jonetta rose barras: Mayor Bowser’s budget ignores her own financial warning 

Mayor Muriel Bowser submitted her $15.5 billion 2020 budget to the DC Council this week; $8.6 billion of the total comes from locally generated taxes and fees. The proposal as presented is a 7 percent increase over this year’s budget. New spending is propped up, in large measure, by a hit on commercial property owners. As proposed, the financial plan provides indisputable proof that Bowser remains an incurable spendthrift.

Obviously that wasn’t her take: “This budget is about ensuring that everyone living and doing business in the District is giving and getting their fair share,” she said in a prepared statement Wednesday. She said the proposal “advances our DC values and addresses our city’s most pressing challenges.”

Bowser called on “commercial property owners to share some of the upside so that we can invest more in keeping DC affordable for Washingtonians across the income spectrum.”

This marks the second year that Bowser has hit the business community to fund unrealistic or unnecessary increases in government spending. Under her administration the DC government has become obese — some might say morbidly obese. She has created new agencies and added new positions — a deputy mayor for operations and infrastructure and an assistant city administrator for internal services, for example. These new offices require additional support staff, supplies and, well, you get the picture.

Bowser’s 2020 budget follows that trend, although on Monday, during her State of the District Address delivered at the University of the District of Columbia, she argued officials should limit their check-writing. “We are resilient, but we are not financially tsunami-proof,” she said. “And, as we continue through budget season, we must resist the temptation to write checks now that we cannot cash in recessionary times.”

Perhaps she did not hear the words coming out of her month.

To be fair, her plan included increased or new spending for some important functions, such as fire and ambulance services (an extra $3.5 million for four ambulances and 45 firefighter-paramedics or emergency medical technicians), new place-based trauma centers ($1.6 million), second-year funding for school mental health services ($6 million), public education (a $56.4 million increase), and affordable housing (over $200 million for four separate programs, including Homeward DC). The housing investments, which will help low-income as well as middle-class residents, could be worth celebrating. However, the Bowser administration has had a poor track record of getting money out the door for construction as well as preservation projects, according to reports by the DC auditor.

There are other aspects of the mayor’s budget that scream frivolous or illogical, however. Consider her decision to permanently offer free rides on the DC Circulator — a move expected to cost the city at least $3.1 million, according to the budget proposal. Currently, there are whole swaths of the city not served by the DC-managed transit program. She has proposed bringing Ward 7 into the system. Wards 4 and 5 would remain on the outside. When asked by Ward 5 Council member Kenyan McDuffie about the absence of service, Bowser said the city doesn’t have enough buses or a large enough maintenance yard right now to accommodate expansion.

Instead of passing out free rides like tap water, couldn’t that money help to fund those equipment and land needs so that the entire city can be better served? Further, enhancing the capacity of the Circulator could result in a future reduction in the District’s payment to Metro for bus services.

Bowser urged council members “to think more broadly about what our best investments are.” Once again, she seemed to have ignored or halfheartedly taken her own advice.

She has proposed, among other things, a massive increase for the relatively new  Immigrant Justice Legal Services Grant Program from $900,000 to $2.5 million, without any evaluation of its effectiveness. She also has placed $122 million in the budget to create a K Street NW transitway. Meanwhile, residents in many neighborhoods have decried the deplorable state of their streets and sidewalks; while there’s money in the capital budget for repairs, it’s not until 2025 that the planned investments would eliminate the backlog of roads and alleys now rated as poor, according to the budget summary prepared by the mayor’s office. She has included salary increases to $14 per hour for youth in the summer jobs program; the extension of last year’s early learning tax credit, making it permanent; and creation of “Families First DC,” an initiative that appears to duplicate the existing network of organizations known as family strengthening collaboratives.

The freebies and program expansions would be paid for, in part, by hiking the tax on commercial property sales. The fee on those transactions would be raised from 1.45 percent to 2.5 percent, yielding about $90 million in 2020, according to DC officials. Additionally, Bowser has removed the $25 million commercial property tax cut that was expected to go into effect in 2020.

Several council members privately expressed dissatisfaction with the tax increases. But for the desire to increase spending, the hikes are unnecessary when weighed against the fact that the city posted a $200 million surplus for fiscal year 2018.

While Bowser and others have touted the city’s prosperity, truth be told DC’s fiscal road ahead isn’t necessarily smooth. Council Chairman Phil Mendelson has admitted that  developing the final budget and financial plan won’t be easy. “It’s going to be tight. Revenues are not dropping; they just are not increasing as fast as we thought they would be,” he said.

“It’s not a crisis; it does make things tight,” Mendelson added.

Neither the mayor nor Mendelson mentioned the fact that the fourth largest expenditure in the local budget is debt service and financing; 12 percent of the $8.6 million in local funds would go mostly to paying off previous borrowing and other related costs. This percentage exceeds that for either public works or economic development.

During Wednesday morning’s meeting with the mayor, some council members asked questions, but they mostly talked about favored projects or services that would affect their constituents. Legislators should resist their own spendthrift tendencies. Further, they should reject the wasteful spending in the mayor’s budget, restore tax cuts for businesses and reject the tax hikes.

In other words, while embracing the truly high-priority programs or initiatives in Bowser’s budget proposal, council members should aggressively move to scale back spending. Chief Financial Officer Jeffrey DeWitt offered more than enough reasons for such a strategy last month in a letter to elected officials: “The federal government remains the major engine in the District’s economy and uncertainty in the outlook for this sector is of great concern,” he wrote.   

Compounding the need to diversify the local economy is this reality: Job growth has slowed, and the geyser of new residents has become a trickle. So far in this fiscal year, the city has had lower collection of sales, property and income taxes than previously anticipated; that slowdown in growth likely will continue through 2020.

The February economic indicators for DC recently released by the CFO acknowledged that while the number of residents employed increased by 6,200 (1.6 percent) in December compared to the same period in 2017, the unemployment rate was 5.4 percent in December — 0.1 percent higher than the previous month. The federal-government sector lost 3,400 jobs, a 1.7 percent decrease compared to a year ago; meanwhile, the education and health sector lost 800 jobs, a 0.6 percent decrease compared to the previous year.

DeWitt said in his February letter that the “national economy is nearing the end of its 10th year of expansion and, while we are not predicting one, a recession may occur during the financial plan and adversely affect the District tax base.”

Experts’ predictions for a recession are 1 in 4 for 2019 and 1 in 3 for 2020, he added. Hopefully, elected officials understand that trendline — no one wants to see the return of the 1990s financial control board.

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jonetta rose barras is a DC-based freelance writer and host of The Barras Report television show. She can be reached at thebarrasreport@gmail.com.