Mayor Bowser’s First Budget

Key Investments Will Reduce Inequality and Expand Opportunity

It does not take a financial wizard to spot the priorities in Mayor Bowser’s first budget: She wants to create more affordable housing, address rising homelessness, and protect thousands of families with children from losing basic income support. These will help residents cope with the dramatic disappearance of low-cost housing and an economy that is failing to create good-paying job opportunities for residents without a college degree. 

Mayor Bowser’s first budget makes new investments even though she faced a shortfall of revenue compared with the costs of maintaining services. To make it all work, some parts of DC government will get little or no new funding next year – like schools. And there are a number of reductions, too, some from outright cuts in services and many others from improved efficiency.

The budget also includes modest tax changes, including a sales tax increase that will add 25 cents to a $100 purchase. That is a small price to pay for a budget that puts DC on a path to ending long-term homelessness. 

This analysis is part of an online "Budget Toolkit" developed each year by the DC Fiscal Policy Institute, which can be found at www.dcfpi.org.

Some Notable Changes

Mayor Bowser’s proposed fiscal year (FY) 2016 budget is just a little larger than this year’s budget – a two percent increase after adjusting for inflation. The total is actually lower than the amount needed to maintain all services at 2015 levels, which means that the proposed budget is a lean one. Within that big picture, some services will be expanded, others will stay where they are, and some will be cut. The mayor found savings through efficiencies, but also cut some services, too.  Some notable changes: 

Record Investment in Housing: Local funding for affordable housing will reach a record high level in 2016, including expansion of programs to build affordable housing, provide rental assistance, and provide housing and supportive services for chronically homeless residents. Most notable is $100 million for the Housing Production Trust Fund – DC’s main tool to build or renovate affordable housing. This will support construction or renovation of 1,000 or more homes affordable for residents with incomes typically under $54,000 for a year for a family of four.

Working to Make Homelessness Rare, Brief and Non-recurring:  Important progress will be made to replace the shameful DC General homeless shelter over the next two years, along with other efforts to help families and individuals leave shelter quickly and to create permanent housing for chronically homeless residents. One issue that remains unclear is whether there will be enough resources to serve all families who become homeless each year. Due to limited resources, the city largely turns away families seeking shelter in warm weather months, even when they have no safe place to go. Getting to the point where families have access year-round will depend on the success of efforts to get families out of shelter faster.

Public Safety Expansions: Funding for the Metropolitan Police Department will increase due to contracted salary increases, 50 civilian staff added so that more officers can be on patrol, and equipping all officers with body cameras for officers. The Fire and Emergency Services Department will also grow due to base salary increases, but also due to a recent legal settlement requiring increases in overtime pay. 

Public Works -- More Money for Metro: The District’s obligation to support operations of WMATA, the regional transportation system, will jump a lot next year.

Education: More Money Going to High-Poverty Schools 

Schools were not a big winner this year. Mayor Bowser proposed no increase to the school funding formula, not even an adjustment for inflation or rising salary costs. DCPS will direct more dollars to schools by cutting central operations. This lean year follows last school year when the DCPS budget grew six percent and charter school funding rose nine percent.

Even with a flat overall budget, there will be big funding shifts within DC Public Schools, around the use of resources for “at-risk” students. The school funding formula was changed in 2014-15 to create a new “at-risk” category, adding $2,100 for every student who was low-income or otherwise at risk of academic failure. However, DCPS used the additional funds for a number of pre-planned initiatives determined by the Chancellor, not necessarily for poor students. An online  HYPERLINK "http://atriskfunds.ourdcschools.org/" data tool developed by DCFPI and Code for DC showed that many high-poverty schools did not get their fair share.

In response to public criticism, DCPS committed to allocating the at-risk funds to follow the student in 2015-16, meaning schools with large concentrations of low-income students will receive their fair share of these resources, particularly schools in Wards 1, 4, 7, and 8. A review of initial school budget allocations shows that much of the funding will go towards extending the school day, for arts programming and supplies, and for middle and high school staffing. 

Another schools issue is a cut in funding for afterschool programs. At least 20 schools will be losing their afterschool funds next year. These programs bring community-based organizations to offer enrichment that schools often do not provide in the regular school day – even an extended school day – and support working parents by offering services as late as 6:00 p.m.

What Is Cut in the Budget?

The mayor’s spending plan includes reductions in a number of program areas. These include scaling back programs and services as well as savings resulting from improved efficiency. 

Payments to Hospitals for Medicaid Services: DC’s Medicaid program covers 98 percent of hospital costs, but that would be cut to cover 86 percent, which roughly matches the average among states. 

Child Nutrition: The budget eliminates the new “Healthy Tots” program which is intended to improve the nutritional quality of meals and snacks at early education sites. 

Summer Programs at Parks and Recreation: The budget eliminates an expansion of summer programs for children that was supposed to start this summer.

The University of the District of Columbia: UDC’s budget was cut by 5 percent, or $3.5 million. The impact is unclear.

First-Time Homeowner Assistance: Funding for the Home Purchase Assistance Program, which provides down payment and closing cost assistance to low- and moderate-income homebuyers, was cut by about one-fifth.

Modest Revenue Increases Will Support Important Initiatives

The mayor proposes increasing revenues by one-half of one percent of the local budget, including raising the sales tax rate from .25 percent to six percent. That would put the District in line with the sales tax rate in Maryland and Northern Virginia, and it follows a recommendation of the 2014 D.C. Tax Revision Commission. 

The sales tax is a broad-based tax, but lower-income households pay more of it as a share of their income, which means it is not always the ideal way to raise revenue. Lower-income families spend all or nearly all of their income each month – including lots of taxable things like cleaning supplies, school backpacks, and clothes.

Despite this drawback, the proposed sales tax increase is modest – just 25 cents for every $100 taxable purchase. That is a small price to pay to tackle an enduring problem like homelessness. Many low-income residents hit hardest by the sales tax increase will benefit from offsetting income tax cuts for that go into effect in 2015. The income tax reductions will outweigh the sales tax increase for a large share of households. 

In the end, the mayor’s budget shows that building a city where everyone can succeed requires substantial new commitments to housing, jobs, and other needs. And it shows that it is possible to make those investments without asking too much of DC residents. 

Lazere is executive director of the DC Fiscal Policy Institute (www.dcfpi.org). DCFPI promotes budget and policy solutions to reduce poverty and inequality in the District of Columbia, and to increase the opportunity for residents to build a better future.   


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