No hope for DC budget, $666 million black hole

In a boon for wonky bloggers such as myself, the City Paper's Mike DeBonis spent yesterday live-Tweeting the DC Council's budget meeting. The city faces a $666 million budget gap, and the Council seems damned and determined to close that gap without raising taxes. Sorta.

The District is in a bit of a jam as far as taxes go. We don't have the ability to levy a commuter tax, and if we raise our income or sales taxes, some people may move to Virginia or Maryland where taxes are lower. In fact, the whole "image" of DC being the land of high tax is the main reason why the Council seems to be looking to make up the $666 million mostly with service cuts.

All sorts of things are getting the ax, including the Council's earmarks. This one is mostly thanks to Marion Barry's complete lack of ethics. If you are a non-profit in DC that receives earmarks and actually does something, tough cookies. Thanks to Barry and his ghost non-profits, you'll be missing out on funds and you might have to close down. Hope you don't do anything important. Or provide a safety net for when DC has to cut social services as well.

What else can be done to fill a Nationals Stadium-sized budget gap? Well, the time machine they are working on to go back and not build the Nats stadium with public funds is first on the chopping block. Also, there's a potential decrease in MPD officers. The hiring freeze will likely continue, and officers who leave via attrition might not be replaced. Some on the Council feel we are over policed anyways. Let the Park Police pick up the slack. Except in Trinidad.

Fee increases for residential parking are on the table, especially for those who have 2 or 3 or more vehicles. $15 for the first car, $50 for the 2nd, and then $100 each for more. Jesus I hope if you own three or more cars, you aren't parking them all on the street. If you are, you're an asshole and you should move to a place where you can afford a damn garage.

Anyhow, there was also some sort of talk about taxes on strip clubs, a "pole" tax if you will. Can't tell how serious an idea that was, but it came from Kwame Brown. Also, we might be getting Sunday liquor sales.

The Council is also floating the idea of cutting millions from the schools. What are we going to do, stop buying textbooks all together? Oh wait, no, they will just cut maintenance. Not that schools are literally crumbling or anything like that.

In any event, most of the discussions from yesterday don't get very close to the magic $666 number. The discussions will continue today, but sadly there won't be any live Tweeting. The City Paper is doing some sort of "Sex in the City Paper" issue and DeBonis will be Tweeting about courthouse marriages. Whatever.

Let's help out the DC Council and figure out some ways to save money. How about some creative taxes and fees? What about service cuts, what would you want to see?

I've got one: how about you stop collecting garbage at midnight on Sundays. Those big orange city trucks driving around like assholes in the middle of the night, collecting a weekend-evening or overnight differential. God, what are you paying them, like $50 an hour to do that?

Another possibility, more corporate sponsorship. Let's just bite the bullet, and find someone to slap their name on the Nats Stadium. RFK as well. I'm sure we could get a few thousand to rename it to CricKet Wireless Stadium. On the subject of RFK, perhaps it could be retrofitted to permit rodent racing. We could also introduce OTB for said rodent races. And whatever happened to the talk about slot machines on the Waterfront? Let's revive that idea. Also, remember the proposed streetlight tax? Come on Fenty and the Council, lets see some of that old moxy. Maybe a "flinty" winter tax of some kind.

There's talk about a tax on theatre tickets (surprised there isn't one already), but let's do some targeted food tax. Obvious and cliche targets are Jumbo Slice, cupcakes, gelato and fro-yo. We can't levy a commuter tax, but what's the legalty of actual toll booths? How about the hotel tax, as well? Would that many people stay in Crystal City instead if we hiked the hotel tax?

What say you, readers?


  1. AnonymousJuly 29, 2009

    Sign of the Beast!

  2. Legalize marijuana, allow a few 'apothecaries' and 'cafes' to open up, tax them at like 50%. It will make the taxes MD and WV get from gambling look like chump change as long as people can get it for roughly the street rates. Plus, with a bit of oversight, the whole thing gets a lot safer and eliminates a bit of crime. And you can count on ever more tourists to help line our city's pockets.

  3. Well, step one should be that all executives, council members and the mayor should take a pay cut. Non-profit and corporate execs all do it in times of crisis. Then let's take everything possible from Marion Barry, including that new kidney, and start making him pay for the damage he has done. Then let's look at the number of agencies in the DC government and find where there is duplication - there are a number of identity group affairs offices that could be merged, saving on directors salaries, administrative overhead and just run with program officers for each group. Maybe even look at which grants/earmarks are providing direct services and which are fluffy, feel-good projects - arts funding is nice but I can do without murals and statues if it means keeping HIV/AIDS and health services open.

  4. I can't imagine how much fuel is wasted by the fire trucks that run constantly at full speed and high pitch (even when returning to the station) around the city. Let the police do their job and be the first responders!

  5. Hotels, parking, and restaurant food in DC are already each taxed at 10%.

  6. Maybe they should cut back on discretionary projects for now? Like the library across the street from me they've been doing major re-landscaping on for the last two weeks. All this week they've had tractors and backhoes out digging up trees and planter beds. Is that *really* something that had to happen in a budget year like this?

    I really don't understand why they can't learn some best practice from the commercial world. When we're in a budget crunch, discretionary spending immediately comes to a halt. No more ordering of office supplies (you know there are pens in the cabinets two floors up, you're just too lazy to go get them), and don't even think about traveling.

    The problem is the easy way out is to make large sweeping cuts, like de-funding non-profits. The smart, long-term solution is to fix the systemic issues, the "layer of fat" that's embedded in everything they do. Become leaner, more efficient, more high-tech. Of course, that's the hard road, so it's easier to just make the big sweeping cuts.

    I agree with Robin: pay cuts for executives. Everyone in my company had to take a 5% cut, directors and above 10%, and the executive layer a 15% cut. It's the DC leadership that put themselves in this position, they need to share some of the burden of it.

    I at least admire their foresight of not just trying to go back to the "tax well" for more. While that may close the gap today, the long-term implications are not good. It doesn't fix the source of the problem (you're spending too much money too inefficiently).

  7. Just curious, have there been any studies to examine the effects of increasing the DC state income tax at least on upper income earners? How many people would this drive really drive out?

    Sure, all things equal people prefer paying less income tax. But 'all things equal' rarely applies in the real world.

    I used to live in Fairfax Co, Arlington Co, and now Capitol Hill. My wife and I have 2 cars, no kids, and make low six figures. We were renting there and bought in DC.

    Sure, VA has less state income tax *10% vs 5.5%) and lower DMV fees. But VA residents pay a car tax (about $900/year for both our cars in my case). In addition DC property tax rates ($.85/$100 assessed value) are roughly equal to Arlington, and much lower than Fairfax ($1.04) and Loudoun ($1.245). DC also does not increase assessments by more than 10%/year by law. Were it not for the near doubling of my car insurance premiums from Arlington to Capitol Hill, it would have been almost a zero sum game for us...and that's before factoring in the much higher real estate prices in North Arlington.

    In a nutshell, I don't think DC taxes are prohibitively high compared to neighboring VA and would not be a factor for most people.

    What would be factors in people's decision are things like lifestyle, crime, school system, commute to work, etc.

    Going back to the original question of levying higher taxes to the wealthiest residents, what would need to be examined is if indeed said residents would find such an increase high enough that they would really move away. And if so, would those staying in DC offset that. I'd be very interested to read any literature on this.

    Regarding spending cuts on non-essential projects, as an economist I would argue that any such projects that are keeping good amounts of working people in employment ought to be maintained if not increased-especially where there can be Federal stimulus dollars to be used. With businesses cutting back now is not the time to increase already high unemployment any higher than the 10% it is.

  8. Simon - another interesting thing to look at would be how many of the people receiving DC dollars are DC residents that factor into that unemployment figure. Seems like most the contractors I see working around here have Maryland or Virginia tags.

    I agree with your assertion that keeping people employed in the current climate is a Good Thing, but it'd be interesting to see what the "revenue run-off" out of DC is, which also obviously affects DC's tax base.

    Personally, I think VA and MD benefit far too much from the tax revenues they receive from the very large amount of employment that DC provides.

  9. I agree that DC residents (especially women and minorities) should have priority with DC job contracts. A recent good example of this is the DC Council voting to require contractors and subcontractors of the new hotel near the DC Convention Center to hire DC residents.

    Arguably more of this is needed.

  10. all else equal, I always prefer a situation where the market lets what will happen happen... if VA and MD can create more compelling places to live, then so be it. the problem is the artificial interference with how funds flow, and DC ends up getting screwed.

  11. Earmarks poison the body politic. There are better ways.



  12. Let's get rid of Marion Barry first! I know he has stolen millions from the tax payers.

    Let's get rid of ANC's and the money most of them steal from the community.

    Let's cut out all of this overtime for our police officers. A lot of them are asleep on the job anyway with all the crime we have.

    Let's get rid of Fenty and Norton

    Let's find out where all of the money from red light cameras, parking tickets, and boots goes? I bet someone is getting a cut of that.