John A. Wilson Building
John A. Wilson Building Credit: Darrow Montgomery/File

We know D.C. Get our free newsletter to stay in the know.

D.C. Council Chairman Phil Mendelson backtracked on the 3 percent advertising tax he included the the Fiscal Year 2021 budget. To make up for the $18 million in lost revenue, Mendelson proposed cuts to infrastructure projects and community-based mental health services.

The Council passed Mendelson’s last-minute budget maneuver Thursday by an 11-2 vote with Ward 1 Councilmember Brianne Nadeau and At-Large Councilmember David Grosso voting against the proposal.

Thursday’s meeting was a continuation of Tuesday’s legislative meeting, which Mendelson recessed following a messy and at times contentious debate during which councilmembers balked at the chairman’s ad tax, at the idea of raising taxes in general through the budget process, and ultimately at his decision to recess the meeting in order to find cuts to make up for the lost revenue.

(In full disclosure, LL’s paper lobbied against the ad tax, for which he is grateful, so that he can continue to pay rent.)

Nadeau objected to the chairman’s cuts to recurring funding for the emergency rental assistance program and homeless outreach initiatives. In a tweet, Nadeau decried the “11th hour meetings held behind figurative locked doors in small enough groups to avoid open meetings requirements to make decisions about the people’s budget.”

“I did not receive a phone call asking for my input, despite cuts being taken from homeless outreach and ERAP, programs under my purview as chair of the Committee on Human Services,” she tweeted during today’s legislative meeting. “And I have to say that I’ve never been so proud to not be invited to the popular kids table.”

Grosso, the mastermind behind the ad tax, stood firm in his belief that the “measly” 3 percent increase would not bring the demise of any healthy businesses. He also repeated concerns from the D.C. Behavioral Health Association that the chairman’s proposed cuts would impair the Department of Behavioral Health’s capacity for providing residents with adequate treatment.

DCBHA Executive Director Mark LeVota tells LL that the $4 million in cuts actually equates to an $8.7 million reduction in spending when factoring in the federal reimbursement for some of that money.

Generally, LaVota says, the funds cover community-based treatment for substance use disorders and serious mental illness. He says DBH serves about 27,000 people annually, and the reductions could impact the amount of time providers spend with those seeking treatment.

“The important thing to understand is this is a particularly incomprehensible approach to trying to address these issues when we know that people have an increasing need during a pandemic, during an economic crisis, and during a reckoning with racial injustice in our city,” LeVota says. “I think it’s particularly disappointing that we’re in a position that the Council had to figure out how to restore funding for these services to begin with.”

LeVota is referring to the fact that Mayor Muriel Bowser‘s proposed budget cut about $12 million from DBH’s community services funding. The Council tossed out her recommendation and added $9.5 million with the help of revenue from the advertising tax. The $4 million reduction still leaves a $5.5 million increase over Bowser’s proposal.

Another significant budget maneuver in Mendelson’s proposal was shifting $11 million from capital funds to borrowing.

The Council unanimously approved the Fiscal Year 2021 Local Budget Act, which directs how $8.5 billion in local funds are spent. But multiple councilmembers alluded to the possibility that they may have to revise the budget in the fall when the Office of the Chief Financial Officer releases revised revenue estimates. The OCFO’s previous predictions relied on the hope that the coronavirus pandemic would have subsided by the year’s end.

The body will vote next Tuesday, July 28, on the Budget Support Act, which includes the laws that support the budget they just passed.