jonetta rose barras: Swimming in money — but how soon will the drought come, and what’s the plan?

When governments run by prudent decision-makers have money to spare, they generally opt for big investments that will significantly enhance community assets while raising the quality of everyone’s future reality. Mayor Muriel Bowser’s administration apparently isn’t intimate with that approach. 

Swimming in money — a sizable portion of which comes from one-time savings or federal pandemic relief — Bowser could have chosen to focus in her proposed fiscal year 2023 budget and financial plan on a few big expenditures aimed at dramatically cranking up the economy, stabilizing downtown, raising employment in the District and rescuing commercial properties. Instead, she and her team seem to have decided to fritter away the value of taxpayers’ dollars — $19.5 billion to be precise.

That’s your money. Stay with me here. 

Nearly $11 billion of that $19.5 billion budget comes from local revenues — sales taxes, income taxes, property taxes, for example. 

Bowser’s proposal essentially hands out small sums of money to special-interest groups and favored constituents, maintaining the status quo while occasionally tweaking around the edges.  “It’s a chicken in every pot” — that’s how one high-level government official described the process to me during a conversation last week.

Among other outlays highlighted by the administration, there is $1.7 million for life coaches, yet another anti-violence strategy; $1.1 million to be used over five years to provide rental assistance to residents at risk of violence; $2.6 million to continue operating the city’s animal shelter; $6.4 million to expand the summer youth employment program; and $3.4 million for grants to small- and medium-sized businesses. 

Well, you get the point. 

Some people might celebrate that approach — except it’s a temporary fix. “We’re [flush] at this time. What about when the one-time money runs out?” asked DC Auditor Kathy Patterson, referring to the federal pandemic recovery money that was disbursed to state and local governments. 

“It’s out of control how much money they are spending,” said former Ward 2 Council member Jack Evans, who for years was chair of the DC Council’s Committee on Finance and Revenue. 

The annual gross budget for the city would increase by 6.4% under Bowser’s proposal. However, the local spending jumps a whopping 13.7%, according to government documents. 

Can you imagine increasing your basic household budget at that rate because you received a one-time gift from a relative? It might depend on the size, but even if the gift is large enough to pay for a new car, you’d still have to consider the future costs of insurance and maintenance.

The FY 2023 local budget is balanced using $1.2 billion in one-time funds from savings and the federal American Rescue Plan Act. About $184 million of that money comes from a 2021 surplus — by law, $92 million was deposited in the Housing Production Trust Fund and for pay-go capital improvements. The remainder, along with $724 million from the feds, was designated for agency spending in FY 2023 and FY 2024, according to a spokesperson in the Office of the Chief Financial Officer.

So, yes, officials have come up with a way to keep the full four-year financial plan balanced on paper — but that doesn’t mean the spending will be sustainable down the road.

Evans said that Bowser and DC Council Chair Phil Mendelson should be planning for the future. “It’s a lost opportunity,” he continued. “Nobody seems to be thinking beyond tomorrow.” 

To be fair, Bowser has proposed targeted spending to address historic racial and economic justice issues, including money to help Black residents purchase their own homes and businesses. Equally important, there is $500 million in the Housing Production Trust Fund for affordable housing and a total of $181 million in new allocations for the city’s public charter schools and DC Public Schools (DCPS). It would be deceptive to claim this is a gross operating increase for the latter, though. The approved DCPS budget for this fiscal year is $1,322,728,419; the one proposed for FY 2023 is $1,162,122,368 — a 12.1% decrease, according to government documents. 

There also is $114.6 million spread over two years to modernize shelter space and supportive housing for residents experiencing homelessness. The requested increase for the Metropolitan Police Department is $30 million to expand recruitment, training and retention; that would essentially stabilize the agency, which is expected to lose about 311 officers through attrition between 2022 and 2023.

Speaking on WAMU’s Politics Hour last week, at-large Council member Elissa Silverman said the conversation shouldn’t just be about the amount of spending but also about results. “How is this spending going to lead to better outcomes?

“This $19 billion needs to improve the lives of residents and businesses in this city,” added Silverman.

Those comments echo others made in an opening statement by at-large Council member Robert White when Bowser appeared before the council on March 18: “Every year, our budget hits a record high, and we spend that money plus money that we borrow; but with one record-setting budget after another, we don’t see record-setting impact.

“Having a lot of money is good, but when the problem is a government flailing under the weight of daily scandals and when [the] press has to busy themselves with March Madness-style brackets to determine which agencies are collapsing the worst, the fundamental problem isn’t a money problem,” added White, who is running against Bowser in the Democratic mayoral primary.

Of course, neither he nor other council members can absolve themselves of the responsibility for government failure. They have oversight of it — and of the budget.

The past is instructive. Consider that while the mayor has proposed a 5.9% increase to the per-pupil spending formula for pre-K-12 public education, there is a consensus among education advocates and parents that very little has changed on the ground — which has been the same story for the past several years.

Prior to the release of Bowser’s budget, DC education finance expert Mary Levy addressed this issue in testimony before the council’s Committee of the Whole. “For many years, including last year and this, many schools’ budgets have been unstable, inequitable, inadequate for what is expected of them, and hard to understand.” The mayor’s proposed per-pupil spending increase “seemingly presented the opportunity to change this — but the opportunity has not been taken,” she said.

While DCPS leadership has asserted no school will see any budget cuts, as many as 76 of the 116 are likely to see reductions, said Levy, who has analyzed decades of budgets and related matters as a parent advocate and as a consultant to council members and the State Board of Education. Administrators are misleadingly pointing to last year’s proposed budget numbers, which don’t account for money added by the DC Council.

Schools in low-income communities would continue to lack sufficient resources, yet be expected to engineer a radical turnaround in achievement. Moreover, during the pandemic as well as in the years before, the academic and literacy gaps between whites and children of color have widened — not closed.

If folks want to understand what irresponsible financial planning and management look like, they need only review the recent Chart of the Week published by the D.C. Policy Center that visually captures what is happening in the city. Expenditures appear to outpace revenues throughout the entire four-year plan unless one-time funding is used to plug the gaps.

Evans is right about the spendthrifts in the John A. Wilson Building. He’s wrong, however, about them not caring about anything beyond tomorrow. Although “future” can be a relative term, for politicians it means the next election, which is the June 21 primary. 

That may explain why Bowser appears intent on not allowing any special interest or constituent group to go unfed during a political season where she is running for reelection against two council members — Robert White and Trayon White — and a gaggle of lesser-known challengers. Several legislators — including Mendelson, at-large member Anita Bonds, Ward 1 member Brianne Nadeau and Ward 6 member Charles Allen — are also seeking reelection. Silverman recently announced she was filing paperwork to run for another term, but as an independent she won’t face voters until the November general election. Ward 3’s Mary Cheh has decided to retire from office and Ward 5’s Kenyan McDuffie, the council’s chair pro tempore, is vying to become the city’s second independently elected attorney general.

In other words, the political stakes are pretty high. It’s doubtful that any of those officials will be cautious about the FY 2023 budget. After all, dear readers, it’s your money — not theirs.

The city’s chief financial officer, Fitzroy Lee, hasn’t helped the situation. He has issued a rosy economic projection through 2026. He notes, for example, increases in various revenue collections including income tax. He doesn’t mention that the uptick has come in part because of the tax increase approved by the council to take effect this fiscal year, FY 2022. 

As far as jobs, he predicts that, despite some improvement, “employment in the District is not expected to recover fully until FY 2025.”

Lee did include some words of caution. In particular, he said, commercial real property tax collections are expected to decline in FY 2022 and are unlikely to return to their FY 2021 peak during the financial plan period, as expanded levels of remote work are expected to reduce demand for office space, limiting growth in the value of commercial office properties. 

“The forecast assumes a return to pre-pandemic growth, but the outlook remains cautious due to several risk factors,” he continued. “Geopolitical instability following the recent Russian invasion of Ukraine and inflation are the most immediate risks to the forecast. Over the longer term, risks include population decline and more permanent remote work arrangements.”

This week, the Office of the DC Auditor offered a somewhat-less-cheery assessment with its release of a report prepared by the District Economics Group (DEG), which was hired by the auditor to provide a regular, independent evaluation of District finances as part of the process of preparing the revenue certification required in advance of any bond issuance.

Using its own model, DEG projects that revenues in various key categories will remain flat through 2026. 

In February, the CFO predicted a Gross Domestic Product of $161.3 billion for FY 2022; the DEG forecast is $159 billion — 1.45% less. 

That difference tracks through the entire plan and should alert elected officials that close scrutiny is essential in this year’s budget review. 

In any case, as Evans suggested, it’s clear that Bowser may have missed an opportunity to have greater impact in her budget proposal.

If DC’s downtown is vulnerable to the continuing absence of federal and other workers, shouldn’t the mayor do something? Instead of investing a measly $12.1 million to reimagine tourism — a prime industry in the city — and $12.7 million for “spurring downtown recovery,” shouldn’t Bowser have put together a robust, muscular and well-funded plan? That’s what Anthony Williams did during his first term when DC’s central business and retail districts were deserted, the victims of flight, private-sector disinvestment and failed public policies. Targeted investment downtown and along DC’s waterfront in Southwest and Southeast helped fuel years of sustained growth in the city — and in the District’s coffers.

Each year, city officials underfund economic development programs and services. That may be hard for some people to believe given the propaganda that circulates about the city’s favorable treatment of businesses and developers. In fact, Bowser has proposed spending only a total of  $1 billion — out of $19.5 billion — in FY 2023 for direct economic development and business regulation, according to government documents; that amounts to 4.9% of the budget. What’s missing is an overarching vision that concentrated investments (local or federal) could help bring to fruition — for instance, how to remake downtown so that it is not dependent on the return of daytime workers en masse.

While Robert White didn’t emphasize economic development during his criticism of Bowser’s budget, he made a point shared by many people with whom I spoke: “Our financial fortunes will not always be this grand. We need to make transformative change while we can.”

Let’s see what he and his colleagues do next. The ball is in their court.

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jonetta rose barras is an author and freelance journalist, covering national and local issues including politics, childhood trauma, public education, economic development and urban public policies. She can be reached at thebarrasreport@gmail.com.