The D.C. Council agreed on Wednesday to roll back the District’s sales tax rate from 6 percent to 5.75 percent, returning the rate to its pre-recession level.
On the heels of the chief financial officer’s latest revenue estimate, which forecasts $86 million more in 2013 and $92 million more in 2014 than previously projected, the council adopted the city’s 2014 spending plan, by a 12-1 vote, with a bounty of new spending items.
The sales tax was last hiked in 2009, when the District faced massive shortfalls. The increase was scheduled to sunset in 2012, but the higher rate was maintained for two additional years and played a key role in the District’s much stronger bottom line.
With the reduction, the District’s sales tax will be the lowest in the region.
A last ditch effort to invest more money in public education failed by a 7-6 vote. Councilman David Catania, I-At large, chairman of the Education Committee, blasted his colleagues for killing his amendment.
“Shame on the members,” he said.
“It’s about political will, and where is ours?” asked Catania, the one council member to vote against the budget. “It doesn’t exist.”
Catania did offer an amendment that was accepted. The council authorized United Medical Center to spend $2 million of its capital budget to build a pediatric asthma management center, which will be operated by Children’s National Medical Center. Demand for pediatric asthma services has ballooned, Catania said, from 15,000 to 40,000 in a matter of a few years.
The approved budget also provides:
“The council has charted a responsible course consistent with my original budget that will help move the District forward,” Mayor Vincent Gray said in a statement.
The amended Budget Support Act, fashioned by Council Chairman Phil Mendelson, also reserves $18 million to offset future tax code changes that might be recommended by the Tax Revision Commission. The Anthony Williams-led panel is expected to release its proposals in January, three months into the next the fiscal year.
That’s not to say council members are willing to wait that long. Councilman Vincent Orange, D-At large, introduced legislation Wednesday to reduce the income tax rate by 2 percent for low-income and middle-class earners — to 2.5 percent and 4.5 percent — and to drop the top rate from 8.95 percent to 8.5 percent.