Today on CityCastDC, we are talking about the 2024 DC budget.
Wait, wait, wait.
I know the words municipal budget make people's eyes glaze over, but the annual debate on how
the city is going to spend your tax dollars actually says a lot about where DC is and
where it's headed.
Like, should transportation be free?
Should there be police officers in schools?
Should the city be doing more in general to support low-income residents?
Michael Bryce Sadler from The Washington Post has been covering the city budget debate.
He's here to tell us what made it into the budget, what was cut, who won and where things
go from here.
Today is Thursday, May 18th.
I'm Michael Schafer, and here's what DC is talking about.
Michael, thanks for being here.
Sure, good to talk to you, Michael.
So the DC council passed a budget, the first of two votes it has to pass this week.
What does that mean?
Is this like the start of the process or the end or the middle or what?
This is pretty close to the end of the process.
So the budget process in DC is a months-long endeavor that usually begins with the mayor
working with her own budgetary team in the CFO, figuring out the city's finances, and
then she is tasked with building a balanced budget, factoring in all types of cost, short
and long-term over a course of a four or five-year financial plan.
Then that budget gets transmitted to the council, and the council gets to basically kind of
hash it apart, determine what priorities they think the mayor nailed it on, what should
be spent otherwise.
Then the various members take their thought to consideration, send them to the chair of
the council, and the chair ultimately presents a finalized draft, you could say, that the
members vote on, and that's what they voted on yesterday.
In your report about this, you wrote that district leaders have repeatedly described
this year's budget process as one of the most arduous in recent history.
Why is it arduous?
Well, much like the global economy is a bit unstable.
Right now, DC has some questions about its own finances, particularly in the long-term.
You have commercial properties, downtown that are a significant source of revenue.
You have questions about how sustainable that revenue will be moving forward when we have
increased remote work.
Those vacancies, property values have gone down.
So there's questions about how much revenue DC will be able to bring in in the out years
compared to what it's used to.
Not to mention you have contracts with the teachers union, collective bargaining agreements.
Other payments that the city has to make in the pandemic also really exacerbated things
in the sense that the federal government offered many cities and states funds to supplement
programs for housing, low-income residents, things of that nature.
And those funds are set to expire this upcoming fiscal year.
So when you're thinking about long-term budgeting, and you have, you know, the chair of the council
actually described it as something of a fiscal cliff in the sense that a lot of these programs
that had a boost for one or two years during the pandemic will no longer have that boost.
So council members in the mayor had to think about, well, how do we proceed knowing that
demand for some of these programs is still high?
And the funding source is going to have to change.
So you're saying there's challenges on both the income side and the spending side?
Yes.
One question about the income side, which I've always wondered.
There's a lot of talk about the disasters of downtown and the low occupancy in offices,
vacancy rates, stores closing.
How tied to real estate values is the DC's tax base.
You know, some places, almost all the money comes from real estate taxes, some places,
almost all the places taxes come from sales or income tax.
Where's DC's set?
Last fiscal year was about 9% of DC's overall revenues came from commercial property values,
especially from big office buildings in DC is unique and that our downtown is made up
of a lot of these buildings.
You have the federal government that occupies some of them.
So in some situations were really stuck.
If the feds aren't coming back downtown, what are we going to do with these buildings?
So that's been a big discussion point for a long time, but it is a significant source
of revenue and it's been a priority for the mayor and a lot of members of the council
on how do we make up for this as these buildings are depreciating in value.
Right.
And it's challenged across the country because as people work from home, downtowns are in
trouble.
Let's dig into some of the specific issues on the other side of the ledger on the spending
side.
Transportation, I don't know, maybe that was the one that got the most attention and heat.
They were arguments over the so-called K Street transit way, which is redoing K Street in
the heart of downtown for with bike lanes and bus lanes and making it prettier in general
versus this proposal to have the city pick up the tab to make Metro bus within the district
free.
There was talk about cutting circulator buses and a potential congestion surcharge on ride
shares.
Can you give us a state of play?
What's been approved?
Where did we land?
Sure, so everything you just mentioned was all part of that back and forth over the past
several months of what should be funded and prioritized and really was probably the most
boisterous, I could say, argument between the mayor and the council.
So what we're at now is the council initially hoped to make Metro buses free.
It didn't work out.
The Metro Board said earlier this month that the plan needed more regional input, needs
to be pushed.
The council has also delayed a proposed 116 million makeover of the K Street corridor.
The Bowser really wanted so you have no free buses.
You have no K Street corridor, at least not until probably next year.
But what you do have is 13 or so bus routes that are going to be 24 hours, which was a
component of the free bus plan that has been salvaged.
So we have 13 24 hour buses that are supposed to begin in January that made it.
And you also have instead of a $2 congestion fee for ride hailing trips that was really
not popular among the council and residents and Uber and Lyft.
You have a 25 cents quote unquote digital dispatch fee that's just going to be applicable
to all ride share rides in the city moving forward that are going to be used to fund
and part the 24 hour buses as well as some other initiatives that the council funded.
So just to be clear, the buses you'll still have to pay for them, but the DC taxpayer
basically is going to make up the difference to Whomata of what they'd be losing on running
these overnight lines.
Yes.
And to clarify that the $2 proposal was only downtown, but the surcharge is for all rides
all over the city.
That's right.
Two dollar congestion fee was for specific times of the day.
It was supposed to just be applicable to the downtown corridor.
What you have now is a 25 cent surcharge for combustion vehicles.
That is for any ride share ride you take in the city.
It's not just downtown.
It's getting point A to point B anywhere.
But if it's a Tesla Uber, it is exempt.
Quite exempt is just a slightly lower cost.
I think it's 15 cents if it's a hybrid and 10 cents if it's a electric vehicle.
So another issue that's been a big deal in DC, particularly as there's been a lot more
media attention to crime is school safety.
Council had decided they were going to pull police officers out of school saying that
they make schools less safe.
Now there's been a lot of pushback and they're considering keeping police in schools.
It's been kind of confusing.
Where did they land?
So yes, you're exactly right.
A couple of years ago, the council moved to pull police out of schools, which was a pretty
controversial vote.
Even two years ago, the mayor was against that plan.
She still is.
And what we've evolved to is that successful proposal by the mayor to sunset that it was
a gradual pull out of police in schools that was supposed to end in 2025.
That's now seized.
No longer will police be pulled out of schools.
And in the interim, another council member, Zachary Parker, proposed convening a focus
group or a committee in a sense that will explore alternatives to policing in schools.
But in the meantime, police are able to stay in schools.
They don't need to be pulled out anymore.
So that is kind of a reversal of what the council did a couple of years ago with the
understanding now that as the city thinks through alternatives, it's better to have some
form of safety in there until they come up with something different.
So there's a lot of other stuff that council, it's sort of perennials for council that they
want to fund.
There's affordable housing stuff.
There are increased food benefits as child care tax credit.
On Tuesday, like at the 11th hour, Zachary Parker, who's a council member, proposed a spending
plan that was going to address this.
Other council members did not go for it.
What happened?
So Parker, and he's actually the same lawmaker who proposed the committee to look at policing
alternatives in schools.
He wanted to go a little bit further to think of ways to fund programs for low income residents,
such as rental assistance, he was interested in a new child tax credit.
He wanted more support for homeless services, for SNAP benefits.
Things in the budget that a lot of members would be happy to see, but in a tight budget,
we couldn't quite find money for.
He had the idea of basically extending a high tax rate that currently exists on big commercial
land deals that was imposed back in 2019 by the mayor and the council.
It was said to expire this year, I believe in September.
His idea was, hey, let's not let that expire.
Instead, let's extend it for four more years and use the revenue from that to pay for these
programs to put more money into it and hopefully be able to help more residents in need.
And one of the reasons people wanted that big commercial deal tax to expire was because
they are hoping to see a lot of big commercial deals as they convert downtown office buildings
to residential.
That was the logic there, right?
Right.
So a few lawmakers yesterday mentioned that there are some commercial property owners,
some business owners who have actually been waiting for this higher rate to expire before
making transactions because it's more costly to them.
So there was a fear with this proposal that even NAC is talking about office to residential
conversions that this would potentially create more lags in building sales all across the
city which could impact the city's economic recovery long term.
So there was quite a bit of pushback on Parker's proposal even though it was a bit of games
manship from him to say, hey, members, I have a way to fund all these things here.
I know you're interested in like Christina Henderson, for instance, introduced a bill
that passed to raise DC SNAP benefit that hasn't been funded yet.
He tried to say, hey, if you go along with me on this, we'd be able to help fund that
bill.
But even Henderson was a bit apprehensive at the idea of not letting this tax expire saying,
hey, we made a commitment that we were going to let this expire and we shouldn't be nig
on our promise.
And there were other concerns that this is just it's not sustainable to use attacks like
this to fund these programs at a super high rate.
I think Parker said it would be 390 million that could be generated if this tax was able
to stay in place for a few more years.
So he said he wants more talk ahead of the final vote addressing some of the budget concerns
in Ward 7 and 8 which are the two mostly east of the river wards that have historically
had the most poverty in the district.
Does that mean we're going to see this plan come back before the final vote?
I'd say it's really unlikely you see this exact plan come back.
He withdrew it for a reason knowing that it wasn't well supported or regarded.
So what we'll likely see and this usually happens between the first and second budget
vote is people getting creative trying to find last minute ways to create revenue like
he did or at least find sources of revenue I should say to fund things at the 11th hour
and sometimes they work, sometimes they don't but it can be pretty tricky to win over enough
members to have a proposal like that go through especially a tax increase which is always
a touchy subject.
So I think for a lot of folks with long memories like going back to when the city went broke
in the 90s the specter of things like the council killing a one time infrastructure spending
like K street in order to pay for ongoing programs like 24 hour Metro bus routes it feels
kind of scary because it's sort of apples and oranges and so on.
What do people say about how sustainable that move and the budget in general is in the long
term?
It's been a big piece of the mayor's critique.
Sherry, when it comes to K street it wasn't killed solely to fund other programs.
There were concerns from members about is this actually the right time to try to tear up
K street and beautify it when we're trying to push people downtown now.
The chairman brings up oftentimes conversation of downtown needs to be fixed now is not something
we can wait for and however long this project is going to take.
So let's and not to mention the other big criticism of the K street plan is that it's
a little bit dated it was conceptualized before the pandemic before remote work looks
the way it does now.
So the counter argument to the current K street proposal that Bowser's before is let's rethink
it let's think about how this works in our current environment come up with a plan that
everyone can agree on is not dated and is good and then will implement it next year.
And they've left eight million in the budget for the city to do get that come up with another
plan.
Now I don't think everyone would agree that the current plan is necessarily bad.
Certainly the mayor would say it's you know her her version is good and then it should
have started when it was supposed to start but ultimately the council was able to punt
to the year but there is a firm commitment from the chairman and council member Charles
Allen who leads the transportation committee that you know assuming the plan they come
up with is good and everyone agrees on it this will be funded next year.
So it's just a one year delay it's not killed entirely.
I mean is this sustainable budgeting like the stuff they have funded can we reasonably
expect it will be fundable in five years or ten years.
I would say no.
I mean realistically programs like emergency rental assistance for instance.
There's an understanding that right now even as BC as maybe you could say post the peak
concerns of the pandemic or post you know where we saw the most levels of unemployment
during the pandemic that people are still in need of this emergency rental assistance.
The council said that within two months of this year that the 43 million that was allocated
ran out so the mayor funded it at eight million next fiscal year and they were like hey eight
million is not going to last a day if we couldn't get 43 million to last for you know
a few months so realistically though no they're going to need to figure out another way if
they'd like to continue to fund say emergency rental assistance at forty plus million dollars.
You're not going to be able to continue to kill plans and things like that to make it
work.
In the future either this mayor or another mayor is going to have to either propose getting
rid of it or raising some other form of revenue to pay for it.
Right.
I guess lowering it you know lowering the funding back to what we saw before the pandemic which
is what the mayor sought to do in her original budget proposal she came out and said this
is not sustainable we need to be thinking about how we fund programs long term and a
lot of stuff was pumped up because of short term federal funding that was given to states
for the pandemic and it created a fiscal cliff the city is working to try to make it less
dramatic for the people who are still relying on those services you had cuts to the mayor
proposed cuts to legal aid to victim services that had been funded at a higher level than
they were in the past so they were able to make up some of that for now but it's not a
long term spending plan or anything like these these are one year fixes and they'll need
to look at this again next year.
So there's one more vote when is it and do you expect any changes between now and then?
So the next vote on the budget is May 30th.
I would expect you'll see members like Zachary Parker or others you know Trion white and
white you mentioned the council members from Ward 7 and 8 both came forward and say hey
we don't think this goes quite far enough on some of the things we'd like to see change
in our wards Trion white held a press conference outside of the Wilson building city hall downtown
before the vote and really lamented the fact that there's a number of recreation centers
and schools in his ward who that need help so he's trying to think of ways to find money
to go toward construction at those schools and to clean up fields and to beautify the
area a bit more so I think we'll see proposals like that.
I don't think we'll see any type of major overall that would have significant consequence
on how things look now but usually the most changes come between the first and second
vote so we'll have to see.
Michael Bress-Sadler thank you thank you thank you for being here.
Sarah thank you really appreciate it Michael.
And that is all for today here on CityCast DC if you enjoyed the show do us a favor and
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talk to you then.
the next week.
the next week.
the next week.
Thank you.
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