It’s budget season! Mayor Muriel Bowser’s administration proposed her fiscal year 2022 budget last week. Now, the Council will hold multiple hearings through June 24, so they can make their own revisions to the budget, which takes effect Oct. 1. This newsletter will unpack a few proposals in the budget, so if readers are interested in a specific topic, let me know by replying to this email or emailing me directly.
Hearings kicked off Wednesday. Mayor Bowser took three hours worth of questions from councilmembers who are eager to get their own ideas into the budget. She explained what her budget does and doesn’t do. Does the budget increase the number of police officers? Yes. Does the budget make any new investments into language access? No.
The budget totals $17.5 billion, of which $9.1 billion are local dollars that lawmakers have direct control over. D.C. is actually increasing spending thanks to federal stimulus dollars. These are a few questions from Wednesday’s hearing that stood out:
What happens when the federal dollars run out?
The proposed budget of $17.5 billion dollars increased by 3.9 percent mostly because of federal dollars. The local funds budget of $9.1 billion increased by 4.9 percent. In fact, federal relief dollars make up 70 percent of the growth in D.C.’s local funds budget. D.C. received nearly $3.3 billion through the Biden administration’s American Rescue Plan.
Multiple councilmembers expressed concerns for when the federal dollars dry up. They worried programs would experience a fiscal cliff. In her opening testimony, Bowser said her administration was very methodical in deciding where to direct federal dollars. The mayor’s proposed budget makes one-time capital improvements that would help D.C. achieve mobility and climate goals faster. The budget also makes investments in the Housing Production Trust Fund using federal dollars that would help the city achieve affordable housing goals. Federal dollars were directed to job training, learning, and business relief over a three-year window. (Federal dollars need to be used within four years.)
“We exercise fiscal responsibility by ensuring that our recurring investments, which total $139 million in Fiscal 2022, are fully funded in the financial plan, with additional local funds in FY 2025 to cover any gaps when the stimulus funds have been expended,” Bowser said.
How does D.C. spend $400 million in surplus?
Bowser’s team identified $400 million dollars in surplus from the city’s paid family leave program. Employers fully fund the program through a 0.62 percent annual tax.
When Bowser’s team discovered the surplus, the mayor said they directed $114.5 million to the unemployment fund to make it solvent; $20.8 million to cover the losses associated with the federal adjustment to taxes on unemployment benefits; $46 million to add two new paid family leave benefits, one for prenatal medical leave and the other for domestic violence/stalking/sexual abuse recovery leave; and $15 million to a financial assistance fund for workers ineligible for unemployment because of, say, immigration status. (Advocates are calling for $200 million for excluded workers.)
The mayor’s budget also uses the surplus for a one-time tax cut for businesses, as well as reducing fees paid by businesses. Specifically, the budget would decrease the Paid Family Leave payroll tax from 0.62 percent to 0.27 percent for FY 2022. The tax cut returns $168 million to D.C. businesses. This proposal is more controversial. At-Large Councilmember Elissa Silverman advocated for offering relief to businesses and workers based on need, not to everyone. (She used this metaphor to make her point.)
“Why not deploy these dollars to help those workers and businesses that really have been clobbered instead of giving that money to—no offense here—law firms, tech companies, government contractors and everyone else who didn’t lose revenues, didn’t have to lay off people,” asked Silverman.
“It refunds businesses money. We didn’t just pick on the big guys—the law firms, as you point out—to pay family leave. Everybody paid family leave. We may be philosophically different but if I overpay my taxes, I expect to get a refund, and I think that’s fair,” said Bowser in response to Silverman’s criticisms.
How does the budget address racial disparities?
After the coronavirus pandemic underscored racial disparities in everything from health care to housing, D.C. officials have repeatedly said they want to return to a “better normal.” The budget couldn’t have come at a more opportune time. As they say, the budget is a moral document.
Ward 5 Councilmember Kenyan McDuffie asked Bowser point blank about her plan to address racial inequality. The councilmember has a few ideas of his own, including so-called “baby bonds” (or direct payments to children whose families earn less than $132,000 per year)—none of which are included in the mayor’s budget.
“Where in your budget specifically would you direct people to find your most significant investment in closing the racial wealth gap?” McDuffie asked. (According to the Urban Institute, “White households in D.C. have a net worth 81 times greater than Black households.”)
“You are not going to go to one place to look for anything, you are going to look at the whole budget,” Bowser quickly responded.
“We don’t build a $17.5 billion dollar budget if we don’t think it is helping the people in our city that need to be raised up. Largely, that is what this budget does. When we talk about $400 million dollars going into affordable housing, who do you think is going to live there? People who didn’t have access to good quality housing and are 30 percent of the area median income,” Bowser continued. She ticked off a few more specific proposals in her budget.
The mayor seemed quite proud of her response, sharing a clip of it on Twitter. McDuffie also tweeted about the exchange to correct the record. The exchange between Bowser and McDuffie emphasizes the tension of this budget cycle. The pandemic impacted everyone. But not everyone to the same degree. Flushed with federal dollars, lawmakers are now deciding what’s the best way to target relief.
—Amanda Michelle Gomez (tips? firstname.lastname@example.org)
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