Washington Post on Budget & Combined Reporting

Interesting take from the Post editorial board Sunday on Gray’s budget proposal and taxes, including combined reporting…

No austerity in D.C.

By Editorial, Saturday, April , 7:13 PM

AS HE INTRODUCED his first city budget, D.C. Mayor Vincent C. Gray (D) produced a glossy, 41-page packet explaining the $9.6 billion proposal.

None of those 41 pages mentioned that the spending plan he was describing as austere and bare bones actually would spend $322 million more than the current budget. That hike in overall spending undercuts Mr. Gray’s argument for a variety of tax increases. Before asking residents and businesses to shoulder new tax burdens, D.C. Council members should look for ways to keep the budget from growing.

The $9.6 billion budget proposed for fiscal year 2012, which includes $5.5 billion in local funds, contains much that is admirable. Mr. Gray would sustain a commitment to education reform with key spending for both the public school system and charter schools. In recent years, the city spent from its reserves, a reasonable strategy in a recession but one that has reached its limit; Mr. Gray rightly did not tap the reserves further but balanced expenditures and revenue. He would meet the District’s 12 percent cap on all general-fund, tax-supported debt. Particularly courageous is Mr. Gray’s effort to cut long-term dependency on government support with needed reforms of the city’s Temporary Assistance to Needy Families (TANF) program and the interim disability program.

But the overall cuts proposed by Mr. Gray — $187 million including a 0.5 percent reduction in the workforce — are, at best, modest. Instead, there is an unwise rush to raise new money through increased taxes. The boost in the sales tax that was supposed to sunset next year stays in place, and the sales tax base would be extended to include live theater. A new tax bracket, the highest in the region, would be created for those earning more than $200,000 a year. Particularly worrisome are taxes that would adversely affect the business community. Foremost is a proposal to require multistate corporations (Disclosure: The Washington Post Co. likely would be included) to report the combined income of all related businesses when filing taxes.

The District, according to a report prepared by Ernst & Young in conjunction with the Council on State Taxation, is tied for last place in the nation as the least competitive place for new investment because of its taxes. Just across the river, Virginia ranks among the top 10 states as the most competitive. So the last thing D.C. officials should do is impose policies that make the city even less friendly as a place to do business.

If there is an argument to raise taxes, it can be made only after there has been a rigorous scrubbing of all spending. Across the country, states are retrenching while the District, as council member David A. Catania (I-At Large) pointed out at a recent hearing, is talking about increasing spending at double the rate of inflation. “To suggest there’s a world of pain being imposed on people is an absolute joke,” he said. In adopting a final budget, the council should be mindful of living within its citizens’ means.

Kevin Wrege, Esq.

Founder & President

Pulse Issues & Advocacy LLC

Office: 202-625-1787

Mobile: 202-253-4929

4410 Massachusetts Ave., NW, #150

Washington, DC 20016


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