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Under Mayor Muriel Bowser‘s budget plan for the fiscal year starting in October, people in D.C. would pay slightly more for goods, restaurant bills, and ride-share services than they do currently, so that the District could contribute $178.5 million per year to Metro.
Announced on Wednesday, Bowser’s fiscal year 2019 budget proposes a 0.25 percent increase across all sales taxes—in addition to other appropriations—to guarantee the dedicated funding for Metro to which D.C. has committed.
As a result, the sales tax for general products would rise from 5.75 percent of a product’s price to 6 percent; the sales tax for restaurants, alcohol, and rental cars would rise from 10 percent to 10.25 percent; and the sales tax for hotel rooms would rise from 10.05 percent to 10.3 percent.
Bowser’s administration says this would generate $43 million annually for Metro. Her proposed budget also includes two other tax changes to cover D.C.’s share of Metro funding (Maryland and Virginia are pitching in as well).
One would be an increase to 4.75 percent from 1 percent on the gross receipts collected by ride-share companies like Uber and Lyft, which would get passed on to consumers. In other words, a ride with a $10 base fare would cost $10.47 rather than $10.10 as of now, according to budget officials.
The other change would affect upper-tier commercial property owners whose properties are assessed by the District at more than $3 million. The taxes on these properties would rise two cents per unit, from $1.85 per $100 of assessed value to $1.87 per $100 of assessed value.
Taken together with the ride-share and sales-tax increases, this would generate $80.3 million in revenue to go toward Metro.
But that’s less than half of the $187.5 million that D.C. committed. The remaining 55 percent, or $98.2 million, would derive from savings and other capital that the District government has.
Bowser defended the prospective tax increases as a necessary and modest way to spread the burden of financing Metro over the long term.
“We worked very hard to make sure that everyone is contributing to what we all agreed is what Metro needs,” she said during a conference call with reporters. “Everybody benefits from a safe and reliable and functional Metro, whether you ever get on Metro or not.”
The D.C. Council will hold budget hearings for city agencies over the next two months before marking-up and voting on the budget. As proposed, it amounts to a record $14.5 billion, including both local and federal funds. That’s more than a 4 percent increase over the current fiscal year budget of $13.9 billion.
Local funds account for more than half of the overall budget proposal, or almost $7.9 billion. The size of the local component represents a 1.3 percent increase over that of this fiscal year’s budget.
Of the local dollars, 27 percent, or about $2.3 billion, is proposed for education; 24 percent, or about $2 billion, is proposed for health and human services; and 13 percent, or about $1.1 billion, is proposed for public safety. These are the top three shares.
Bowser also announced funding for a few new initiatives on Wednesday.
One is $2.5 million for a $1,000 per-child tax credit for residents who enroll their children up to the age of 3 in licensed child care centers. Another is an additional $10 million in subsidies for child care centers so the centers could expand their hours and capacities.
The mayor is fully funding the recently passed Fair Elections Act, which provides for the public financing of District elections, after initially opposing the measure. It is expected to cost $860,000 next fiscal year and $20.6 million over the next four fiscal years, according to the administration.
Among notable investments in education, Bowser’s plan allocates $19.2 million in “out-of-school” funding to grow after-school and summer programs. Education experts say these programs improve student achievement and reduce stresses on parents.
“We’re making sure that we’re pushing down targeted investments at the school level,” the mayor said when asked how her budget proposal would help alleviate the graduation and attendance problems that have plagued D.C. Public Schools and shaken parents’ confidence in the system. “We’re also very focused on how we increase family and community support that isn’t necessarily DCPS.”
As for affordable housing, Bowser’s proposal maintains the same level of funding for the Housing Production Trust Fund—the District’s main way of providing gap financing to developers who produce below-market units—at $100 million next fiscal year. It also adds $10 million to a preservation fund that officials hope will attract private investment for redeveloping D.C.’s existing affordable housing stock.
But progressive advocates say this amount of funding is not enough to meet the needs of longtime and low-income residents who are squeezed by the District’s booming housing market. For one, the Fair Budget Coalition—a nonprofit group of more than 60 member organizations—has asked for more than $300 million in affordable housing investments targeted at the District’s lowest-income families next fiscal year.
Aja Taylor, advocacy director at Bread for The City, a nonprofit that serves low-income residents, said in a statement that BFC is “disappointed to see a third consecutive budget with little-to-no increase in programs that create and preserve affordable housing.” “Put simply, the Mayor’s $100 million investment—only $40 million of which funds housing for residents at 0-30% of the Area Median Income (AMI)—is woefully inadequate,” she said, adding that the Council should fund more affordable units.
“We’re pleased that the Mayor continues to invest in affordable housing programs, but the proposed budget does not bring the city closer to making a dent in the 26,000 affordable units needed by extremely low-income residents, including workers in low-paying jobs and seniors on fixed incomes,” said Claire Zippel, an analyst at the D.C. Fiscal Policy Institute, in a statement.
Asked why her proposal does not increase investments in the Housing Production Trust Fund, Bowser acknowledged that it is D.C.’s “best tool” for creating affordable housing, but cast it as one method among others, including the preservation fund and the District’s slow-to-advance New Communities Initiative to redevelop public housing. “There are lots of ways that this budget invests in housing,” the mayor said.
She said she had not yet read the highly critical audit of the HPTF released by the D.C. Auditor on Tuesday, but looked forward to doing so. Examining the fund from 2001 to 2016, the audit cited various forms of mismanagement, loans the District gave to developers that have gone unpaid, statutory income requirements for apartments that have not been met, and missing records.
The agencies in charge of the fund and a prominent umbrella organization that represents affordable housing developers, Coalition for Nonprofit Housing and Economic Development, have challenged the audit’s conclusions. Bowser said that based on media reports, she “noticed that some of big criticisms were in years prior to 2015,” when she took mayoral office. “This is something worth delving into and making sure we’re getting it right.”
On the capital side of the proposal, which totals $1.6 billion, the Bowser administration pledges to “eliminate all sidewalks in poor condition by [fiscal year] 2020, all alleys in poor condition by [fiscal year] 2021, and all roads in poor condition by [fiscal year] 2024” through a $430 million investment. The administration also pitched $300 million to construct a new hospital on the St. Elizabeths Campus in Ward 8 to be built by 2023.
But given the beleaguered state of United Medical Center, the District’s only public hospital and only hospital located east of the Anacostia River, some say that timeline is not quick enough for residents.
“No way should it take five years to construct a hospital,” Ward 7 Councilmember and Health Committee Chair Vince Gray told local reporter Cuneyt Dil. “This will likely result in higher costs overall and further delays in meeting the urgent needs of people on the East End of the city.”