- The Washington Times - Tuesday, March 7, 2006

The D.C. Council yesterday approved a contingent tax increase — a .1 percent deed and recordation tax increase for commercial properties — that would take effect in 2008 if projected sales tax revenues that year and in following years are insufficient to fund an ongoing $100 million-a-year modernization plan for D.C. schools.

The proposed increase affects one of the taxes commercial property owners must pay when they buy or sell land in the District. The current deed and recordation tax rate is 1.1 percent. It will be raised to 1.2 percent.

Council member Jack Evans, Ward 2 Democrat who introduced the increase, said it would be implemented only if the city cannot generate enough sales tax revenue to support the modernization project. He predicted enough sales tax revenue would be collected, despite less optimistic revenue projections from Chief Financial Officer Natwar Ghandhi.

The tax increase was passed 12-1, with council member Sharon Ambrose, Ward 6 Democrat, voting “no.”

The council unanimously approved the school modernization plan Feb. 7. At that time, Mr. Evans assured them that annual increases in the city’s collection of sales tax revenue would cover the $100 million-a-year plan.

The District’s fiscal 2006 budget is about $8 billion. Last year, the District collected about $850 million in sales taxes.

He described the tax increase as a fall-back measure that will never be used.

“It only assures people that we have the money,” he said. “The likelihood of it being needed is almost nonexistent. We’ve completely funded the modernization of schools.”

Not all council members agreed. Putting a tax in place while claiming it will never be used, they said, is a trick.

“I’m not happy about it,” said council member Phil Mendelson, at-large Democrat. “I think it’s a mistake. If the tax is in the law, it can be used.”

Council member Adrian Fenty, Ward 4 Democrat who is running for mayor, said that although he does not support raising taxes, he feels it is the only way to raise money for schools if sales tax revenue falls short.

“It’s not the best option, but if it is the only one, then that is what we need to do,” he said.

“So many people are so adamant about fixing the condition of the schools. It’s an embarrassment and an excellent reason” to raise the tax.

The school modernization plan, which has no end date, calls for an ongoing investment of at least $100 million every year in public school facilities. A task force has been assembled to assess what needs to be modernized and is expected to report to the council in June.

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