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Taxes on cigarettes, Uber rides and estates rising under approved D.C. budget

The D.C. Council on Tuesday approved a $14.5 billion budget for the next fiscal year that contains more money for subsidized housing and higher taxes than Mayor Muriel E. Bowser’s ­proposal.

The unanimous votes came after a group of clergy crashed the council chambers to protest what they considered insufficient relief for rising water bills. Church leaders say the new water fees related to a federal mandate to clean up the Potomac and Anacostia rivers could force them to close their doors.

While the council’s budget included $12 million to help residents and nonprofits cope with increased fees to D.C. Water, church leaders said it was not enough. They interrupted the meeting to shout at lawmakers and sing the civil-rights-era song “Ain’t Gonna Let Nobody Turn Me Around.”

“This is classic racism and classism,” Willie Wilson, pastor of the Union Temple Baptist Church in Southeast, told lawmakers, according to video of the disruption. “Residents, poor residents, cannot afford these bills and will be pushed out the city. You cannot separate that from gentrification.”

Council Chairman Phil Mendelson (D) and several lawmakers huddled privately with Wilson, Graylan Hagler, senior pastor of Plymouth Congregational United Church of Christ, and other clergy. The lawmakers emerged with a promise to revisit the issue before a final budget vote in two weeks.

“We will attempt yet again to see if we can’t find some additional funds to soften the blow to those people who are especially seriously affected by these increased fees,” said Council member Mary M. Cheh (D-Ward 3).

Lawmakers also approved an ­increase on the cigarette tax by $2 a pack, as proposed by Council member Vincent C. Gray ­(D-Ward 7). That would be a hike of 68 percent on the current tax of $2.94 a pack, aimed at curbing smoking, particularly among youth. The plan would also raise the legal age to buy tobacco from 18 to 21. It passed on a 10-to-2 vote, with Council members Jack Evans (D-Ward 2) and Mendelson opposed. Council member Trayon White Sr. (D-Ward 8) was absent.

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The council’s budget also creates a $30 million dedicated funding stream for the city’s arts commission, which provides grants for projects, by redirecting a portion of the sales tax and imposing a one-cent increase in the commercial property tax rate.

Lawmakers also increased funding for various housing programs by $15.6 million, enough for 752 units. They shifted funding from temporary one-year rapid rehousing vouchers to permanent housing programs.

“The fact we are doing all we can with every dollar we can find to enhance affordable housing is very, very rewarding for those of us who are very concerned and work on these issues every day,” said Council member Anita Bonds (D-At Large), who chairs the housing committee.

The budget included tax increases to fund the ­$178.5 million share of a regional funding agreement for Metro.

Bowser (D) proposed increasing the fee on ride-hailing trips from one percent to 4.75 percent, as well as hikes in sales and commercial property taxes.

More detail on plan to increase fees on Uber and Lyft to play for Metro

The council rejected Bowser’s proposal to increase restaurant and hotel sales taxes, and instead raised the ride-hailing fee to six percent. The tax on commercial real estate over $5 million would rise three cents from $1.85 per $100 of assessed value, a penny more than Bowser proposed.

Bowser and the council agreed on increasing the general sales tax from 5.75 percent to 6 percent, and boosting sales tax on liquor, beer and wine sold at stores from 9 percent to 10.25 percent.

The revised budget also decoupled the District’s estate tax from the federal tax code, reversing an impending revenue loss for the city when the Republican-backed federal tax overhaul eliminated tax liabilities for people with estates under $11 million.

The budget also offered a new tax break: A $5,000 credit to help small retail businesses with rising rents and property taxes.

Lawmakers also appeased to residents who worried they would lose a dog park in Columbia Heights: They earmarked $1.5 million to purchase and preserve the land.