- The Washington Times - Sunday, March 20, 2005

Whether comparing the state of the District to a decade ago, when the city was drowning in red ink, or five years ago, when the city first showed signs of fiscal viability, the District stands on sound financial footing. Indeed, it is the state of those fiscal affairs, among other good news, that Mayor Tony Williams will highlight tonight during his annual State of the District address. Later this week, he and D.C. lawmakers will begin posturing on how best to pay dividends to newcomers as well as taxpayers who decided to stay in the city for that decade-long haul to financial fitness. Both groups of residents, as well as businesses, deserve tax relief.

There are nearly a dozen tax-cut packages making the rounds of City Hall. We stand behind the mayor’s proposal, which would grant income-tax and property-tax relief to residents. We also support Council member Jack Evans as he seeks lower property taxes. The current property-tax cap stands at 12 percent, and Mr. Evans says he wants the cap at 5 percent.

That the mayor took the initiative to propose his own tax cuts is an encouraging sign. Mr. Williams vehemently opposed the much-needed tax relief that the council offered during his rookie year as mayor in 1999. At the time, Mr. Williams, fresh off his stint as Marion Barry’s chief financial officer, essentially said the city could not afford tax cuts. The council held its ground, and, thankfully, reduced taxes anyway.

The mayor’s largesse is part political reality (he has to step down next year or seek a third term) and part fiscal reality (the city had a $318 million surplus last year and is on pace for a projected $395 million this year). His plan would ease the tax burden of every income level and give considerable relief to older homeowners who simply cannot afford the substantial increases in their property taxes. For example, the mayor’s $19 million income-tax relief package would raise both the personal exemption (from $1,370 to $1,500) and the standard deduction (from $2,000 to $2,500).

Mr. Williams also proposes more than $22 million in property-tax relief. He specifically wants to lower property taxes for disabled residents with incomes of $50,000 or less, freeze property taxes for all residents with incomes of $50,000 or less and raise the homestead-income deduction from $38,000 to $60,000.

If passed with the mayor’s numbers, the proposal would provide about $41 million in income- and property-tax relief. That total would be in addition to the $53 million in income-tax cuts that also would go into effect beginning in October, when the new fiscal year starts.

With considerable tax relief in the one hand and a huge surplus in the other, special interests are clamoring for more spending on schools and social services. But both the mayor and the council should think longer and harder than usual before proposing to dip into the coffers to quiet those requests. Audits by the D.C. Auditor, D.C. Inspector General and the federal Government Accountability Office have seriously questioned the city’s expenditures on schools and day-care programs. In fact, as we said on Tuesday, Auditor Deborah Nichols is conducting an on-going investigation into after-school programs that target the poor and use federal dollars, such as Temporary Assistance for Needy Families. There also are longstanding problems with the delivery of HIV/AIDS services and feeding programs. In addition, school children remain academically shortchanged while school facilities remain in dire need of basic routine maintenance.

We hardly expect the mayor to break with tradition and use the stage at the Lincoln Theatre tonight to run down the list of what all ails his administration. We do, however, expect him to say that, while he supports agents of change within the school system, his No. 1 priority remains not change for the sake of change, but true school reform that benefits students.

The District has come a long way from the tax-and-spend follies that led to the bankrupt realities of the mid-1990s. For that turnaround, the occupants of City Hall can pat themselves on the back. As Chief Financial Officer Natwar Gandhi has warned, however, the financial control board is dormant, not dead.

The critical reports by the auditor and others prove that D.C. leaders have enlightened themselves regarding fiscal management, but they remain in the dark when it comes to educating children and government reform. More must be done. That is the simple reality that the mayor cannot ignore tonight.

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