Over fruit and coffee, some members of the D.C. Council and Muriel Bowser argued about a piece of tax reform that Chairman Phil Mendelson proposed in his fiscal year 2016 Budget Support Act.
The Council approved a package of personal and business tax cuts last year as part of the fiscal year 2015 budget. Some cuts—like a decrease in the income tax rate for residents who earn between $40,000 and $60,000 a year—took effect on Jan. 1; others are contingent on the District surpassing projected revenue. Under Mendelson’s budget amendment, more tax cuts would be “triggered” at the end of the month, rather than in Feb. 2016, as Bowser’s budget calls for.
“I think the mayor is stirring up a tempest, and I don’t understand the motive,” Mendelson said.
Mendelson estimates that $40 million in tax cuts have already been implemented, and that another $40 million would be triggered in June. He also argues that enacting the tax trigger this month will allow people to benefit from tax breaks during next spring’s tax season. If the triggers aren’t enacted until Feb. 2016, people would have to wait until 2017 to see the tax cuts.
“The question is, do we provide tax relief to residents today or do we wait a year? There’s nothing else we can do with the money, unless one wants to renege on the tax cause. There’s no reason for this debate,” Mendelson said.
Jenny Reed, D.C.’s deputy budget director, says rejecting Mendelson’s budget amendment would allow the Council to make better decisions about how much excess revenue to allocate to different programs, like WMATA improvement and boosting school enrollment, both of which are long-term goals the mayor stressed during this morning’s breakfast.
“[June tax triggers] don’t allow the mayor, Council, or public to have conversation about this dialogue. It doesn’t give us an opportunity to have a clearer picture of what our needs look like as we try to tackle them,” Reed said.
Mendelson pointed out that regardless of how much extra revenue the District might see in the next year, Bowser wouldn’t be able to spend any of it because she can only allocate money through the city’s budget, which has already been tentatively approved for fiscal year 2016.
“There is no reason to delay implementation of tax relief unless the mayor’s goal is to cancel the tax reform in order to unnecessarily increase spending on discretionary programs,” Mendelson said in a statement.
In a show of solidarity with Bowser, At-Large Councilmember Elissa Silverman argued that with five new members on the Council, it’s time for a fresh discussion about the tax trigger timeline.
“I fear that this is going to turn into an argument of who gets to spend the money—the Council or the mayor,” Silverman said.
Update, June 24: LaToya Foster, a spokeswoman for Bowser, adds by email: “Mayor Bowser has long championed middle class tax cuts—that’s why she voted for them as a member of the Council and made them a cornerstone of her first budget. What Mayor Bowser does not support is arbitrarily accelerating tax cuts for upper income earners without any discussion and ahead of existing spending pressures for schools, public safety, transportation and other critical investments.”
Photo by Darrow Montgomery