The D.C. Council held its first vote on the Fiscal Year 2012 budget on May 24, 2011. (For more on the process, see the D.C. Fiscal Policy Institute’s FY 2012 Budget Toolkit.) The Council’s budget makes several changes to the Mayor’s proposal that affect both revenue-raising measures and expenditures on safety net programs.
Perhaps the most notable change in revenue enhancement measures was the Council’s decision to abandon Mayor Gray’s proposed 0.4% income tax increase on individuals earning more than $200,000 per year. The Council decided instead to adopt a measure that Legal Aid has endorsed on multiple occasions: eliminating DC’s exemption on interest collected from out-of-state bonds. At the beginning of this budget season, only D.C. and Indiana exempted interest earned on out-of-state municipal bonds from taxation. The Indiana Legislature voted to end their exemption in early May, and the D.C. Council followed suit on May 24. Although this measure raises less revenue than the proposed income tax, it (along with other changes to the revenue distribution scheme explained here) allowed the Council to give some support back to the hardest-hit safety net programs.
TANF: The Council voted to restore $4.9 million to TANF, which would avoid additional time-limited cuts for FY 2012. The Budget Support Act, the subject of the second vote on June 14, still includes benefits cut to begin in FY 2013.
Homeless Services: The Council voted to restore roughly $17 million to the budget for Homeless Services.
Interim Disability Assistance (IDA): The Council added $1.5 million to preserve IDA. The District is currently reimbursed about 40% of the money it spends on IDA -- a high percentage relative to other states, but an amount that has come under the Mayor’s attack. Under the May 24 budget, the Department of Human Services must review the IDA program to see if there are ways to increase IDA’s reimbursement rate. Although the Council has allocated some money to IDA, it is only enough to serve about 500 residents – less than one-half of the current IDA recipients. The Council voted to add additional funding to IDA if revenues in DC increase above the currently projected amount.
Even with these restorations, a significant amount of the District’s budget cuts still fall on the most vulnerable communities. In addition, there are lingering indicators – such as the review of IDA and the continued enthusiasm for a time limited approach to the broken TANF program – that safety-net advocacy will remain vitally important during the next budget cycle. Nonetheless, the Council should be commended for its efforts to preserve and improve the safety net, and for its commitment to strengthen some safety net programs with additional revenues. If the Council were to restore the modest income tax increase and include the elimination of the bond exemption, the social safety net would be in far better shape.
The final budget vote, which will solidify legislative changes through the District’s Budget Support Act, will be held on Tuesday, June 14. At this point, the amount of money available in the budget is finalized, but the allocations of funds can still change. Thus, we urge you to reach out to your Council Members and encourage them to consider restoring the modest tax increase and do all they can to maintain the restorations to safety net services that are critically important to our client community.
For more information about the first budget vote, see:
D.C. Fiscal Policy Institute - The DC Budget Vote: So What Happened?
Washington Legal Clinic for the Homeless - Shelter System Crisis – Averted!
Washington Post - Upper-income residents in D.C. won’t face higher tax rate
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