- The Washington Times - Monday, September 23, 2002

Against the backdrop of election preparations, the District's elected leaders are considering an unbalanced approach to address the $323 million shortfall: spending cuts, tax increases and a dip into the District's so-called rainy-day fund. It is unbalanced because only one of those options is viable.
Congress mandated the creation of reserve funds for the very reason that officials are proposing using them. But the rules governing use don't appear to be applicable. The city can tap those funds if revenues fall more than 5 percent below levels assumed in the enacted budget. Indeed, revenues in fiscal 2003 will be $285 million, 7.7 percent lower than assumed in the 2003 budget D.C. officials sent to Congress in June. However, here's the catch: The rules stipulate that the budget must be enacted, and Congress probably will not pass the 2003 D.C. budget before the end of this fiscal year, which is Sept. 30. As has happened in years past, Congress would then pass a continuing resolution, which means even though the District is in a new fiscal year, it must spend at 2002 levels. No new 2003 budget, no permission to tap the reserves.
As for tax increases, they are no solution at all. Of the District's four major tax sources, three are bringing in less revenue, despite having kept the city afloat. Individual income-tax revenues have grown by an annual average rate of 10 percent since 1996. And, while payments fell because of reduced capital gains and rising unemployment (much of it joblessness related to last year's terrorist attacks), now is not the time to ask residents to dig deeper into their pockets. Also on the decline are sales-tax revenues 5.6 percent growth in the late 1990s compared to 2.1 percent in recent years. Weak profits, meanwhile, are driving down revenues from business taxes. The District continues, however, to reap substantial revenues from property taxes $707 million in 2001 compared to the projected $852 million in 2003.
Closing the gap, then, must entail spending cuts. Mayor Williams and Chairman Linda Cropp's D.C. Council have several obvious options chief among them personnel and program cuts. The first place to look for personnel cuts is on the payrolls of high-level administrators. Agency directors not only have city-owned vehicles to cruise around in, but drivers too. These expenses reach above and beyond allowances on Capitol Hill, where only the leaders of the House and Senate and whips are granted such a perk. If D.C. Delegate Eleanor Holmes Norton can drive herself around the city, so can senior D.C. officials better to learn their way around and truly get to know their beloved nation's capital.
Practically every agency can stand a budget cut. D.C. taxpayers are paying top dollar for purportedly top-drawer agency chiefs. The city's elected leaders need to tell them to cut their budgets, or else. Tell them to cut the fiefdom-building and bureaucratic waste, for example, at the Office of Neighborhood Planning, the Office of Planning, Office of Neighborhood Stabilization, Office of Community Outreach, Office of Neighborhood Action and the Office of Neighborhood Services. And stop the mini-legal-empire-building at the Office of the Inspector General and Office of the Corporation Counsel. Their offices are starting to rival K Street.
Similarly, the Cropp legislature must curb its own spending urges. While D.C. Council member Carol Schwartz is entertaining legislation that would place public potties around the city, D.C. Council member Kevin Chavous is proposing more spending on subsidies. Taxpayers have not given lawmakers blank checks.
This mayor and this council's tax-and-spend ways mean the city stands perilously close to where it was a mere seven years ago, when it wallowed in red ink. These leaders were warned about the pending deficit three months ago. They ignored it because they chose to play all summer long. Now is the time to make the tough spending calls on subsidies, raises due to the unions and other new expenditures and, yes, as officials gear up for fall elections.


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