Last week, the General Accounting Office released a report saying that if D.C. officials curb spending, cut waste and manage more efficiently, the nation’s capital would be better off. It also reached the same conclusion as two other studies: that the District cannot tax or manage its way out of its fiscal problems. Then, the GAO did something it generally does not do, and that is make recommendations, saying that “it may be necessary to change federal policies to expand the District’s tax base or to provide additional financial support.” Expansion of the city’s tax base is a must. In fact, Mayor Williams said earlier this year that doing precisely that is a top priority. However, we continue to oppose any form of taxation against nonresidents. To that end, we encourage changes in federal policies to help alleviate the so-called fiscal structural imbalance.
Nonetheless, the District’s elected officials must do more. Indeed, when it comes to annual deficits, D.C. officials bring many problems upon themselves by overspending and poor legislative oversight. Accordingly, we urge the executive and legislative branches to be more vigilant. The mayor cannot lure more residents to the city if new residents have to worry about high crime, poor schools and high taxes. Similarly, fees, tax burdens and bureaucratic red tape continue to cast the city in an unfriendly business light. Businesses, for example, can’t encourage suburbanites to work in the District if they fear a commuter or reciprocity tax.
The federal government, meanwhile, has short- and long-term aid in a federal payment in lieu of taxes. However, such a payment must come with strings attached. The federal government cannot afford to hand over additional funds to any jurisdiction — even the nation’s capital — without ensuring accountability and making certain that those additional taxpayer dollars benefit more than merely D.C. residents. The increased use of federal money to pay a larger portion of Medicaid costs, for example, only benefits a small portion of D.C. residents.
The Bush administration and Congress should therefore seriously consider restoring an annual federal payment. Such a payment must, however, be tethered to public safety, roads and education, which would benefit not only D.C. residents, but commuters and the regional economy, too.
“If there is a shortfall, the nation ought to pay the shortfall,” Rep. Tom Davis, chairman of the House Government Reform Committee, told us. “Every jurisidiction has a structural imbalance. Virginia has a structural imbalance. Fairfax has a structural imbalance. You can’t talk to a governor or mayor right now who’s not wanting. … What [D.C. officials] really need to focus on is growing their tax base. … [D.C.] has not had the revitalization that other cities have.”
We concur. To grow that tax base, the D.C. government must first correct its management deficiencies, improve its legislative oversight and end its nagging deficits. Those are reforms which D.C. officials themselves have authority to make.