Mayor Fenty and the new DC Council have been in office nearly a year now. It's been a momentous 11 months, highlighted by the strongly supported mayoral takeover of the DC public schools. This mayor and council are not the kind to rest on their laurels, however, and no doubt 2008 will be another busy year for them.

As we marvel that yet another year is coming to a close, my holiday gift to Mayor Fenty and the DC Council is advice on managing the city's finances in 2008. No thank you card is needed. Following it all will be thanks enough.

Keep Dr. Gandhi as CFO!
Turmoil at the chief financial officer’s office is foremost in the minds of many DC residents. While the property tax refund scandal is very troubling, my first piece of advice is to keep Gandhi as the city's top finance official — while thoroughly investigating what went wrong. DC's finances are at a sensitive point: tax collections that may fall due to a slowing real estate market, continued pressure over DC's substantial debt, and new spending demands for education and affordable housing. Keeping our financial ship afloat will take special care from someone with experience. If the investigation of the tax refund scandal ultimately reveals a serious pattern of mismanagement under Gandhi's watch, we can revisit the issue of his tenure then.

Focus on Education and Housing
Mayor Fenty may want to fix every DC problem at once, but focusing on too many things makes it hard to address any of them well. There is a broad consensus that reforming DC public schools is the top item on the city's priority list. And the disappearance of affordable housing is the clearest downside of DC's economic rebound. Mayor Fenty already has promised $117 million to expand housing programs in a pledge to Washington Interfaith Network, and making schools top-notch could very well require more money. That won’t leave much for other budget priorities, and may actually force some tough choices, but that’s what budgeting is all about.

Adopt a Goal to Reduce Poverty
Even though there may not be much wiggle room in next year's budget, it's time for Mayor Fenty and the DC Council to start making public policy that recognizes DC's deep economic divisions. A recent report from the DC Fiscal Policy Institute found that poverty has increased by 27,000 residents since 2000, proof that DC's economic renaissance is in many ways a mirage. Addressing poverty is more than a moral issue. Much of the city's biggest budget expenses — public safety, foster care, special education — are tied at least in part to our high poverty rate. Those problems and expenses won't go away no matter how many luxury condos are built.

You may be thinking: Doesn't the District already spend lots on social services? Well, yes, but not necessarily in the right places. The city has thousands of adults needing literacy services and devotes just a few million dollars each year to help them. Local funding for workforce development has risen in recent years but was almost nonexistent prior to 2006. And DC still lacks a workforce development plan, a system to target training for the kinds of jobs being produced here.

A number of states and cities have adopted targets to reduce poverty (or child poverty) by a specified percentage over a specified number of years. Great Britain created such a vision five years ago, and it led to a new policy focus and real results. It's time for the District to do the same. Mayor Fenty has had a year to appoint a legislated poverty commission but has not done so. That's not a good sign that reducing poverty is at the top of his list.

Take a Vacation from Property Tax Cuts
The District has cut property taxes for homeowners for four years in a row. Even though assessments continue to rise, we now have the lowest property taxes in the region. That’s because DC has cut property tax rates and put a 10 percent cap on how much assessments can rise each year. As a result, property taxes for most DC homeowners have grown quite slowly — or even dropped — in recent years.

Yet Councilmember Jack Evans has pledged to revive efforts to set the tax cap at 5 percent per year instead of 10 percent. And the DC tax code has a provision to keep ratcheting down the homeowner property tax rate. This just should not be the top tax cut priority.

If You Really Want to Cut Taxes ...
If there's any room for tax cuts, a more pressing problem is that many hard-working DC families face hefty DC income tax bills. A family of four earning $40,000, for example, pays $1,700 each year. In a city with outrageously high and rising costs of living, it’s fair to ask why working families that earn too little to make ends meet should pay any income tax. (They still pay lots in sales, utility, and other taxes).

Property tax relief could be ok, too, but only if it targets the people who need it the most and not the mansions on Foxhall Road. DC's low-income property tax credit is available only to families below $20,000, and that eligibility level was set in the 1970s.

More Budget Transparency, Please
The chief financial officer scandal is a sign that we are not paying enough attention to the flow of DC tax dollars. The DC Council berates Gandhi for not paying enough attention, but they oversee a DC budget that does a pretty lousy job of connecting dollars spent with services provided. The example I like to use is DC's Summer Jobs program. It's a flagship DC program, yet it doesn't merit a line item in the budget, and there's not even information on the number of kids who participate. A stranger reading our budget wouldn't know we have a large Summer Jobs program. How many other programs fail to show up in the budget? And how can the council do its oversight job without better information? Yet the council rarely demands a more transparent budget. If they did, we'd probably get better budget decisions.

This is my holiday gift to Mayor Fenty and the DC Council. I hope it's your size. Go ahead — you can open it now.