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Across the country, states, counties, and municipalities have been scrambling to come up with plans for sucking up the billions lawmakers have promised in stimulus dollars.
Make that states, counties, municipalities, and a District.
Earlier this month, Mayor Adrian M. Fenty outlined in a letter [PDF] to Eleanor Holmes Norton, the District’s delegate to Congress, his list of priorities for federal dollars that might be disbursed in coming months in attempts to jumpstart the economy.
What are those priorities?
Well, one’s no secret: schools. In his letter, Fenty talks up his DCPS reform efforts, but notes that “many of the buildings in which these reforms are occurring do not meet the high standards to which we are holding our teachers and students….With Federal support, we could cut in half my 5-year plan to rehabilitate all of the city’s educational space.” He also notes UDC could use an injection of capital funds.
Moving on to public safety issues, he mentions a pair of “shovel-ready” projects that could move forward immediately with federal funding: a new police evidence warehouse and forensics lab, which the letter says “could be underway within 90 days of funding.”
Also in the shovel-ready category are a bunch of transportation projects—-including the South Capitol Street and 11th Street bridge replacement projects, as well as streetcar implementation and other transit projects. The more pie-in-the-sky request in the transportation category is to change the federal transportation funding formula to reflect the fact that most cars on District roads are from out of state—-“Therefore, some additional targeted funding might be necessary to reflect the unique Federal/Regional aspects of the District’s transportation infrastructure.”
As far as environmental matters, Fenty’s letter pays somewhat short shrift to one of the costliest items on the horizon: The $2 billion plan to eliminate combined-sewer outflows into local waterways by constructing a giant tunnel. Rather, Hizzoner prefers to go big-picture: “With Federal support, Washington, D.C. could be a national model for ‘green’ government, an appropriate role for the nation’s capital as we confront this critical issue as a country.”
Housing issues are also mentioned, but only in that the city is looking to be treated as a state rather than merely a city regarding its participation in a federal program allowing governments to purchase foreclosed homes—-a distinction which has cost the District more than $15 million.
Perhaps the most surprising disclosure in the letter regards health care—-in particular, the D.C. Healthcare Alliance program that provides affordable care to thousands of low-income D.C. residents who don’t qualify for Medicaid. “[T]he combination of local revenue reductions and changes to the interpretation of Medicaid reimbursement rules is straining the District’s ability to sustain and expand this program,” the letter warns. The solution, in part, according to the letter, is for the feds to temporarily increase their Medicaid reimbursement rates.
More on whether any of this will become reality next week. Full letter is below.
January 7, 2009
The Honorable Eleanor Holmes Norton
U.S. House of Representatives
2136 Rayburn House Office Building
Washington, D.C. 20515
Dear Congresswoman Norton:
I write today in response to your request for information regarding the District’s particular needs and priorities as they relate to legislation currently being developed by Congress to stimulate the economy, create jobs, and provide direct assistance to state and local governments to help offset the significant declines in tax and other revenue we are experiencing as a result of the current economic downturn.
In addition, for context, I would like to briefly describe the impact of the economic downturn on the District budget so far this fiscal year. In mid-September, our Chief Financial Officer issued a revised quarterly revenue estimate for the city that projected a shortfall of $130.7 million in local fund revenues. Over the next two months, my administration developed a gap-closing plan that included significant spending cuts – including the elimination of several hundred D.C. Government jobs – and the Council enacted a newly rebalanced budget. Then, two weeks ago, Dr. Gandhi announced a second downward revision to his revenue estimate for FY09 of $127 million. Closing this gap will be even more difficult and painful. Together, these reductions represent about 4.5 percent of our local funds budget. Moreover, Dr. Gandhi has warned that additional downward revisions are likely for both FY09 and FY10.
As you know, our ability to respond to declining tax revenues is further complicated by the special budgetary challenges we face as we work to provide services to our citizens, commuters from around the region, and visitors from across the nation and world, and to make the necessary infrastructure investments to support the needs of these various users. The District budget contains a significant structural imbalance, because we must deliver the traditional municipal services of every large city, as well as many state-level functions (i.e., Medicaid), but are severely limited in our ability to raise revenue. Specifically, as you have frequently noted to your colleagues, congressionally imposed limitations on our local taxing authority and building height limitations that limit the density of development in our commercial corridors, combined with the presence of a large number of tax-exempt entities and Federal agency buildings, have narrowed our revenue base dramatically. While I am very appreciative of the targeted funding provided by Congress for several District initiatives (most notably school improvement and college access), this funding does not fully offset these restrictions on our ability to raise revenue.
Congressional “stimulus” proposals that would increase Federal funding for Medicaid, food stamps and unemployment benefits, invest in job-creating public works projects, and reduce taxes for middle class families are badly needed and I home Congress acts quickly on them. At the same time, in light of the District’s unique fiscal situation, I would respectfully request your assistance in pursuing support for the following additional items:
School Modernization: As you know, reform of the District’s public schools has been a top priority of my administration and I am confident that the operational and programmatic changes we are making will support high levels of academic achievement by our students; however, many of the buildings in which these reforms are occurring do not meet the high standards to which we are holding our teachers and students. The District inherited almost all of its public schools from the Federal government, in varying states of repair, and those buildings are now more than 65 years old on average. In the last several years, we’ve spent more than $600 million in local funds on capital improvements for our schools, but much more is needed. With Federal support, we could cut in half my 5-year plan to rehabilitate all of the city’s educational space. In addition, the University of the District of Columbia has significant infrastructure needs, including a large back-log of repairs and the need for renovation of a number of academic buildings, classrooms, and laboratories.
Public Safety-related Priorities: I think you would agree that the District is fortunate to have an extremely competent and committed Chief of Police and a dedicated police force. As you know, these officers not only protect residents and visitors against crime; they also provide on-going security support to the U.S. Secret Service in protecting Federal officials and foreign dignitaries and assisting with large-scale demonstrations and other events related to the Federal presence (for which Federal funding is provided). However, they are limited in their ability to effectively investigate crimes by our lack of a modern forensics lab and evidence warehouse. Both of these projects, though, are ready-to-go and could be underway within 90 days of funding. In addition, the District has been saddled for over a decade with the cost of incarcerating offenders at the D.C. Jail despite the fact that Congress has deemed this to be a Federal responsibility. If we were fully reimbursed for this cost, those funds could be used to expand crime prevention and abatement efforts in our communities.
Transportation Infrastructure: Like most states, the District has a long list of critical highway, bridge and transit projects that are well-developed and could begin very quickly in order to have a meaningful stimulus effect, should new Federal funding become available for this purpose. In particular, aspects of the Eleventh Street and South Capitol Street Bridge replacement projects could be undertaken immediately, hi addition, there is a tremendous backlog of system maintenance and paving projects that could begin right away. Finally, we have substantial transit improvements, from Metro rail investments to streetcar Implementation and bus replacement and route expansions, that are ready-to-go. As you know, what sets the District apart with regard to transportation infrastructure is that some 70% of the cars that use our roads each day come from outside the jurisdiction, and we are unable to collect any revenue from them to support our transportation infrastructure maintenance program. In fact, current Federal formula allocations do not reflect this unique aspect of the District’s system usage. As such, current Federal Highway funding may not fairly reflect the investment needs of the District’s infrastructure. Therefore, some additional targeted funding might be necessary to reflect the unique Federal/Regional aspects of the District’s transportation infrastructure.
Environmental Initiatives: The District’s environmental initiatives range from repairs to the Potomac levee to completion of a $2 billion plan (developed with the Environmental Protection Agency) to address our combined sewer overflow problem, which presents a threat to the health of our rivers and our citizens, in addition, we’ve identified numerous ways to make the city more energy-efficient and environmentally-responsible, many of which we’ve already begun implementing with local funds. With Federal support, Washington, D.C. could be a national model for “green” government, an appropriate role for the nation’s capital as we confront this critical issue as a country. Our plans address energy use and environmental sustainability at every level – by residents, businesses, and the government – and include expansion of a green job training program for District youth that we tested last summer with positive results.
Housing Affordability and Access: In our local response to the housing crisis, the District faces the twin issues of high housing costs and high foreclosure rates. Media reports suggest that Congress may provide additional funding to states and localities to purchase foreclosed properties through the new Neighborhood Stabilization Project at the Department of Housing and Urban Development, an idea that I wholeheartedly support. However, as you know, when the original funding was allocated the District was severely disadvantaged by the fact that it was treated as a locality, rather than a state, in the authorizing statute. As a result, the District received only $2.8 million from the program, while a number of states with comparable populations and foreclosure rates received the “small-state minimum” of $19.6 million. I greatly appreciate your on-going efforts to correct this problem and would also respectfully request that if additional funds are provided for this program, you work to modify the statute to ensure that the District is treated more fairly under the allocation formula in the future.
Health Care: Finally, I want to make you aware while that the District has the highest rate of insurance coverage in the country, largely due to huge local investments in our “Alliance” program, which covers low-income residents who don’t qualify for Medicaid, the combination of local revenue reductions and changes to the interpretation of Medicaid reimbursement rules is straining the District’s ability to sustain and expand this program. Therefore, I hope that you will advocate for a temporary increase the Federal match rate for Medicaid, while also guarding against requirements that could have the unintended consequence of penalizing states which have already extended health insurance to a greater number of residents. In addition, I urge you and your colleagues to consider addressing any Medicaid liabilities the District and other states may have to CMS. This latter change is critical because proposed increases in the FMAP levels could be overwhelmed by these liabilities.
Thank you for your consideration of these important issues. Please have your staff contact Ms. Karen Bates, my advisor for Federal Affairs, if you require additional information, at (202) 340-xxxx.
Adrian M. Fenty