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The Mayor’s Budget Raises Many Red Flags

In testimony before the DC Council’s Committee of the Whole on March 25th concerning the Mayor’s proposed fiscal year 2020 budget, DC Auditor Kathy Patterson had this to say:

“Mr. Chairman, the budget before you is not fiscally responsible. I applaud the Mayor for her cautionary statements at her swearing-in on January 2, 2019, and again in her State of the District speech last week when she said, ‘As we continue through budget season, we must resist the temptation to write checks now that we cannot cash in recessionary times.’ The budget before you represents an 8.2 percent 1-year increase in overall spending and that is not sustainable.”

While the title of DC Auditor sounds like it is an executive branch position reporting to the Mayor, it is not — and that is fortunate for us DC taxpayers. The Office of the DC Auditor lodged within the purview of the DC Council; its staff of over 30, highly qualified professionals provide the research and technical support for Ms. Patterson who, herself, is much respected. With her background and years of DC Council experience – three terms representing Ward 3 between 1994 and 2002 during which time she chaired the government operations committee, among others, and was very much involved with the process that saw DC successfully emerge from its financial crisis of the mid-1990s. Back then we applauded her always effective oversight of executive branch agencies; her reputation was then, as now, stellar, and when she speaks, all should pay very close attention.

Of the several specific concerns highlighted in her testimony was that which sounded to us like an alarm about a serious short-shrifting of education:\

“Mr. Chairman you have spoken of the need for additional funding for our public schools. It’s a critical issue especially when you consider the byzantine way in which we fund our schools. Many neighborhood public schools will see real shrinkage [emphasis added] in their purchasing power this year, after the same phenomenon last year. As a committee chair with shared oversight for public education, I would ask you to seek answers to straightforward questions before you entertain any increase to the $1.8 billion allocated for public schools.

“We have just over 4,000 classroom teachers in the D.C. Public Schools (DCPS), 4,012 according to the DCPS website. But the budget before you would support salaries to pay 8,830 full-time equivalent employees, 420 more FTEs than funded today. Now, I know school systems need more than classroom teachers — they need chancellors and custodians and psychologists. But significantly more than the number of classroom teachers? Longtime analyst Mary Levy reports that there are now more employees in central administration than ever before. [Emphasis added] Ask the new chancellor: who are those 4,830 employees and what do they do? As a newcomer he might appreciate having to tease out an answer to that question.”

Indeed, let’s insist that the Chancellor provide a supportable justification for this overloaded central bureaucracy which, as far as we have seen =ever since the time of Michelle Rhee’s controversial tenure during the Fenty administration has been making a hash of things at the neighborhood school level.

Echoing Ms. Patterson’s warning, is DC Council Chairman Phil Mendelson’s extensive comment about the Mayor’s budget, received by us just as we were finishing writing our own commentary. Among other observations, the chairman wrote:

”I cannot help but be critical of this proposed FY 2020 budget.“While many people are celebrating the dramatically increased investment in affordable housing — a 30% increase to the Housing Production Trust Fund alone — there is very little, too little, scraps, relatively speaking, added for public education. And yet public education, more than anything else, is the true pathway to the middle class.”

And, having cited two, glaringly egregious examples of providing mere “scraps” to the schools, he concludes with the following clarion call:

“I don’t see how cutting schools helps our kids. Yet about half of the DCPS schools are seeing cuts. Two-thirds of those schools are in Wards 7 and 8. If a budget is a moral statement reflecting our values, the proposed budget fails our kids. We need a Marshall Plan, not funding cuts.”

We agree, 100%!

It appears that the Mayor believes her budget will work out very nicely by means of increasing taxes on commercial real estate, already accounting for a whopping 65% of all real property taxes collected. Specifically, not just commercial but also mixed use deed transfer taxes on properties valued at $2 million and above would nearly double; deed recordation taxes would increase to slightly more than 2%. Additionally, commercial properties valued in excess of $10 million would have their per $100 assessed value rate increase by three cents. That may seem like nearly nothing to complain about, but just do the arithmetic and one will be astounded.

While at first blush increasing taxes on commercial properties might not seem to be something to get riled up about since it will just affect the “fat cats,” or so many will argue; we don’t agree, but that is a topic for another day.

However, what we cannot brush aside is the negative impact on the owners and tenants of mixed-use properties. Those are mostly what one finds along neighborhood shopping streets where residents rely on their local retailers and come together in the local restaurants and bars. It’s tough enough these days for so many neighborhood businesses to survive; we should not do anything to make their survival more problematic.