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Facing a $200 million shortfall, Mayor Muriel Bowser has drafted a $12 billion budget that makes up the expected gap through a higher sales tax and other taxes, as well as reduced spending on key programs like Medicaid and funding for the University of the District of Columbia.
Bowser’s proposal would raise D.C.’s sales tax from 5.75 percent back to 6 percent, its level prior to a cut in fiscal year 2014. That change is expected to bring in $22 million. Additionally, Bowser is proposing a 4 percent tax hike on parking in order to fund the District’s contribution to Metro and an increase in taxes on e-cigarettes that will cause them to be taxed at the same rate as regular cigarettes.
On the spending side, Bowser’s budget would save $9 million by cutting the Medicaid reimbursement rate from 98 percent to 86 percent of costs—-a reduction that administration officials say will bring the reimbursement rate closer to the national average. The University of the District of Columbia will see a 5 percent reduction in city funding, as will maintenance of District facilities.
“These were tough cuts for us to make,” said a senior administration official, who requested anonymity, in a background briefing to reporters last night. “We did not do across-the-board cuts.” Instead, the official said, the administration sought to target ineffective programs, while preserving the middle-class tax cut that went into effect this year.
The fiscal year 2016 budget, $7 billion of which comes from local funds, is 3.2 percent larger than the current year’s budget. But that’s the smallest budget growth in the past five years, when annual budget growth has ranged from 4.2 percent to 9.1 percent.
Major programs are still funded, although with some dollars shifted around. The budget includes $335 million over six years for the embattled streetcar, which Bowser promised in her State of the District Address Tuesday night to send to the Benning Road Metro station and Georgetown. That’s $129 million less than was slated to go to the streetcar last year, with that amount being shifted to fund the rebuilding of the Hopscotch Bridge on H Street NE. Administration officials say the city will begin spending funds to plan that rebuilding next year, with construction starting in 2020 or 2021. In all likelihood, the tracks won’t be laid across the bridge until then, meaning we won’t see the streetcar extension to Georgetown for more than five years.
With the city struggling to address yet another homelessness crisis this winter, Bowser’s budget increases local funding for the Department of Human Services by $29.9 million over the current level. It also honors her commitment to put at least $100 million annually into the Housing Production Trust Fund, which pays for the construction and preservation of affordable housing. Half of the $100 million that the Trust Fund would receive under the budget comes from the deed transfer and recordation taxes that are already dedicated to the Fund; the other half comes from discretionary spending.
In addition, the budget provides $40 million over two years to close the troubled D.C. General family shelter. According to administration officials, the Department of General Services has located some potential successors to D.C. General, which the city hopes to replace with a network of smaller shelters around the city.
District officials asked the public to weigh in on where to prioritize spending. Education came out on top; in this realm, Bowser’s budget puts $185 million toward the renovation of Martin Luther King Jr. Memorial Library and $1.3 billion toward school modernizations over six years, including the long-awaited renovation of Coolidge High School.
At the bottom of the public’s priority list was infrastructure. That may explain, in part, the shift in funding away from the streetcar. And while the city is meeting Metro’s requests for operating and capital expenses—-which will avoid the need to raise fares or cut service this year—-it’s not committing at this point to provide funding for an extra 220 new 7000-series railcars, intended to modernize and expand Metro’s aging fleet.
Bowser is briefing the D.C. Council on her budget proposal this morning. She’ll make a formal presentation of the budget on April 13.
Photo by Darrow Montgomery