Wash Post Op-Ed: Council Chairman Kwame Brown on DC Tax Increases

The hard choices ahead for D.C.

By Kwame R. Brown, Published: October 14

One of the credit rating agencies recently warned that the District’s economy is likely to suffer if Congress and the president make significant cuts to federal spending. The extent of this potential federal contraction is unknown. But the District government must be prepared to respond accordingly. It is time to take a serious look at what we can live without.

Between 2000 and 2010, the District’s local operating expenditures grew by 20 percent, after adjusting for inflation. Several agencies have led this expansion. For example, during this period, the District’s annual payment into the police and firefighters’ retirement system grew by 114 percent; Child and Family Services Agency spending rose by 74 percent; and the D.C. Public Charter School subsidy grew by 59 percent. Again, importantly, these numbers represent real expansion, not the effect of inflation.

It is my strong belief that the District is a better place to live now than it was 10 years ago, but these growth rates are unsustainable, especially in light of the serious threats facing our economy and tax base. We cannot continue to expand the District government unless the District’s population and economy grow at a parallel rate.

The decline in the District’s general fund balance over the last several years is a sign that we are spending beyond our means. Although the council has passed a technically balanced budget every year since the Control Board era, the credit rating agencies have indicated that they do not view a budget as being balanced if it involves spending from the fund balance. That view is reasonable. We must flatten the curve of government growth to more closely align our services with the revenue we receive from an already heavily burdened tax base.

The problem, however, goes beyond the potential decline in local revenue. There also exists a real possibility that federal grants and payments to the District, such as Medicaid reimbursements and allocations from the Highway Trust Fund, will be reduced. If this happens, we will face the difficult choice of whether to divert local funds from some programs to replace missing federal dollars.

Every District resident and business relies on this government to educate the city’s children, pick up the trash, police the streets, respond to fires, maintain the roads and protect the environment; these are the basic services that any government must provide. We also have made policy decisions over the past 10 years to increase and focus our investments in certain areas. For example, with the creation of the D.C. Alliance, we have near-universal health care in the District; with new investments in schools and teachers, we have made significant strides in improving our education system; and we have continued to provide social services at a level rivaled by few cities in the United States. But all of these efforts are expensive. Some of them may be worth re-examining.

Over the next three years, I will work with my colleagues and the mayor to strengthen the District’s long-term financial stability and demonstrate the council’s ability to spend within our means and grow the District’s economy. Having used the District’s fund balance to pay for significant recent expenditures, we must now restore the undesignated and unrestricted portion of those funds. Increasing the total fund balance to $900 million from under $800 million will improve our cash flow and send a signal to the credit agencies that, although we may have to deal with federal retrenchment, we are responsible stewards of the funds that are within our control.

Inevitably, as this process plays out, there will be pressure on the council to increase taxes and fees. But I am not willing to turn to new revenue enhancements to mitigate reductions in federal funding. There are many options for reducing the size of the District’s local funds budget relative to the local economy. At the top of that list must be eliminating underperforming programs in order to adequately fund the basic services that all District residents rely upon.

The writer is the chairman of the D.C. Council.

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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