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District of Columbia state budget

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State Information

The District of Columbia is facing a $393 million budget gap for fiscal year 2009 and a predicted $650 million gap, 10.4 percent of the current General Fund, for fiscal year 2010.[1] However, more recent reports place the budget gap closer to $800 million,about 15 percent of the $5.4 billion budget in local funds from 2009. "In the coming fiscal year, we will need to do more with less," said Mayor Adrian Fenty.[2] In order to reduce the city's looming budget gap the Mayor has proposed reducing spending of local funds by 4 percent to $5.4 billion, the first reduction in a decade. Additionally Mayor Fenty has suggested several hundred job cuts across the district and "raising fees." However, Fenty noted that while his recommended budget includes several cuts it does not include raising taxes.[3]

Impact of budget woes

See State budget issues, 2009-2010
  • Mayor Fenty's proposed budget eliminates 1,632 government jobs and raises fees on parking meters, emergency phone service and business licensing. Additionally in the budget plan, property owners will be required to pay taxes on a minimum of 40 percent of their property's assessed valuation. Currently there is no minimum requirement.[4]
  • The D.C. school district is expected to lose approximately 250 staffers, mostly teacher aides and support staff.
  • 240 workers will be let go from St. Elizabeths Hospital and other community mental clinics, in light of recent budget cut proposals.[5]
  • The Department of Public Works will lose about 140 employees, including more than 60 parking enforcement officers. Some of the eliminated officers are possibly going to be replaced by the automated camera enforcement system placed on street sweepers.[5]
  • D.C.'s Metro has rejected a proposal to consider a 5-cent fare increase as the transit agency scrambles to close a $29 million budget gap. Instead, board members plan to close the gap by reducing bus service. The reduced service is expected to generate $13 million in savings. The remaining budget gap is going to be through increased subsidies from the jurisdictions served by Metro.[6]
  • According to the Mayor's proposed budget the D.C. National Guard will experience cuts in equipment and training funding. Additionally the D.C. government is looking at renegotiating funding with the federal government, according to budget documents. D.C. funds approximately 40 percent of the D.C. National Guard's budget.[7]

Budget background

The District of Columbia's fiscal year begins July 1 and ends June 30 of the following year. The Mayor develops and submits the proposed budget for the next fiscal year to the Council of the District of Columbia by March 18 of every year. The Council proceeds to hold a series of public hearings before deciding to accept the Mayor's budget or adopting their own version. The Mayor may sign or veto the Council's budget. However, the Council may override a veto by the Mayor. Before the new budget is adopted the bill is presented to the President of the United States for submission to Congress for approval. Congress must approve the District's budget as one of the 13 annual federal appropriations bills.[8]

Budget figures

The following table provides a history of the District of Columbia's expenditures and gross domestic product (GDP).

Fiscal Year Expenditures (billions) GDP (billions)
2000 $6.5[9] $58.7[9]
2001 $7.2[9] $63.7[9]
2002 $7.8[9] $67.7[9]
2003 $8.2[9] $71.7[9]
2004 $8.5[9] $77.9[9]
2005 $8.9[9] $83.0[9]
2006 $10.1[9] $88.2[9]
2007 $11.5[9] $93.8[9]
2008 $13.1[9] $99.8[9]
2009 $14.9*[9] $106.2*[9]
  • NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

Ideas about why the crisis exists

  • According to city officials D.C. is expected to see a drop in revenue of approximately $802 million in the 2010 fiscal year.[5]
  • The sales tax in the District of Columbia is 5.75 percent and exempts food from the tax. The tax on a pack of cigarettes is $2.00 per pack and gasoline tax is .20 cents per gallon.[10]
  • The District of Columbia saw a decline in real estate median price for 12 out of 19 areas for the months of January through December 2008 as compared to 2007. For example in the Adams Morgan neighborhood in 2008 96 homes were sold and the average home sold for $677,000 as compared to 2007 in which 126 were sold and the average price was $715,000.[11] However, approximately 7 areas of the district did see an increase in median price. The general Foxhall/Glover Park area had 199 sales in 2008 compared to 237 in 2007, a decline. However,the median home price climbed to $1.075 million from the previous year’s $909,150.[12]

Proposed actions

Mayor Adrian Fenty

In response to the city's budget deficit Fenty's recommended budget calls for spending $5.4 billion in local funds, approximately 4 percent less than FY 2009's $5.6 billion. The total FY 2010 budget, which includes federal stimulus funds, is estimated at more than $10.3 billion. According to Mayor Fenty's plan the city's savings will be generated from job cuts - an estimated 776 layoffs, 398 jobs will be cut through attrition and 458 vacant positions will be eliminated.[5] "These choices won't be easy, and they won't always be popular. But I promise you this. I will consider every idea, exhaust every effort, and overcome every obstacle in delivering better services for less money," said Mayor Fenty.[2] There are no increases in income tax, property taxes, or sales taxes, however, the Mayor has proposed "increasing fees."[13] For example, the monthly 911 fee embedded in customers' phone bills would go from 76 cents to $1.01 for land lines and from 76 cents to $1.15 for cell phones. The city expects to collect $50 million in new or expanded fees and fines. The Fenty administration says the fees, fines and freezes do not amount to tax increases. "There are fees, there are changes to deductions," Dan Tangherlini, city administrator, said. "There are all those kinds of things you adjust on the side, and that happens every budget."[14]

A mixed approach

Some D.C. organizations are calling for the Mayor to use a mixed approach, budget cuts and new revenue, to close the city's $800 million budget gap. The DC Fiscal Policy Institute said in March 4,2009 that "it is instructive to review how the city handled its last major budget shortfall, which occurred in 2002 following a national recession and the economic aftershocks of the September 11 terrorist attacks." The 2002 budget included spending reductions and revenue increases. However, spending cuts outweighed revenue increases two to one. According to the Institute the revenue increases were notable and came as a result of a mixture of permanent and temporary tax and fee increases. The mixed approach, they said, helped to reduce the impact on critical public services.[15]

Economic Stimulus Package

The District of Columbia is expected to receive approximately $644 million of the $787 billion dollar American Recovery and Reinvestment Plan, or "stimulus package."[16] According to White House officials the package is expected to create approximately 12,000 jobs.[17]
For more information on how the federal stimulus funds are being used in the District of Columbia, visit the state recovery website.

According to preliminary reports the District of Columbia is expected to receive:

  • $20 million in State Energy Program funds[18]
  • $7.5 million for homelessness prevention[19]
  • $27 million for improvements to public housing[19]

Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.[20][21]

Washington, D.C. is a non-voting, single district, represented by Eleanor Holms Norton, but the ARRP website has alloted money to many districts, including Congressional District 99.

The government-run website notes that the 99th Washington, DC congressional district received $136,717,784 in stimulus which created 41.9 jobs. The 98th Washington, DC congressional district received $23,258,609 which created 22 jobs.

If the federal capital was sliced into 99 districts, there would be a congressional district every two-thirds of a square mile.[22]

Budget transparency

District of Columbia currently has no official spending database online.

Legislation

None.

Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases
State Database Searchability Grants Contracts Line Item Expenditures Dept/Agency Budgets Public Employee Salary Exemption Level
None n/a n/a n/a n/a n/a n/a n/a

Limitations and Suggestions

Support for creation of the database

Independent transparency sites

None.

Public employee salary information

None.

External links

Additional reading

References

  1. Center on Budget and Policy Priorities," March 13,2009
  2. 2.0 2.1 Washington Post,"Fenty:'Better Services for Less Money'," March 19,2009
  3. Mayor Fenty,"2009 State of the District Address," March 19,2009
  4. News 8,"Fenty's Budget Calls for Job Cuts, Raised 'Fees'," March 23,2009
  5. 5.0 5.1 5.2 5.3 WJLA,"Fenty Questioned on Budget Cuts, Layoffs," March 23,2009
  6. Associated Press,"DC's Metro rejects fare hike; proposes bus cuts," March 27,2009
  7. Examiner,"DC mayor's budget cuts funding to National Guard," March 26,2009
  8. District of Columbia,"Budget Process," accessed April 1,2009
  9. 9.00 9.01 9.02 9.03 9.04 9.05 9.06 9.07 9.08 9.09 9.10 9.11 9.12 9.13 9.14 9.15 9.16 9.17 9.18 9.19 US Government Spending,"District of Columbia State and Local spending," accessed March 31,2009
  10. Examiner,"A look at metro D.C. taxes," March 16,2009
  11. Washington Post,"Housing Review 2009," accessed April 1,2009
  12. NBC,"D.C. Neighborhoods: Real Estate Winners in 2008," March 30,2009
  13. Fox DC,"Fenty Unveils Proposed 2010 DC Budget," March 20,2009
  14. Washington Times,"Fenty seeks freezes, fees, cuts in '10," March 21,2009
  15. DC Fiscal Policy Institute,"DC Took a Balanced Approach to Addressing Its Last Major Deficit: The Budget Shortfall in 2002 Was Addressed With Both Budget Savings and Revenue Increases," March 4,2009
  16. Wall Street Journal,"Stimulus Spending by State," March 12,2009
  17. American Recovery and Reinvestment Act,"Estimated job effect," accessed March 31,2009
  18. DC Recovery,"Energy & Environment," accessed March 31,2009
  19. 19.0 19.1 DC Recovery,"Housing News," accessed March 31,2009
  20. $6.4 Billion Stimulus goes to Phantom Districts, Watchdog.org, November 17, 2009
  21. Stimulus Creates Jobs in Non-Existent Congressional Districts, Watchdog.org, November 16, 2009
  22. Washington, DC Stimulus Funds 99th Congressional Districts, La Raza, AARP, Watchdog.org, November 17, 2009