Loose Lips

D.C.’s Found Money

D.C. Mayor Vince Gray and Chief Financial Officer Nat Gandhi announced today that the District ended fiscal 2011 with an extra $240 million in its pocket, but Gray says don't expect any relief from the city's high taxes and fees.

Much of the reason for the extra bounty lies in an extra $97 million in income and franchise taxes than the CFO had earlier anticipated. The District can thank a stronger-than-expected stock market and corresponding capital gains tax revenues for much of that increase. Local lawmakers may also want to send a thank you note to the apparently large number of rich residents who died in fiscal 2011: The estate tax pulled in a whopping $50 million more ($89 million total) than it did the previous year, according to the CFO's office.

Gray said it wouldn't be prudent to lower taxes and fees because the city's reserves are still tender from the beating they took during the last administration and need more help being nursed back to good health. Also, the District is still, at least on paper, facing a $150 million budget gap for fiscal 2013, says Gray budget director Eric Goulet (thanks in part to large projected increases in Medicaid spending that are due to health care costs rising at rates well above inflation).*

But Ward 2 Councilmember Jack Evans says he'd like to see the surplus used to lower the District's income taxes, an idea Council Chairman Kwame "Fully Loaded" Brown said the council should consider. The council voted to raise the marginal tax rate on high earners last year at the mayor's suggestion, with both Brown and Evans on the losing side of a lengthy fight. Does a rematch await?

On another note: Gray's announcement today came during the official unveiling of the city's annual audit, or Comprehensive Annual Financial Report, which is filled with fun facts and figures.

One set of numbers that caught LL's eye is the breakdown of income tax revenues that illustrates the District's explosion of rich people in the last nine years and the city government's growing dependence on their wealth.

Between 2002 and 2009, the number of tax filers in the District grew by nearly 40,000, with almost all of that growth occurring in higher income brackets. In 2002, there were 27,209 tax filers who made $100,001 or more. In 2009, that number had grown by a staggering 88 percent to 51,407. The high earners paid more than $912 million in income taxes last year, accounting for 71 percent of all of the District's income tax revenue. In 2002, six-figure-earners accounted for just 57 percent of income tax revenue.

The number of filers making between $75,001 and $100,000 grew by 63 percent, and the group making between $50,001 and $75,000 grew by 36 percent. But the number of filers making $50,000 or less actually shrunk by nearly 7,000, or 3 percent.

Nobody ought to be shocked by now to learn that the District is attracting and retaining large numbers of high income residents. But LL thought a nearly 90 percent increase in less than a decade of six-figure-earners deserved at least a low whistle.

*This post has been updated.

Photo via Wikimedia Commons

  • NE John

    Kwame has a infamous nickname (earned), so how about giving Jack Evans one.

    How about on of the following:

    Jack "Skin Flint" Evans
    Jack "Bug Up My Ass" Evans
    Jack "Center Court Seats" Evans

  • Guy

    As one of those 90% who have come to the city and make mid six figures I say: please don't give me a tax break! I won't really notice it either way, and I'd rather the city spend the money on all those infrastructure projects we keep being told there's no money for.

    Do you hear me Jack Evans? I am your constituent, I make a very comfortable wage, and I DON'T WANT THE TAX CUT YOU'RE OBSESSED WITH!

  • Rebecca

    Hey Guy - love your comment. LOVE IT. I was part of the campaign to increase taxes (by a tiny fraction!!) last year and we're totally frustrated by the prospect of a rematch. You're not the only one who supports the (very reasonable) taxes DC charges on high earners; over 90% of city residents across income groups supported the tax raise. So it's not a question of "relief from high taxes and fees" but, as you put it so well, citizens wanting the city to spend money on project we need.
    Would love to get in touch - I work for Jews United for Justice and like I said we organized middle and high income earners to say "tax us more" last year. If we have to do it again this year, we'll be there, and we'd LOVE to have you standing with us. Email me at info@jufj.org!

  • Typical DC BS

    And as one of those who don't make mid six figures, I say quit spending money stupidly and quit dreaming up new ways to spend. Public safety, schools, infrastructure, some compassion for the poor = obvious government responsibilities.

    Time to stop the gravy train for so many who do so little while being parasites on the DC government.

  • Kevin

    It looks like the 2011 tax increase on incomes over $350,000 is paying off and helped brighten the revenue picture.
    With the potential for future federal cutbacks, I agree with the mayor, cutting taxes left and right would not be a prudent move.

  • Keith B.

    Stupid Jack, we're not out of the woods yet!

  • truth hurts

    typical dc bs--totally agree with your comment. And it's not necessarily inconsistent with the two comments before your post. Modest tax increase on those earning more than $350k and spend everybody's tax dollars efficiently and without political graft.

    I know, I know --- it's not gonna happen with the current crop of DC pols. Sorry.

  • DCDem

    At the end of the day, the only common denominator with these poor financial forecasts is CFO Natwar Ghandi. His Modus Operendi has been to under report our financial situation to then come in at the end of the day with a surplus as if he is some sort of a hero. NO!! He is the poorest CFO this city has ever had and he needs to be replaced. Then-Mayor Anthony Williams knew this. He never trusted Ghandi's counting. As a previous CFO himself, Williams was able to double check Ghandi's numbers and workaround his incompetence.

    What is worse, because of Ghandi's false projections, thousands of city workers lost their jobs due to "budget pressures" that, it turns out, were no pressure at all. He is and has been playing games with peoples lives

    Since Fenty was Mayor, and what continues today, this city has nickel and dimed citizens through fees, double fines, revenue driven speed and light cams etc. They council has approved this primarily because of Natwar Gandis budget forecasts. HE is the problem!

  • RT

    DCDem, hopefully hundreds more of the non-workers in DC gov will lose their jobs (excepting people who actually interface with the public, like DMV, DCPS, and DCRA). There's a longggg way to go. It's actually amazing, perusing the DC jobs site, that backoffice DC gov workers make about 15-20% more than federal workers of the same job grade. Without having to have nearly the qualifications.

  • cminus

    RT, it's not accurate to say that DC government workers make more than federal workers of the same pay grade. DC government workers make more than the *base* salary for federal workers of the same grade and step, but federal base salaries are increased by a percentage known as the locality adjustment to reflect differing costs of living around the country. The locality adjustment for the DC area is currently 24.22%, so federal workers in DC actually make more than their DC counterparts.

    Wikipedia has a good explanation as part of their article on the General Schedule, but when I posted this with the link it went to moderation, and everyone knows that's a black hole. But you should be able to find it pretty easily

  • DCDem

    @RT it is hard to take on your comment because it comes from a place that is fundamentally wrong. I also don't come from a place of income envy. (a deadly sin).

    But here goes. I, too, have no problem with the city getting rid of under-performing employees, hell, I wish my company would. However, the city has lost many quality employees, not because of poor performance, but because of false "budget pressure" reported by CFO Ghandi. Performance isn't taken into consideration in those instances.

    When Anthony Williams separated local government workers from the federal pay scale, city employees began making much less than their federal counterparts. That is a fact. Now, I do expect a city professional to make more money than a non-professional private sector employee. For instance, an Attorney with the Office of the Attorney General SHOULD be making more than a clerk typist at a local bank. Someone with a Masters Degree education SHOULD be making more than someone with only a high school diploma in the private sector. I'd prefer highly educated and qualified employees in the local, county and state government than the low level, minimally educated. I expect stewards of tax dollars to be highly experienced in what they do.

    It is naive to say you want public employees to directly interface with the public without those that don't. Truth is, in the private and public sectors, it is those who don't directly interface with the public that support the operations that allow for those who do to do their job. Human Resources does not interface with the public but they ensure that those who do get hired and paid. Safety personnel do not directly interface with the public but they ensure that those who do, particularly in hazardous operations, do so in a safe manner to minimize costs of workers compensation and personnel pressure due to absences, the Budget and Finance Offices do not interface with the public but are tasked with ensuring that organizational funds are managed appropriately.

    Natwar Ghandi is the problem here. He has been the problem all along. Every organization, every state, every city has a process by which they can use to get rid of under performing employees. That isn't what we are talking about here.

    The only under performing employee in this instance is the city's Chief Financial Officer.

  • StrangeFruit

    @ NE John,

    How about Jack "the Lobbyist" Councilman?

  • Ward 2 since birth

    How about renovating the schools where plans were postponed? Roosevelt and Coolidge would love to have all that surprising excess money spent on planned- but put off to the future - repairs.