In an era of shrinking budgets, the District’s government has an unusual fiscal conundrum: It has millions more dollars than anticipated, and the looming fight for city leaders is about how to spend extra cash, not how to find — or cut — more of it.
Before Mayor Vincent Gray announced a $240 million surplus from 2011 two weeks ago, the D.C. Council was already planning a battle with the city’s chief executive over the extra $42 million the District expects to rake in this year.
So far, Gray and members of the council have floated trial balloons of every fiscal stripe, including tax cuts, bulking up the District’s savings account and doling out extra dollars to public schools.
The idea of slashing income and franchise taxes — those revenues increased $97 million in 2011 — has much of the attention, especially after Council Chairman Kwame Brown said D.C. should consider a repeal of September’s tax increase.
“At what point are we going to continue to fee and tax them to death?” Brown said of District residents. “Everything should be on the table.”
But Gray’s office says using the $240 million surplus for anything — including tax cuts — beyond the District’s savings account is a nonstarter, even though activists have urged spending on everything from longer library hours to better equipment for firefighters.
“The surplus is one-time money. Tax cuts or recurring spending on programs require ongoing funding over five years,” the mayor’s office wrote in a handout for reporters. Gray’s office said repealing the tax cuts or spending the money would be “unwise” and unlikely to win approval from the District’s chief financial officer.
Council members and mayoral aides agree, though, that there’s far more flexibility when deciding how to use 2012’s surprise $42 million.
“The $240 million year-end surplus is not touchable,” said Ward 2 Councilman Jack Evans, the chairman of the council’s finance and revenue committee. “The $42 million revenue estimate increase for the quarter is touchable.”
Gray has outlined his ambitions for the $42 million: half to public schools, $10 million for health care and $11 million for the department that maintains city vehicles and buildings.
That plan didn’t impress the council. Though Gray said he wanted lawmakers to vote on his budget request last Tuesday, they never even placed it on the agenda.
Pedro Ribeiro, a spokesman for Gray, denied that legislators had dealt the mayor a defeat.
“They haven’t said that they’re not going to take it up,” said Ribeiro. “We hope to continue to work them. It was absolutely not a defeat.”
