That question leads to thoughts about the District, my lifelong hometown. Because of the virus’s devastating impact on lives and livelihoods, I suspect this city will, as Hamlin concluded, “see a different world on the other side of this moment.”
The covid-19 statistics are stunning. As of Friday afternoon, the District had more than 1,600 cases, resulting in 39 deaths. The heartache keeps rising. This virus won’t last forever, but the pain will linger.
The coronavirus’s impact is also costly in another way.
The infection has delivered a sudden end to the city’s booming economy. The scope and depth of the financial blow were called to my attention by Jack Evans, the longtime Ward 2 D.C. Council member who in January resigned before his colleagues could expel him for good and sufficient reason. His ethical transgressions notwithstanding, Evans remains the District’s most knowledgeable and experienced lawmaker on the tax code and city finances.
“The District is facing the most serious financial crisis since the mid-1990s. The mayor and the council will have to make difficult and unpopular decisions to reduce spending in order to balance the budget and keep the city solvent,” said Evans, who is seeking election to his old seat. (I take no position on that prospect — there are a couple of other promising candidates in that race.)
Evans provided me with a report by DC2021, a high-powered business group that represents the D.C. retail, hotel, restaurant, sports, arts and entertainment industries. The report, also provided to Mayor Muriel E. Bowser (D), Council Chairman Phil Mendelson (D) and others, takes a deep dive into the economic impact of the crisis as of the end of March, when the city was officially shut down.
The blow to D.C. hotels is astonishing: Sixty of them closed; the 2020 peak season is lost, along with $2 billion in projected revenue.
The city’s 5,273 restaurants are either closed or open for delivery only, jeopardizing $4.1 billion in annual sales and 8 percent of total D.C. employment.
Nonessential retail is also closed. An estimated $910 million loss of tourism shopping is in the offing. This business sector is losing an estimated $700 million in revenue monthly.
Step back and look at what a wallop the D.C. budget will take, according to the report. The District collects $8.2 billion in local tax revenue. Over $2.7 billion, or more than 30 percent, comes from businesses covered by DC2021 and their employees via property, sales and income taxes. Employees in those sectors also represent 30 percent of working D.C. residents.
Consider the impact of those losses to a city that spends about 80 percent of its local budget on human services, education, public safety and debt service.
Under current conditions, the District’s spending will far exceed the amount of revenue it will collect. That simply won’t do.
Bowser’s first steps have been in the right direction: freeze hiring, stop salary increases, ban traveling. Limit spending to public safety, basic human services, coronavirus relief measures and the schools.
The steps ahead, however, will be harder, especially for a wing of the D.C. Council that believes no public wish should go unmet. Bowser, a realist, knows that tough choices lie ahead.
The city may have to cut $500 million or more out of this year’s budget, given the free fall in tax revenue. D.C. Chief Financial Officer Jeffrey S. DeWitt reportedly thinks the city may have to cut spending by about $600 million in the next fiscal year.
Recovery will be slow. Unemployment checks aren’t going to be spent in restaurants, hotels and retail or on sports, entertainment and the arts. Some retailers may never reopen. Yes, the city has reserves. But not enough to cover all of the relief measures being adopted to support businesses, workers and renters and also operate government at its current level. Federal stimulus relief funds will help fill the gap. There’s also the option of raising taxes. (Every good wish.)
Something’s got to give, and maybe given up, for a long time.
Which gets us back to Hamlin and his question.
Bowser needs help in getting the city from here to fiscal stability and renewal. She has available Ward 7 council member and former mayor Vincent C. Gray (D), a veteran of budget wars.
Also at hand is Mendelson, frankly a reluctant warrior who often needs kick-starting. Missing in action, however, is Evans, who was the one council member actively involved in digging the District out of a financial ditch in the ’90s.
I vividly recall those days as a writer on The Post editorial board that published editorials decrying the unfolding fiscal crisis. Ultimately, Congress imposed a federal control board with authority to oversee the District’s finances. The city must avoid going back to that, especially with you-know-who in the White House.
Today, Evans is a pariah. His poor judgment has cost the council a source of expertise in an emergency.
The crisis ahead will test this generation of D.C. leaders. “This is a time and a season that has shifted our habits,” declared Hamlin.
For the District, the question is how much and how far?
Read more from Colbert King’s archive.