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DC Council Blasts Mayor For Planned Tax Hikes

D.C. Mayor Muriel Bowser sat in front of the council Monday to defend her 12.9 billion budget plan for the 2016 fiscal year, and council membersgrilled her about budget cuts and tax increases.

Bowser testified in the first of many planned oversight hearings to discuss the city’s budget for next year, where she laid out her plans to raise taxes to deal with the city’s homelessness and affordable housing crises, among other things.

Her plans to raise taxes and dip into the city’s surplus funds to balance the budget drew sharp rebuke from most members of the council, with council member Mary Cheh calling the ideas very “shortsighted.”

“Neither of those steps is very wise,” Cheh said.

Despite growing tax revenue, in her proposed budget for next year the mayor wants to raise the city’s sales tax to 6 percent, hike the parking tax from 18 to 22 percent, and boost the tax on e-cigarettes to the same rate as regular smokes.

Councilman Jack Evans called the taxes regressive and said they would disproportionately hurt the city’s poorest residents who already have a hard time getting by.

He said he would like to reverse the trend of raising taxes and pointed to the fact that Maryland and Virginia, which surround the District, do not have parking taxes.

“This is just another back-handed tax on our residents and it’s not something we need to do,” Evans said.

Bowser did have a lone defender on the council, though, in Councilman Vincent Orange.

Orange said there are around 700,000 people coming into the city every day to work, who leave without chipping in any taxes, and a sales tax hike would help the city recoup some of the tax dollars lost from its lack of a commuter tax.

“There’s never any gain without pain, and the pain is something we are all going to have to share,” Orange said.

In addition to the tax increases, and against the wishes of council members, Bowser wants to take money from the city’s general fund surplus accumulated over the past five years to use for projects in the 2016 fiscal year.

“Next year we will be spending faster than the money is coming in,” said Council Chairman Phil Mendelson.

The mayor’s proposed budget calls for an increase of just 3.2 percent, the smallest increase in years, and Bowser said it was a major accomplishment since she faced a nearly $200 million budget gap when she took office earlier this year.

Currently, the city has a record level of roughly $1.8 billion surplus in its general fund thanks to former mayor Vincent Gray taking the higher-than-expected revenues during his tenure and stuffing them away in the city’s rainy day fund. That $1.8 billion would allow the city to operate normally for about 45 days if the federal government shuts down again or if another unforeseen event occurs.

In her budget, the mayor seeks to cut $25 million from the D.C. police department, while at the same time adding $2.5 million and 30 employees to grow the staff in her own office. She also wants to cut the amount the city reimburses Medicaid recipients from 92 to 86 percent, which would save the city around $9 million annually.

Mendelson called the move foolish, because it would only save the District around $9 million a year, but it would cost hospitals nearly $50 million.

Bowser’s city administrator, Rashad Young, said this was one of the more difficult decisions made in the budget process but said it would bring the rates paid by the city more in line with the rest of the country.

“Reducing that rate to 86 percent still leaves us as one of the highest in the nation,” he said.

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