- The Washington Times - Wednesday, September 25, 2002

D.C. Mayor Anthony A. Williams' plan to eliminate the city's budget deficit, which includes raising taxes for residents earning $50,000 or more, needs some work, some D.C. Council members said yesterday.
Council Chairman Linda W. Cropp said the council and the mayor agree on agency spending cuts and are close to reaching a consensus, but are still far apart on tax increases. The mayor is seeking a one-time tax surcharge for residents earning $50,000 or more, but the council does not agree with that idea.
"The plan I presented to the council did not include a surcharge on income taxes," said Mrs. Cropp, at-large Democrat.
Council member Adrian M. Fenty described the mayor's plan to raise taxes as a "silly proposition."
"There's no support for that in the council," said Mr. Fenty, Ward 4 Democrat.
Mrs. Cropp said the city would be better served by increasing the real estate recordation and deed-transfer taxes. She said the mayor's proposed increases are a few dollars lower than the council's.
Recordation and deed-transfer fees are paid primarily by real estate investors and by home buyers and sellers.
Williams spokesman Tony Bullock said the mayor is reluctant to increase the deed-recordation fees beyond the amount he already has proposed from 1.1 percent to 1.3 percent.
"It is already higher than most jurisdictions, and many don't have the fees at all," Mr. Bullock said, "and it will hurt first-time home buyers."
But Mrs. Cropp said the tax primarily will affect businesses, the "majority" of which have received tax relief over the last few years. She said home sellers easily could spend a little more in closing costs without losing their substantial profits because housing prices are high.
Council member Phil Mendelson, at-large Democrat, said his colleagues chose the approach because it would yield less resistance, although he said the council had received "a stern opposition letter" from the Washington Association of Realtors.
"These taxes tend to be paid by people who are doing business in the city and in many cases being paid by people who don't pay D.C. taxes," Mr. Mendelson said.
Mr. Williams' plan seeks to delay new spending by $98.9 million. He also would reduce spending by city agencies by $104.6 million. The mayor said he will seek to "follow the lead" of the federal government by appointing a commission to decide about closing or consolidating city-owned facilities.
His budget would cut $30.3 million from public schools, $61.2 million from social services and $15.6 million from public safety.
Members of the D.C. Board of Education yesterday expressed their displeasure over the proposed budget cuts to schools to help close the District's projected $323 million deficit.
"We cannot afford them. Simply put, budget cuts would have a devastating impact on our schools. Eliminating organized sports, closing small schools, halting new textbook orders and other draconian measures would have to be put on the table," school board President Peggy Cooper Cafritz said during a press conference at Moten Elementary School in Southeast.
Mrs. Cafritz was joined by other school board members, Mr. Fenty, schools Superintendent Paul L. Vance and other D.C. school officials. The school board recommended that the council and the mayor exempt the school system from cuts and encouraged use of the District's reserve fund.
Some council members want to tap the reserve fund to offset some expenses, but Mr. Williams said that is out of the question.
"The reserves are congressionally mandated pursuant to the Appropriations Act, and we are required to maintain a 7 percent reserve fund," Mr. Bullock said. "We are also required to pay that money back in the next fiscal year."
He added that an issue of illegality may be involved, as the city isn't in the 2003 budget and is not yet in a deficit. "All we would be doing is borrowing the money from ourselves," Mr. Bullock said.
Mrs. Cropp said dipping into the reserve fund should not be an option for balancing the budget and that the majority of the council agrees on that issue.
Mr. Bullock and Mrs. Cropp said the two sides are close to an agreement, and many of the council members said the negotiations will be completed by the end of the week.
"Overall, most of the spending cuts I am supportive of," said council member Jack Evans, Ward 2 Democrat.
The council and the mayor will meet today for more revisions, followed by hearings on Friday.
Mr. Mendelson said that after this budget crisis, he expects his anti-deficiency bill, which would impose stiff penalties for agency heads who overspend their budgets, will be approved. "We need to send a strong message that we will not tolerate overspending," he said.
The council must vote on a deficit-reduction package and send it to Congress by Tuesday.
Denise Barnes contributed to this report.


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