On April 24, 2006, five big names vying for the city’s mayoralty gathered for a big event early in that year’s campaign season: a forum at Arena Stage organized by the twin towers of the local business community, the D.C. Chamber of Commerce, and the Washington Board of Trade.
Moderators peppered the candidates with all sorts of questions, trying to pin down the wannabes on various biz matters. Alex Orfinger, publisher of the Washington Business Journal, asked a question of obvious import to the hosts: Will any of you promise not to raise taxes during your first term?
Granted, if you’re running in the Republican primary for a Middle American congressional seat, a no-new-taxes pledge is de rigueur. In the District, with balanced budgets mandated by the Home Rule Act, few candidates are foolish enough to constrain themselves from, say, at least squeezing out a few extra million through the occasional bump to one of those gross-receipts-tax thingies.
Down the line they went—Council Chairman Linda Cropp, Verizon exec Marie Johns, Ward 5 Councilmember Vincent B. Orange Sr., and lobbyist Michael A. Brown all gave various versions of “Sorry—not going there.”
Ward 4 Councilmember Adrian M. Fenty, however, went there.
“In my opinion, government is growing enough,” he was quoted saying in the next day’s Washington Post. “We need to spend our money better.” That pledge, the Post reported, extended to “the entire range of District taxes, including personal income, property and sales taxes.”
The room, several attendees recall, was pretty much stunned. “Several of us thought we had misheard,” says Chamber of Commerce president Barbara Lang. “Obviously we were very surprised. But delighted.”
As mayor, Fenty has come in to some criticism for his George Bush- like approach to message discipline and executive power vis-à-vis the legislature. Turns out we may have been comparing him to the wrong George Bush.
Remember “Read my lips—no new taxes?”
Fenty, admirably, kept his pledge for a while. His fiscal 2008 budget—submitted less than three months after his inauguration—held the line on new revenue sources, ginning up a little extra operating revenue by shifting a few line items over from the capital budget and having the transportation department write more traffic and parking tickets.
But Hizzoner’s new proposed budget, submitted to the D.C. Council on March 20, is chockablock with “Policy Proposals Impacting General Fund Revenue,” adding more than $100 million to the bottom line. Here’s a rundown:
• $2.15 million from raising fees for Basic Business Licenses—that’s a hike that falls squarely on long-moaning small businesses. Renewals are going from $10 per year to $35.
• $2.53 million by establishing a $100 “general business license” fee and a $250 “general contractor endorsement” fee.
• $7.24 million by essentially doubling fees for ambulance service. Under rules published earlier this month, if you need an ambo, you’re about to pay at least $530 (hundreds more if you require a paramedic instead of a plain-jane EMT) plus $6.60 a mile. (LL knows a group of local businessmen who might be able to recommend some sweet metering options.)
• Oh, and calling for that ambulance is going to cost you more, too: $3.8 million is to be raised by hiking 911 fees for D.C. phone customers.
• Nearly $6 million from a passel of new fees collected by the transportation department, including increased excavation fees, utility marking service fees, truck tag permit fees, and a new, poetically titled “public inconvenience fee” that’ll be charged to developers who occupy public space during construction projects.
• By far the biggest hit: Delaying implementation of a commercial property tax cut passed by the council last year. That’s expected to raise $80.7 million in fiscal 2009.
Now, none of these things are tax hikes in the traditional sense—you won’t feel any difference on your yearly income tax form. But do fee hikes, directly or indirectly, increase the cost of living in the District? Is delaying an already-approved tax cut tantamount to a tax hike? For the purposes of supporting his premise, LL says: Yes!
That’s not to say the hikes are unreasonable. But a campaign pledge is a campaign pledge. The wisdom of Fenty sticking his neck out on taxes is mystifying considering that his promise didn’t really net him much in the way of concrete benefits. “Delighted” or not, Lang and the chamber, along with the Board of Trade and most major city business groups, opted unsurprisingly to endorse Cropp.
Fenty, responding to LL’s questioning, says that his package of revenue increases is in keeping with his campaign pledge. Asked whether he considers a fee to be the same as a tax, Hizzoner replies, flatly, “No.” Same goes for rolling back the council’s tax cut: “We agree with them that you need commercial property tax relief,” he says, but adds that a year’s delay would be prudent.
How does Lang feel about Adrian “Herbert Walker” Fenty’s tax record these days? “Obviously there is some level of concern, and we’ve started to look at it,” she says. “We’re going over the budget with a fine-tooth comb.”
And Lang doesn’t go in for Fenty’s semantics: “A fee is a tax,” she says. (In other words, this Washington Times headline, from after the budget announcement, ain’t flying in Lang-land: “Fenty’s $9.4 billion budget has fees, no taxes.”)
Now, Papa Bush was forced to raise taxes in 1990 because he was dealing with a crippling budget deficit and a Congress controlled by the opposing party. Fenty’s imperatives for hiking taxes are more nuanced: his desire to look like a fiscal watchdog while avoiding programmatic cuts in a downturning economy.
At a March 20 event, Fenty presented the budget as the very model of fiscal rectitude, holding it to a miniscule 0.7 percent spending growth. The reality, budget wonks say, is that such a hard line was accomplished through what are essentially accounting maneuvers—eliminating scores of vacant positions, for one. Or this: Last year, the District kept about $13 million in the bank for short-term borrowing when cash flows are inevitably tight just before income-tax and property-tax payments arrive. This year, Fenty proposes doing that borrowing out of the city’s rainy-day cash reserve. Last year, the city set aside more than $20 million for court judgments and settlements; this year, Fenty has eliminated that line item. The consequence of all this is that “wiggle room” once built in to the budget isn’t likely to be there in 2009.
LL asked Fenty that day whether his cuts were actually cuts: “You’ve gotta do the editorializing and the writing.…It’s our job to both provide services but to make sure that we don’t do so for a dollar more than they cost.”
Still more tax increases may be coming before this year’s budget season ends. Last week, At-Large Councilmember David A. Catania rolled out his “Healthy DC” plan, modeled on the universal-coverage initiative in Massachusetts. Under the plan, all currently uninsured adult District residents would be required to enroll in an insurance plan, whether Medicaid, the Anthony A. Williams-era Healthcare Alliance, or a new plan intended to cover those who make too much to qualify for the other programs.
A noble plan worthy of praise, but it’s going to cost money—and it’ll be harder for Fenty to claim those revenue measures aren’t tax hikes, strictly speaking. Under Catania’s proposal, the projected $32.2 million it’ll take to fund such a program is borne in part by HMOs, who’ll have to pay a new 2 percent tax on the premiums they collect in the city. Catania also proposes doubling the District’s cigarette tax to $2 per pack.
At the monthly council press conference, Catania—by no means a reckless spender—drew a somewhat subtle distinction: “The mayor understands we wouldn’t be raising taxes to cover the existing budget,” he said. “These are new taxes for new projects, which I think is something different.”
And, he said, Hizzoner might have different preferences on how to raise the funds: “Representatives from his administration have identified other funding sources.” But Fenty’s squarely behind it, he said.
Says Fenty, “We really think the world of Councilmember Catania’s proposal.” He declined to detail how it might be financed.
Please Stop Calling It a $611 Million Ballpark
On Monday morning, the Washington Post flooded the proverbial zone on its Nationals Park coverage—more than 20 reporters documented every last aspect of the ballpark’s first official major-league game. The Post also flooded the paper with an inaccuracy: that the stadium cost $611 million.
• In their A1 lede-all, Dave Sheinin and Daniel LeDuc referred to "a $611 million, taxpayer-built palace in a formerly blighted part of the District"
• Marc Fisher kicked off his column with, "So, Mr. and Mrs. Taxpayer, what did you get for your $611 million?"
• Thomas Boswell referred to MLB's sweetheart deal as comprising "a $611 million stadium and a $450 million purchase price by the Lerners"
• Barry Svrluga's sports-section fronter talked about the Nats' "brand new, custom built, $611 million home"
• Philip Kennicott wrapped up his pan of the stadium and its surroundings with the line, "All that for $611 million in public money."
The $611 million figure reflects the cap that the D.C. Council imposed on District financing back when it approved the stadium deal. Since then, costs have risen, largely due to inaccurate estimations of land acquisition costs by Chief Financial Officer Natwar M. Gandhi. A January report issued by the CFO’s office showed that land and environmental remediation costs had to date run $43 million over estimates. (To get around the cap, some legal costs were moved out of the capped-cost category to an uncapped “ancillary costs” category last summer.)
Depending on the outcome of various land disputes, the local contribution to stadium construction is likely to edge into the mid-to-upper $600s, with the total project cost—including contributions from the team, Major League Baseball, and the federal government—likely to end up close to $800 million.
How does LL know all this? Well, he happens to take an interest in the subject and has been inspecting reports from the CFO’s office for months. But he could have figured it out another way: He could have read it in the Post!
On March 14, the paper ran a piece by reporters David Nakamura and LeDuc on the stadium’s imminent opening; part of the package was a neat chart compiled by Nakamura that laid out the figures above, thoroughly debunking the $611 mil figure.
Between the day that chart ran and Monday, the Post published no fewer than 15 mentions of a $611 million stadium.
City editor Marcia Slacum Greene says in an e-mail that the Post sticks with the $611 million figure “because it is the amount city officials approved in the stadium agreement.” She goes on to explain that the Post has done plenty of reporting on the “other costs connected with the stadium.”
“Journalists are certainly free to note funds from other sources,” she says.
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