[from May 2007 issue]


We continue to be dismayed over what seems to us and others whose comments we have been monitoring on a variety of community listservs to be a distressing disarray in the District Building about how to get a workable budget that will be in truth a balanced budget.

There appears to be a pesky $30 million or so gap that the Mayor doesn’t want to own up to, yet we see him putting forth one scheme after another that he hopes will paper it over.

So, as we saw reported in the Washington Post on May 9th, the Mayor is proposing to shift $7.4 million from the public safety budget to cover costs associated with personnel and procurement functions now that his earlier plan to bill those costs associated with each city agency utilizing the services of the personnel and procurement departments was exposed as unworkable since all those other agencies were not being provided with administrative funds to use to reimburse for personnel and procurement services normally provided by the departments responsible for those tasks.

And for the Mayor’s budget man to tell the Post that “it is a misnomer to refer to the transfer of funds as cuts” because those funds were intended for positions not yet filled and programs not yet implemented is truly bizarre. The old saying, “If it walks like a duck, quacks like a duck, it is a duck,” certainly applies here. Or, to be more succinct, in the words of another old saying, let’s call “a spade a spade” and stop pretending.

Assuming the Council goes along with this tricky little dance, what’s to come of the 300 new police officers we have been promised or the long overdue upgrading of the emergency medical service or the urgently needed resources for the corrections department? The Mayor’s budget man says that since many of the authorized police positions are at the moment vacant there is no harm redirecting the funds that would have paid for them. What alternative universe is that man living in? If those positions are for one reason or another not yet filled, what makes anyone think they will ever get filled if the funds for them are taken away?

And, on top of all this, the Mayor was trying to put the kibosh on the plan to cap residential real property tax increases at 5 percent. He seems to be buying into the weird notion that only the “rich” benefit; has he not been told about the astronomical increases this year on residential real property assessments in Shaw, Columbia Heights, Petworth, far Northeast and east of the river, to mention but a few areas? By comparison, the so-called “rich” in upper Northwest are nowadays truly off the hook with regard to the wild assessment increases.

Another scheme to squeeze a few more bucks from taxpayers on the theory that only the “rich” benefit is opposition by some to raise the dollar amount of an estate not subject to the inheritance tax from the present $1 million cap to $3.5 million. Even the usually very sensible Ward 1 Councilmember Jim Graham seems to have signed on to that canard.

Consider that in today's world where a million is not much more than bupkes, to tax estates above $1 million could really represent a hardship on survivors, especially in our city where for ordinary middle-class people a house or condo can easily come in at around that amount without even trying.

In the interest of full disclosure, this commentator’s own situation can be instructive and not unusual and illustrates the real-life problem not raising the limit will cause: My own house, hardly a palace –- simply a standard late-19th century carpenter-built dwelling (and needing some real work to boot) –- is assessed at slightly under $1 million. Once upon a time that would have been a real big deal. But no more, especially around here. And, as with most ordinary folk who own their homes, it is the primary asset.

It is not far-fetched to say that within about two or three more years the assessed value of houses now hovering near $1 million in assessed value will undoubtedly substantially exceed that amount and by the time homeowners such as this one pass on to the great beyond, even without the wildly inflating values of the past few years, a typical estate will be worth far in excess of that $1 million. The fact is, money simply isn’t worth what it once was.

The big danger for a person’s surviving spouse or partner, should the limit not be raised, will be that the survivor will not be able to pay the inheritance tax utilizing other, undoubtedly modest assets and will thus be forced to sell the property and leave the house and neighborhood that had been home for many years.

The small amount (in relation to the city’s overall huge revenue stream) of foregone tax receipts that might be occasioned by this change is hardly worth jeopardizing the lives of large numbers of surviving spouses and partners who, if able to remain, will only continue to keep the neighborhoods stable. On the other hand, the more that older people are forced from their lifetime homes because they won't be able to pay inheritance taxes the more we will see strangers, flush with cash, coming in, taking over, and changing long-stable neighborhoods with long-time residents who developed a true stake in those neighborhoods; in their place will be the trendy, short-timers who will buy in, stay for a bit and then depart in the unfortunate and often typical DC scenario. That does not seem to us to be the sort of (probably unintended) result we would think our city leaders would welcome, but it is what could well come about by a short-sighted policy of refusing to adjust the estate tax cap upwards to adjust for rising values.

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