D.C. Council Passes Tax-Cutting Budget

James Wright | 5/30/2014, 4:33 p.m.
The D.C. Council's tax-relief plan and budget for fiscal 2015 may leave many residents smiling — particularly at their lower ...
Phil Mendelson is chairman of the D.C. Council. Nancy Shia

The D.C. Council's tax-relief plan and budget for fiscal 2015 may leave many residents smiling — particularly at their lower income tax bills — but will undoubtedly chafe others who feel the wrath of sharp budget cuts.

Council Chairman Phil Mendelson (D) helped Wednesday to pass the budget, which funds important services and programs and focuses on developing the city economically. The council approved the budget, 11-2.

"The council's budget proposal focuses on sustaining important investments in affordable housing, workforce development, public schools and infrastructure," Mendelson said. "The budget adopted builds on the hard work by the mayor's team in the budget originally proposed, and with the cooperation of the mayor and the chief financial officer, the council was able to build on that foundation to make changes that will benefit the District significantly."

The final vote on the budget will take place next month.

The budget implemented the majority of the recommendations proposed by the Tax Revision Commission that was chaired by former Mayor Anthony Williams. Those recommendations include expanding the Earned Income Tax Credit to childless workers, increasing the personal deduction and personal exemption to the federal level and tax relief for low- and middle-income taxpayers who earn $40,000 to $60,000.

The budget also helps senior citizens and homeowners whose property values have increased by raising the estate tax threshold to twice the current limit and eventually recoupling it with the federal level.

Council member Jack Evans (D-Ward 2), the chairman of the powerful Committee on Finance and Revenue, said that he is glad the council supported many of the commission's ideas.

"At a time when the District is seeing record budget surpluses, these tax cuts will keep money with citizens while providing support for necessary city services," Evans said. "In total, the budget will provide $165 million per year in tax relief to District residents and businesses."

The budget will increase the funding for the Local Rent Supplement Program, provide application assistance for those applying for Social Security, fund the Homeless Prevention Program Establishment Act and case managers at D.C. General.

The council's budget didn't please everyone, though. The District's upcoming streetcar project, which was to receive nearly $900 million in Mayor Vincent Gray's proposed budget, was cut to $400 million, with the option of adding money as time progresses. Backers of the program, including council member Tommy Wells (D-Ward 6), argued the slashed funds have stymied the project before it begins.

Wells, one of the two council members to vote against the budget, said the cuts to the streetcar project were too drastic to approve. The other dissenter, Marion Barry (D-Ward 8), said he was against funding the project altogether.

Additionally, a tax on health care memberships has drawn the ire of fitness trainers and health clubs in the region. Myron Flowers, who co-owns a professional training business, 360 Fit Performance in Silver Spring, Maryland and who has clients in the District, said that the tax may be a problem for him.

"It will be tough for people who want to remain fit but don't have a lot of money," said Flowers, whose list of clients include San Francisco 49ers star Vernon Davis. "We know that the big gyms can handle that but it will be tough for smaller gyms. It will hard to handle the paperwork with recording the taxes and things like that."

Despite the gripes, council member David Grosso (I-At Large) said he is generally pleased with the budget.

"The Committee of the Whole put forth forward a thoughtful and comprehensive budget that will benefit all District residents in the areas of education, work-force development, human services and transportation," Grosso said. "This budget is the result of a lot of hard work and careful considerations and I am pleased to support and vote in favor of it."