting his priorities last month, vetoing the spending legislation Friday and asking lawmakers to postpone their traditional summer break to fix it.

The veto, delivered in a letter Friday afternoon, challenges a spending plan crafted by Chairman Phil Mendelson (D) that eliminated hundreds of millions of dollars of planned future spending on a streetcar system and substituted a broad package of tax cuts.

Gray had previously lambasted the budget as a “bait and switch” that eschewed critical investments in favor of ill-advised tax reductions. On Friday, he criticized the council’s decisions to extend sales tax to health-club memberships for the first time, to gut a property tax exemption for senior citizens and to place new restrictions on the mayor’s ability to move funds between agencies or tap emergency reserves.

“I cannot, in good conscience, sign a budget that hurts seniors, taxes wellness, dramatically delays and drives up the cost of the D.C. Streetcar system, and ties the hands of future Mayors to respond to fiscal problems,” Gray said in a statement released by his office.

Gray is asking lawmakers to stay in session up to 30 days into their traditional summer recess to forge a new spending deal that restores streetcar funding and addresses other key issues. The council is set to recess for two months Tuesday, after an expected marathon legislative meeting Monday.

Mendelson intends include an override vote on the agenda for Monday’s meeting, said spokeswoman Karen Sibert.

While there is little indication any votes have been swayed by Gray’s veto, an override votes could give activists a new opportunity to rekindle debate over the new tax on gym memberships.

On Thursday, the owner of a local chain of health clubs said he had abandoned negotiations to locate his seventh Vida gym in a new development on H Street NE because of the new tax.

“This is not a decision I make lightly, nor is it one that I wanted to make,” said Vida owner David von Storch, who had lobbied against the sales tax expansion. “This was definitely the straw that broke the camel’s back.”

The added sales tax, von Storch said, will push the cost of a typical Vida membership over $100 a month and could cause members to reassess whether they keep their membership. Any loss of cash flow, he said, would threaten his expansion plans.

“I’m not Wal-Mart,” he said. “I can’t make a mistake, so I need to sit this one out.”

Messages left Thursday with an executive at Insight Property Group, the developer with which von Storch had been negotiating, were not returned.

Activists plan to use von Storch’s business decision to confront Mendelson, who said last month that if foes of the tax “can show that business falls off in the next year, I’m willing to revisit this and I’m certain that other members will as well.”

Otherwise, it is unclear what leverage, if any, Gray has to force changes to the budget. Since losing the mayoral primary in April, council members have shown little deference to his priorities.

The budget legislation passed June 24 on a 12 to 1 vote, with only Tommy Wells (D-Ward 6) opposing the deal. Nine of the council’s 13 votes are needed to override a mayoral veto.

The council failed to override Gray’s last veto, of a bill that would have set a super-minimum wage for certain large retailers such as Wal-Mart, but that legislation was passed by a much more closely divided council. In 2011, Gray vetoed a budget provision that would have delayed a tax on out-of-state municipal bonds; that tax ultimately went into effect.

In his statement, Gray acknowledged that lawmakers might simply override his veto but said he “cannot in good conscience support this budget as submitted.”

“Although I will not be in office when the majority of this budget is implemented, I cannot turn a blind eye to the impact that it will have on the next administration and District residents,” he said.

Mike DeBonis covers Congress and national politics for The Washington Post. He previously covered D.C. politics and government from 2007 to 2015.



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