The D.C. Council is eyeing a range of tax increases on income, gasoline and even snack foods to close a massive budget gap in fiscal year 2010 and beyond, city lawmakers said Monday.
The council also floated the prospect of wage reductions and spending cuts during a lengthy hearing aimed at dealing with looming shortfalls.
Council members warned that no agency is safe from the budget ax as deficits are expected to reach $150 million in 2010 then widen in 2011 and 2012 to more than $1 billion annually.
“For me, everything is on the table,” Council Chairman Vincent Gray said during a public briefing on Mayor Adrian Fenty’s proposed gap-closing plans. “I intend to look at both revenue enhancements and expenditure cuts.”
Fenty’s revised 2010 budget, slated for a council vote July 31, suggests closing the $150 million shortfall with agency reductions, fee increases, job cuts, earmark curtailments, stimulus dollars and the transfer of dedicated taxes and other revenue to the general fund.
But Gray said the mayor’s plan does not go far enough: Taking into account a transfer to a retiree benefit trust fund and other one-time expenses, the budget gap next year is actually $337 million, the chairman said.
“We should be looking at all manner of strategies,” said Ward 1 Councilman Jim Graham.
Graham has proposed a new 8.9 percent tax bracket on D.C. residents earning more than $500,000 a year.
Ward 6 Councilman Tommy Wells, meanwhile, suggested a three-cent gas tax increase to bring the city’s levy in line with that of Maryland.
Wells also asked City Administrator Neil Albert, speaking for the administration, about a tax on snack foods.
“I didn’t look at that as a revenue enhancer,” Albert said.
At-large Councilman David Catania warned against tax increases given that Virginia’s tax rates already are significant lower than the District’s. “If we don’t keep our eye on the ball, if we don’t stay competitive, what you will hear are millions of square feet of commercial Class A office space going and creating new Ballstons, new Clarendons, new Courthouses, new Arlingtons,” Catania said.
Rather than raising taxes, Catania suggested freezing wage increases for unionized workers, or limiting cost of living increases for retirees, or cutting wages 2 percent across the board for all District employees: “The mayor on down,” Catania said, “every last one of us.”
