Public Briefing - The Executive's Fiscal Year 2011 Budget Gap-Closing Plan

Tuesday, November 30, 2010 9:30 AM

Location: John A. Wilson Building, Room 500
Committee of the Whole, Vincent C. Gray, Chairman
Testimony, David Schwartzman, dschwartzman@gmail.com, 829-9063
DC Statehood Green Party

A balanced budget should not be the first priority of the City Council’s deliberations, rather it
should be a just budget that is balanced. If the Council passes Mayor Fenty’s proposed budget
for FY2011 intact it will be a budget balanced once again on the backs of the poor, a repeat of
the Control Board era, as well as the budgets passed in the last several years, which have
progressively reduced funding for essential programs such as affordable housing and child
care. Mayor Fenty’s proposed budget provides for a $43 million cut in programs that serve low
income residents, according to the analysis of the DC Fiscal Policy Institute. In these times of
recession and depression for our low income community, this approach translates into still
another round of the war on the poor, and must be decisively rejected by the City Council. To
claim that everyone must bear the burden of balancing the budget is equivalent to saying the rich
and poor have an equal right to sleep under bridges.

Here are key recommended actions by the City Council that would support a just budget for
FY2011:
1) Cancel all cuts in services for low income residents called for in Mayor Fenty’s
proposed budget.
2) Add at least $100 million to the budget for the same services. This will
partially make up for the onerous cuts made in programs for affordable housing, child
care and other services for low income residents since FY 2008, with affordable
housing cut by one-third and child care cut by one fifth in FY 2010 (DC Fiscal Policy
Institute).

Let us assume a round figure of $150 million for incremental revenue is needed to balance the
FY 2011 budget, while also avoiding other hurtful and unnecessary proposed budget cuts, where
will this revenue come from?
I submit the following sources are more than adequate:
1) Our progressive restructuring plan for the DC income tax includes a modest hike
in the tax rate of the top 5% income bracket. Our plan using the 2007 income levels
generated $116 million/year additional revenue, while giving significant tax relief to
the bottom 60% of DC families. Now the revenue generated would be about 20%
higher using the latest available income data (Matt Gardner, ITEP). For details go to:
http://www.dcstatehoodgreen.org/testimony/fairtax. Note that the effective increase for
the top 5% income bracket would be about 1.4% of family income, or less than 2
cents/dollar. With lower tax relief for the bottom 60% income bracket even more
revenue could be generated.
2) A curb on corporate welfare, i.e., unjustified tax exemptions and abatements.
Councilmember Michael Brown introduced B18-0400 in 2009. We urge that a
strengthened version be adopted. Councilmember Brown estimated that $350
million/year is lost from our revenue from tax exemptions and abatements. Further,
 some $150 million/year is paid in rent to the corporate sector for municipal use when
publicly owned property could be used for the same purposes in many cases.
3) Potential PILOTS (payments in lieu of taxes) from tax-exempt entities such as the
World Bank, IMF, Fannie Mae and non-educational activities of universities housed in
the District. Our Mayor-Elect and Council should mount an aggressive public
campaign to get PILOTs. Hundreds of millions of dollars are waiting to be collected
from this source, just like is already the case in other cities.
4) And here is one legislative step that could make a big difference: our Mayor-Elect
and Council should act to establish a DC municipal (state) bank, that could leverage
billions of dollars in DC taxes and fees for local green economic development, living
wage jobs, and truly affordable housing, instead of continuing depositing this revenue
into Wall Street banks. The North Dakota State Bank shows this approach works to
support its local economy.
On the public bank concept go to: http://www.yesmagazine.org/new-
economy/campaign-for-state-owned-banks

In conclusion, revenue sources can be found for a budget that better serves the needs of our
residents if there is the political will to break with years of subsidizing the very wealthy and big
corporate sector. Positive social investments are preventative medicine to avoid much greater
costs in the future, the costs of more incarceration and needless suffering (see Money Well
Spent, Justice Policy Institute, at http://www.justicepolicy.org/content-
hmID=1811&smID=1581&ssmID=104.htm). Also see: “One City” a Pipe Dream, or Is Another
DC Possible? (http://www.dcwatch.com/themail/2010/10-10-13.htm).

Finally, I urge the Council to support full funding of the Renewable Energy Trust Fund (DDOE),
a vital program promoting solarization in our community, and to insure $250,000 is kept in the
FY 2011 budget for DC Statehood efforts.