Council Restores Funds and Fights Worst of Feared Cuts in Challenging Budget Year

In recent years, the ability of those who follow DC politics to describe the twists and turns of the latest budget cycles as unprecedented has been compromised by what can only be described as the predictability of the unpredictability. Increasingly, the prospect and/or the reality of delayed budget submissions, combined with the increasingly bizarre triangular dance between the Council, mayor, and chief financial officer-plus pockets of funds withheld from one or two of these actors by the third-have transformed the already inherently and profoundly complex budget process into even more of a mystery, and a three-dimensional game of chess.

How We Got Here

Much of this year's specific complexity can be tracked directly back to the passage of the first bill introduced in the current session of the US Congress, HR 1, the inaccurately and non-facetiously named One Big Beautiful Bill Act. Through emergency and temporary legislation passed late last year, the Council chose to not implement certain of the local tax code changes that would otherwise have mirrored the same changes made at the federal level.

Local savings were generated through this process of decoupling, though Congress would later take the extremely rare step of voting to override the Council's decision. The Council disputes the timeline the Congress used in claiming their objection to our legislation was timely. Regardless, an opinion by DC's attorney general found that Congress' disapproval of the Council's temporary bill did not address the emergency version of the bill, and that the disapproval was not retroactive in any case. Because of this, for just this one year, the funds available via decoupling indeed accrued and should be available to the District government.

The crux of the matter came when the chief financial officer (CFO) chose to recognize the existence of the revenues generated via the decoupling, but did not include those same dollars in the revenue estimates provided to the mayor in the lead-up to her budget preparations. As a result, the budget proposal she presented to the Council was particularly austere and punitive in its impacts. After much cajoling by the Council, the CFO's office did eventually score the generated revenue so that these funds could be available to the Council for its budgeting process, thus allowing a freer hand for the Council's spending decisions.

Second Source of Funds

A second source of funds for the Council's efforts to scale back social service cuts in the mayor's budget proposal has been misconstrued in some media coverage of the process, being described as a raid on rainy day funds.

In reality, the District has four reserve funds, two Congressionally-mandated and two others created locally by the Council. In the budget bill passed on the first of two necessary votes at the most recent Legislative Meeting, the Council did draw marginally on just one of the four funds. However, what much of the commentary around this decision neglects to mention is the specifics. Governmental best practices suggest that ideally, local governments would maintain sixty days of operating reserves. Prior to this year's budget process, the District had 66 days of reserves on hand. Even after the Council's draw-down of its reserves, we will have 62 days-still above the recommended level.

This is a bit analogous to doctors' common wisdom about getting eight hours of sleep a night. While hearing someone is "getting less sleep" may sound concerning without further context, when you find out that a person had been getting a remarkable ten hours of sleep, and will now "only" be getting a still impressive nine hours-that should lay to rest potential concerns that otherwise might have arisen when hearing the general news of a cutback.

Avoiding the Worst of the Cuts

The Council made the best possible use of these two sources of newly available funds, blunting though not completely alleviating the painful cuts made by the mayor in her CFO-encroached budget proposal.

Among the improvements passed by the Council in the first of two necessary votes, the approved legislation:

• restores $72 million toward Early Childhood Educator Pay Equity
• eliminates the anticipated waitlist for the Childcare Subsidy Program, allowing 8,450 total children to be served every month by the program
• partially alleviates a funding gap between public schools and public charter schools, addressing a funding disparity that had been instigated by the mayor between the two sectors
• restores $6 million of a proposed $10 million cut to the subsidy for the University of the District of Columbia
• supports 569 housing vouchers (prevention of loss of 379 turnover vouchers, plus 190 vouchers for families leaving rapid rehousing) across the four-year financial plan (up from zero new vouchers and inadequate sustenance for existing vouchers in the mayor's proposal)
• maintains the maximum paid family leave weekly benefit at $1,100 (rather than cutting it to $1,000), plus indexes it to inflation in future years
• retains the medical leave and family leave categories within the paid family leave program, which the mayor had entirely struck in the single upcoming fiscal year, with benefits held at ten weeks (medical) and six weeks (family) rather than being decreased from twelve to eight (medical) and twelve to six (family) as the mayor proposed
• delays by one year the sanction and benefit stepdown regime proposed by the mayor for the Temporary Assistance to Needy Families program
• removes the proposed moratorium on new Healthcare Alliance members for those up to 138 percent of the federal poverty level
• provides an additional $2.37 million in funding for youth recreation programming, providing essential proactive alternatives for youth
• resurrects 58 currently filled jobs in the Office of the Attorney General, which would have been eliminated by the mayor's budget proposal
• fully funds the Access to Justice program at prior fiscal year levels, ensuring access to legal counsel for those who cannot afford legal services related to civil matters such as evictions, domestic violence, and wage theft
• fully funds victim services grants at prior fiscal year levels
• restores $10.1 million to the Sustainable Energy Trust Fund, for programs such as Healthy Homes and Solar for All
• provides $7 million for federal clean water compliance requirements
• provides $300 million in capital budget funding, prior to the 2030 opening of the new Commanders stadium, for the necessary expansion of the Stadium/Armory Metro station, which had incomprehensibly been left entirely unfunded in the mayor's budget proposal
• adds $100 million for collective bargaining agreements with government employee unions
• eliminates a proposed $0.80 per room tax on hotels
• eliminates a proposed sales tax increase on medical marijuana
• adds a $0.20 fee to third-party food deliveries
• rejects the elimination of a minimum pre-application education requirement for Metropolitan Police Department recruits-a decades-old reform credited with improved results in police hiring and performance

Via amendment, the bill was modified to:

• restore and consolidate grant funding specifically for LGBTQ priorities
• support establishment of an automated curbside management program at the District Department of Transportation
• restore $325,000 for the Brightwood Family Success Center
• create a one year, $50 a week financial literacy and sustainability pilot program for certain middle and high school students
• requires the upcoming comprehensive plan for the District to include language addressing the concentration of industrial land use in certain areas of the District
• reallocates funds to allow installation of a new pool shell at the Kelly Miller pool
• allows the Art All Night program to pursue and accept sponsorships

With the first of two necessary votes taken on both the Local Budget Act (the dollars-and-cents component of the multi-bill legislative budget package) and the Budget Support Act (the legislative language necessary to implement the budgetary changes), this year's budget process is well underway. The second vote on the Local Budget Act will be taken on June 23, along with the sole necessary votes pertaining to the fully federal portion of the District budget, as well as the bill regarding the supplemental budget request for the fiscal year that is currently underway.

After the June 23 meeting, two more Legislative Meetings will be held prior to the Council's summer recess. At one of these two meetings (either June 30 or July 14), the second vote on the Budget Support Act will be taken, and another year's budget process will be complete.