Photo by quotlumen on Flickr.

DC Council Chairman Kwame Brown released his proposed budget last night. Many transportation priorities will get funded, despite removing graduated RPP. The income tax is replaced with a tax on out-of-state bonds. And many services for the less fortunate remain in limbo.

Brown’s budget proposal maintains transportation programs funded in Mayor Gray’s budget and Tommy Wells’ additions. Streetcars still get $100 million of capital dollars, $25 million this year. Capital Bikeshare gets $2 million for 40 more stations, meaning DDOT will need your ideas at tonight’s meeting to add to locations already proposed.

Metro also gets the money it needs to avoid almost all service cuts. With Maryland and Virginia already ready to contribute, DC’s decision should ensure that weekend Metrorail headways don’t increase and some bus lines won’t get cut, like the E6, whose riders rallied strongly for the line. The N8 and K1 lines are still slated for elimination.

Wells’ other measures to fund green alleys, add a few key jobs including a parking manager to DDOT, and keep the Circulator fare at $1 all remain. RPP fees will go up to $35 per car, but will stay flat regardless of how many cars each person owns.

Where does the money come from? Mayor Gray’s budget shifted a lot of jobs from the capital to operating budget, mostly in DDOT and OCTO. Doing this saves money in the long run, since capital spending is paid for by borrowing, and that costs interest. Brown’s budget reduces this shift, but would put back $21.567 million for it if future revenue estimates come in higher than current estimates, as everyone expects they will.

Some revenue measures proposed by the Mayor remain, including combined reporting, raising the parking tax from 12 to 18%, and allowing liquor sales until midnight. The sales tax on theater tickets and live entertainment events is gone, but sales taxes on armored car services, private investigators and security services remain.

The biggest tax increase, the income tax bracket on people making over $200,000 (which was very popular with DC residents), is gone as Kwame Brown promised. But he’s replaced it with another tax measure, removing the exemption for out-of-state bonds that only DC and Indiana offers.

Bringing DC’s tax treatment of bonds in line with 49 50 other states makes a lot of sense. Still, replacing the income tax for this is less progressive; the Fair Budget Coalition says ¾ of the savings goes to people making over $200,000, meaning ¼ of this measure will hit households with lower incomes. The proposed income tax, on the other hand, would have only affected those making more than $200,000 and really only strongly affected those making significantly more.

In the past, many councilmembers have opposed the bond measure. Brown seems to be seeking their support by offering to repeal part of this exemption with potential future revenue estimates. However, any repeal would only apply to bonds purchased before October 1, 2011. Any bonds bought after that are going to be taxed regardless, at least unless the Council passes a separate tax repeal before next year.

There’s a long list of priorities for what to buy if there are indeed rosier budget outlooks from the CFO’s office in coming months. After the $21.567 million for the capital to operating shift, 50% of any additional money would replenish DC’s reserve fund and the other 50% would pay for a number of other items.

The table below lists the items and by how much the revenue outlook has to increase in order for that item to get funded under Brown’s formula.

ItemCostTotal revenue
increase needed
1. Hiring more police$10.8$43.2
2. Housing First (homeless services)$1.6$46.4
3. Housing Production Trust Fund (affordable housing)$12.0$70.4
4. Mental illness services (housing and children’s services)$5.5$81.4
5. Restoring bond exemption for pre-10/1/2011 bonds$13.4$108.2
6. Keeping MLK Library open on Sundays$0.3$108.8
7. Commercial Revitalization Program (Main Streets)$1.8$112.4
8. Parking rates lowered to $1/hr in busiest areas$3.0$118.4
9. Buying books for libraries$1.4$121.3
10. Early childhood education$2.0$125.3
All figures in millions.

The housing for homeless (#2), bond exemption (#5), and parking meter reduction (#8) only kick in if all the revenue is available to fully fund that particular item; if not, the funding goes to the next priority. That means if the future estimate is $90 million more, as Jack Evans predicted, then the money would go to police, homeless, affordable housing, mental illness, (skipping the bonds since it’s not enough), the MLK library, Main Streets, (skipping parking), and then buying books. That would be an irony if Evans’ guess is right and it means his priorities, the ones that just lower revenues, all get skipped.

Parking rates would decrease if revenue estimates grow by $91.6 million to $108.1 million (which doesn’t fund the bond repeal), or $118.4 million or more (which does). Nobody knows what the revenue estimate will be, but Evans’ guess of $90 million was seen as high last week. Kwame Brown guessed $20-60 million, which might not be enough to pay for any of these priorities, or might be enough just to fund police and restore some homeless services and a tiny bit of the affordable housing.

This budget isn’t bad, but the Housing Production Trust Fund and other programs deserve to be saved even without such extreme jumps in the revenue outlook. Housing First saves the District money by housing homeless people who would otherwise end up in expensive emergency rooms, and the HPTF builds housing including in parts of the city where there’s vacant land that the market can’t otherwise fill with units for people who might live there.

Brown could keep the income tax hike or just repay the reserve fund less aggressively. While it’s great to build up the reserve, it’s also important to invest in programs that help save DC money in the long run and keep our city a diverse place with people of many different income levels.

Updates: A few details to note:

  • Indiana has eliminated their exemption for out-of-state bonds, leaving DC as the only “state” with the rule.
  • As with all non-emergency, non-temporary legislation, the Council has to pass this on two readings. The first will be today, the second June 14.
  • Weekend and evening parking will not be changed under Brown’s proposal.