Housing Complex

Gray Budget Would Cut Some Tax Rates, Add New Spending

Mayor Vince Gray submitted a $10.7 billion budget to the D.C. Council this morning, with increased funding for his priorities in education, health care, and housing, just two days after a primary loss that ensures he won’t be returning for a second term next year.

The budget includes $139 million for new policies in fiscal year 2015, according to senior administration officials, or 2.3 percent of the budget. That's largely in line with the city’s 2.1 percent population growth, the officials say. The budget Gray proposed last year was $10.1 billion.

The 2015 budget includes funding for several major ongoing projects, such as $409 million for school modernization. But it also proposes several new initiatives.

Among those: a reduction in marginal tax rates for residents’ income between $40,000 and $60,000, from 8.5 percent to 7.5 percent—paid for in part with higher taxes on tobacco and a repeal of the sunset of certain taxes on high earners. That move was proposed by the city’s Tax Revision Commission, but other recommendations of the commission didn’t make it. The budget would provide $8.5 million in property tax relief for seniors, as laid out in legislation introduced by At-Large Councilmember Anita Bonds.

The budget also accounts for Gray’s pledged $100 million investment in affordable housing. It allocates $78.5 million to the Housing Production Trust Fund, with $30.2 million coming in fiscal year 2014 through a new commitment of funds and $48.3 million coming in fiscal year 2015 through the standard mechanism for funding the Trust Fund, deed recordation and transfer taxes.

Gray is seeking to boost funding for the rapid rehousing program by $1 million. The program provides rent subsidies to homeless families to move into long-term housing, which then phase out as the families gain the ability to pay rent on their own. But the program has been hampered not by lack of funds, but by a dearth of affordable apartments for families to move into. The $1 million is designated for additional vouchers for the program.

Additionally, the budget provides for a $1 million increase in the Emergency Rental Assistance Program, which helps families stay in their homes after falling behind on rent.

The budget also allocates $1 million to a pilot program to switch the Metro Access program for disabled Metro riders from Metro Access vans to private taxis. Currently, administration officials say, the city pays about $50 per ride to the contractor that runs Metro Access, and hopes to save money through the switch in the long run.

In health care, the budget sets aside $300 million for a new hospital on the St. Elizabeths campus near Congress Heights, as proposed by Gray last week. It also allocates $15.1 million to reduce a hospital tax, as required by the D.C. Council.

For the first time since 1996, benefits to low-income families through the Temporary Assistance for Needy Families would increase. In each of the next two years, the benefits would rise with inflation, before a larger 46 percent increase in 2017 that would bring the benefits in line with those in Maryland.

The city would also provide $100,000 in funding to the statehood delegation under the budget proposal. That money would go to supplies and expenses, and not to salaries for the city’s shadow representatives on Capitol Hill.

The budget includes a business development initiative focused on Ward 8, the city’s poorest ward. As part of that initiative, the mayor is seeking $3.3 million for streetscaping work in the area and $500,000 for business facade improvements.

One conspicuous absence from the budget? Funding for D.C. Promise, a scholarship program pushed by At-Large Councilmember David Catania, who’s running for mayor as an independent in November’s general election. Administration officials said they opted not to include that for fear that it would lead Congress to pull federal funds for a related program known as DC TAG.

The budget now goes to the D.C. Council—a third of whose members just challenged Gray for the Democratic mayoral nomination, one of whom won, plus Catania—for revision or approval.

Photo by Darrow Montgomery

Due to a typo, this post originally referred to a $10.7 budget, not a $10.7 billion budget

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