- The Washington Times - Saturday, August 1, 2009

The D.C. Council voted unanimously Friday to raise the city’s sales, gas and cigarette taxes and to cut spending in an effort to close a three-year, $666 million budget shortfall.

The tax increases will take effect on Oct. 1 at the beginning of fiscal 2010.

The District’s sales tax will increase one-quarter percent to 6 percent. That will make the tax equal to Maryland’s and 1 percent higher than Virginia’s general state sales tax.

The gasoline tax will increase 3.5 cents per gallon. The gas tax in the District - not including federal taxes - will be 23.5 cents per gallon, which is equal to Maryland’s but higher than in Virginia, where it is 19.4 cents per gallon.

The taxes are expected to raise about $50 million annually. The council also approved about $90 million in cuts that will affect public safety, education and summer youth programs.

The details largely were worked out during council meetings in recent days, as city officials rushed to balance the budget after declining revenue estimates announced in June predicted a $190 million shortfall in fiscal 2009 and a $140 million shortfall in fiscal 2010.

“The financial crisis of the ‘90s, when the nation’s capital was governed by a congressionally mandated control board, has remained in our memory,” said council Chairman Vincent C. Gray. “The council is acting today to ensure that we never again return to those horrific days of government insolvency.”

The changes, which have consequences through fiscal 2013, must be approved by Mayor Adrian M. Fenty.

In a statement issued late Friday, Mr. Fenty said he was still reviewing the budget approved by the council.

Earlier in the day, Mr. Fenty said the tax increases could have been much worse.

“The truth of the matter is, this is a pretty big budget hole to fill,” Mr. Fenty said during an interview on the “Politics Hour” on WAMU radio. “These are obviously not Draconian tax increases.”

Those affected by the tax increases and the budget cuts had different opinions.

John B. Townsend II, a spokesman for AAA Mid-Atlantic, said the organization is concerned about the impact on consumers. He pointed to the fact that although the council chose a 3.5-cent hike, it will be added to gas prices that are the highest in the region.

The largest tax increase will be on cigarettes. The 50-cent-per-pack increase will make the District’s cigarette tax the sixth-highest in the country, according to the American Lung Association

The council has said that the major tax increases will expire in three years.

Among the budget cuts will be $8 million in earmarks for fiscal 2010. The council has been criticized in recent weeks after news broke that council member Marion Barry has awarded roughly a million dollars in earmark funds to charities controlled by people close to him.

D.C. Council member Jim Graham said he requested earmarks that he thought were important for his community and the District overall.

“The earmarks that I offered were worthwhile projects with fine organizations. It’s very disappointing that was lost,” he said. “I’m proud of what I tried to do. And the organizations will be damaged.”

The cuts have consequences for service organizations and city agencies - particularly those that assist low-income families and children - who are dependent on the funds.

“In the middle of economic downturn, when it’s hard to find a job, it would cut basic income assistance to thousands of low-income families with children at a time when it’s challenging for anyone to find a job,” said Ed Lazere, executive director of the D.C. Fiscal Policy Institute.

Mr. Lazere said the biggest victims of the cuts are public schools and low-income families that depend on the city help for affordable housing, literacy services, basic cash assistance and other aid programs.

The council also voted to stop hiring police officers with local funds and instead rely solely on federal funds to hire new officers over the next two to three years.

“I think it is going to be a catastrophe for the city,” said Kristopher Baumann, chairman of the union that represents D.C. police officers. Mr. Baumann said that changes to officers’ benefits will heighten attrition at a time when the council has opted to hire officers only with federal funds.

He predicted a 20 percent cut to the force “that will mean more crime, more violence and a diminution of property taxes and all other benefits low crime rates have brought.

“It is the start of a death spiral for the city,” he said.

The council also reduced the Summer Youth Employment Program from 10 weeks to six weeks and reduced summer school spots for 2010 by 50 percent.

Members opted not to address the shortfall by borrowing from the city’s rainy-day fund, which Mr. Fenty had suggested.

“I decided that an approach of facing the problem head-on now was a more responsible tact to take,” Mr. Gray said.

As the council adjourned, Mr. Barry led the chamber in a round of applause in praise of Mr. Gray’s efforts in reaching a timely budget solution.

“The ball is in Mayor Fenty’s court,” Mr. Graham said.

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