The District is accumulating record surpluses and touting its economic successes, but legislation before the D.C. Council to cap property taxes on homes and commercial buildings might be too costly to bear.
Two bills currently under consideration by the finance and revenue committee would carry a $1.26 billion fiscal impact over four years. Given the staggering figure, tax relief comes down to “where we can do it and where we can afford it,” Council Member Carol Schwartz said during a recent council hearing.
The District spends an incredible amount on schools and human services but doesn’t get the expected return, said Ward 2 Council Member Jack Evans, the finance committee chair. In the meantime, he said, property taxes are driving businesses out of the District and residents out of their homes.
Evans introduced both bills. One would limit property tax hikes on owner-occupied residences to 5 percent a year, down from the current 10 percent. The other would cap tax increases on commercial buildings at 10 percent, a tool to contain soaring rents for small businesses, Evans said.
“From Georgetown to Capitol Hill and all points in between, property owners and tenants are being taxed out of the city,” said Roy Eppard, senior property manager with Axent Realty Group. “Any outward migration of small business owners and property owners can be alleviated” by passing the legislation.
But the bill, co-introduced by Council Chair Vincent Gray, would consume more than $230 million a year from the general fund and chiefly benefit a “relatively small number of large corporations,” the owners of 561 large commercial office buildings, said Robert Ebel, deputy chief financial officer for revenue analysis.
“I’m putting this out for discussion,” Evans said, “because if we want to help small retailers, this is one method of doing that.”
Limiting residential property tax hikes to 5 percent would cost about $17 million a year, a price the city can afford, Evans said. But homeowners already benefit from generous tax relief, critics of the bill argued, while government services continue to suffer.
