Council approves FY 2015 budget proposal on first reading

Fiscal Year 2015 Budget Vote: Some Context and Some Content
In the days leading up to the Council’s first vote on the District’s budget, and in the time since, much has been written in the press and on social media regarding selected aspects of the budget’s content. Let’s step back, though, and consider the broader procedural and operational context of the budget.

Process
Before the Council takes up the budget in the spring of every year, it has been in development by the Mayor and within the agencies since the previous fall. Agencies submit their proposed budgets to the Mayor and Chief Financial Officer late in the calendar year, and by early February the first outlines of the budget come together. In late winter, the Council also holds oversight hearings to review the previous year’s operational performance by agencies. In late March to early April, the Mayor submits his budget to the Council, which then “breaks it apart” and assigns to each committee requests from agencies under its purview. Each committee reviews the budget for its agencies and holds public hearings on agency budget requests. Then each committee marks up their portion of the Mayor’s budget and reports out on it. In May, the work of the committees is merged into two documents that encapsulate and expand upon that information: the Budget Request Act and the Budget Support Act.  The Council then approves the city’s budget and submits it to the Mayor for his signature.

The Budget and Budget Autonomy
As discussed elsewhere on this site, the Mayor and 83% of District voters supported the Council’s effort to achieve budget autonomy for the District. As we have pointed out in earlier budget autonomy documents, 75% of the District’s revenue is locally raised. When this amount is combined with the 24% of the budget that is federal formula funds that all states receive, that leaves just a tiny 1% sliver of the District budget that is comprised of federal discretionary funds that Congress inputs. Despite this, the full District budget must be approved by Congress, and only three times in the past quarter century has Congress done so prior to the start of our fiscal year on October 1. The Council recently sued the Mayor in order to gain clarity on the issue. While an initial court decision was unfavorable, an appeal is currently pending. At this time, it appears that this year’s budget will follow the current process regardless of the decision in that appeal.

The First Vote on the Budget
On May 28th, the final draft of the Budget Request Act and the first draft of the Budget Support Act were discussed and voted on. The Budget Request Act includes the agency funding levels necessary for the operation of the government, whereas the Budget Support Act usually contains details of new programs and initiatives, as well as new policies for the District government. Because the Budget Request Act is akin to a federal document which feeds directly into the federal budget, it requires a single vote by the Council. The Budget Support Act, like most Council legislation, requires two votes before it is enacted.  This year, the second vote on the Budget Support Act will be held on June 24.  Like most budget votes, the first vote on the FY 2015 budget was supported by the majority of the Council.

What’s in the FY 2015 Budget
The budget as passed on May 28th includes approximately $12.6 billion in funding.  Specifically, it contains:

• A large tax reform package that at full implementation will cost around $165 million per year. The particular reforms enacted were long in the making, and originated with the Council-created Tax Revision Commission, chaired by former Mayor Anthony Williams. By expanding the Earned Income Tax credit, aligning deductions and exemptions with those at the federal level, and creating a new middle income tax bracket, the reforms ensure that low- and middle-income District taxpayers will keep more money in their pockets to fund their daily needs. Additional reforms (including those to the estate, business, and sales taxes) were intended to close loopholes, increase fairness to taxpayers, improve competitiveness with neighboring jurisdictions, or achieve parity with federal tax law.
• Responding to increased need and vocal advocacy, the Council approved a series of funding increases for human service and homelessness programs that serve the neediest among us. These included multimillion dollar bumps in funding to a half dozen tested and successful programs that help to keep people who have homes from slipping into homelessness, and to move the homeless into housing.
• The Council reiterated its support for the District’s streetcar project, specifically to a six-year, $400 million funding commitment. Additionally, the Council provided $187 million towards the replacement of the Hopscotch Bridge, a necessary component of the streetcar project. Importantly, the Council urged the Mayor to restore confidence in DDOT’s ability to successfully administer the streetcar project. As of May 25, 2014, the streetcar project had over $100 million in unspent funding.
• Instead of funding the creation of a new $336 million hospital east of the river, the Council opted instead to follow consultants’ recommendations and save $200 million by investing $135 million to bring the existing United Medical Center up to a standard of excellence, seek an operating partner, rebrand it, and improve patient care there.