- The Washington Times - Tuesday, March 18, 2003

D.C. Mayor Anthony A. Williams yesterday proposed to plug the city's 2004 budget gap by tapping the wallets of wealthy residents and businesses and by putting a new wrinkle on commuter taxing.
The 2004 budget remains constant at about $5.6 billion, although expenditures have risen by 5.5 percent. The city still may have to deal with a $134 million spending gap during this fiscal year.
Mr. Williams said tough economic times are the major reason for the bad budget news. The budget he will submit to the D.C. Council will look to defer tax parity for residents and businesses, halting income- and franchise-tax decreases for the second time, keeping city taxes further away from Maryland and Virginia taxes.
The mayor proposed to hit "wealthy" residents those earning more than $100,000 annually with a surcharge tax of 0.6 percent for the next two years.
"Residents making $100,000 [a year] or more will pay about $150 more in taxes with the surcharge," Mr. Williams said.
Many of the same revenue options imposed in October, when the city was struggling to fill a $323 million hole in the budget, appear for a second time in the mayor's 2004 budget proposal.
The mayor has no plans to raise property taxes and will retain the 25 percent cap on increases. But his proposal capitalizes on the city's hot housing market by increasing a variety of real estate-related fees.
Mr. Williams wants to maintain the increased fees for deed recordation and transfers, which rose from 1.1 percent to 1.5 percent on all property sales last year. Vacant and abandoned properties also are back on the board, costing property owners 5 percent of the market value.
The mayor is seeking a compromise with union labor by going forward with the pay raises guaranteed in collective-bargaining agreements for teachers, firefighters and police among others.
"But step increases will be deferred this year," said City Administrator John Koskinen.
Taxes on tobacco and alcohol sales will hold at $1 per pack and 9 percent, respectively. At the same time, the mayor also wants to end tax exemptions for health club membership sales.
"You want to penalize those doing things that are unhealthy, and then turn around and hit those trying to be healthy," said one government observer wryly.
Costs for towing, security and investment counseling also will lose exemptions.
One tax some council members called innovative was the increased parking tax. Commuters are the primary users of parking garages in the city and will pay more for the convenience 50 percent more, with the rate going from the current 12 percent to 18 percent.
The city also will install another 1,500 parking meters.
Council Chairman Linda W. Cropp, at-large Democrat, said she isn't sure yet where the meters will go, "but it will certainly be near businesses and commercial zones, not in the neighborhoods."
The budget also includes a citywide hiring freeze and a halt to some projects like street paving and alley cleaning. Renovation of libraries, fire stations and other public buildings also will be put on hold next year.
But the budget protects the public schools, health and human services and public safety agencies. The police and fire departments will receive increases for new staffing and maintaining facilities.
Council members struck down the surcharge tax last year, but might have to consider it this year.
"Everything is on the table right now," Mrs. Cropp said.
She said anything that is taken off the mayor's budget will be replaced with other measures.

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