- The Washington Times - Tuesday, May 24, 2011

The D.C. Council on Wednesday will deliver a vote on the budget for the upcoming fiscal year, placing its stamp on a plan that has hinged on taxes, cuts and political wrangling to close a $322 million budget gap.

Mayor Vincent C. Gray’s spending plan featured 13 tax and fee initiatives to raise $127 million — including an income-tax increase on households making more than $200,000 — while slashing spending by $187 million.

Health and Human Services faced the brunt of spending cuts, with a proposed funding reduction of $113.4 million, or 8 percent.

But council Chairman Kwame R. Brown vowed not to craft a proposal with income-tax increases or a sales tax on theater tickets, to restore funding to homeless services and to find money for Temporary Assistance for Needy Families (TANF) cash assistance and Interim Disability Assistance.

The council will vote on the Budget Request Act — the appropriation level for each agency — and render its first vote on the Budget Support Act, or laws implementing the budget.

A second vote on the support act is scheduled for June 14.

Mr. Gray can sign or veto the council’s version of the budget. If thwarted by the mayor, the council can attempt to override his veto.

Once the budget is approved locally, it is sent to the Congress for approval.

Complicating the budgeting process, the District’s chief financial officer warned the mayor and council chairman Tuesday against relying on projected revenues in their budgeting.

In a letter, Natwar M. Gandhi said he had concerns about proposals introduced by both officers, “which would automatically trigger certain increases in appropriations, or reductions in revenue initiatives, based on revised June and September revenue estimates.”

Mr. Gandhi recommended that the council wait until September revenue estimates are released before relying on these financial mechanisms and send an amendment letter to Congress for consideration.

Council members said they had not seen the chairman’s proposal as of late Tuesday afternoon, although they had a good sense of what will be in it based on prior discussions.

Jack Evans, Ward 2 Democrat and chairman of the Committee on Finance and Revenue, said the only “deal breaker” would be the reappearance of the income tax or the sales tax on theater.

“On Thursday it was [out], but that was a long time ago,” he said, noting that was the last time he had spoken to the chairman.

He issued a cautionary note about the budget in general.

“It’s going to be the largest budget ever passed by the city, while every other city is cutting back,” he said. “I don’t know how long you can do all things for everybody.”

Mr. Evans also said he is concerned about a proposal to tax out-of-state municipal bonds in lieu of an income-tax increase, because many of these bonds are held by retirees on fixed incomes.

Council member Jim Graham, Ward 1 Democrat, said his priorities, notably the restoration of homeless services, have been taken care of in the chairman’s anticipated budget proposal, but he has concerns about the bonds tax.

Yet his worries are of a much different nature than Mr. Evans‘. He supports the bonds measure and has co-authored similar initiatives in the past, but saw majority support for it evaporate quickly amid opposition.

He would have rather seen the income-tax increase, citing broad popular support for it around the District compared to service cuts.

“There almost seems to be a consensus outside the council,” Mr. Graham said. “And the out-of-state bonds is going to be a firestorm.”

He noted, however, the income tax would have raised only about $18 million compared with an estimated $31 million through the bonds measure.

In the end, it’s up to the chairman.

“He’s got all of the cards on this,” Mr. Graham said.