D.C. Council Chair Phil Mendelson has made his revisions to Mayor Muriel Bowser’s proposed budget, and there are marked differences in how he wants to handle tax increases and the Early Childhood Educator Pay Equity Fund, which Bowser controversially proposed slashing.
Mendelson’s proposal would increase the property tax rate on single-family homes and condo units valued at more than $2.5 million. Those homes will still be taxed at the regular rate of 85 cents per $100 of assessed value up to $2.5 million, but every $100 in value after that will be taxed $1.
Mendelson explained during a briefing that a hypothetical homeowner of a $2.6 million house would pay $184 more in taxes annually in his proposed budget.
And while Bowser’s budget proposal includes a tax on hotel stays of 80 cents per room, per night, Mendelson’s includes no such hotel room tax.
One of the most hotly contested issues in Bowser’s budget was her proposal to cut the Early Childhood Educator Pay Equity Fund, which subsidizes pay for day care and preschool teachers. Mendelson’s proposal includes $70 million for the restoration of the fund.
Mendelson noted Bowser had tried to cut the program’s funding to address Glen Lee, the city’s chief financial officer, and his focus on refilling D.C.’s rainy day fund. He said she originally wanted to reduce the program’s funding down to about $53 million a year at the “CFO’s insistence.”
“The mayor didn’t want to do that, and I have to keep emphasizing that because she gets criticized for eliminating Pay Equity. That’s not what she wanted to do,” Mendelson said during a news briefing. “She did want to reduce it, however.”
Mendelson and Bowser did largely align when it comes to public safety, including increasing police staffing.
“The budget fully funds the mayor’s request for sworn police officers, my notes here say 3,370 because that’s what the chief (of police) testified to,” Mendelson said.
The full council will take up the budget Wednesday.
“The budget that the mayor proposed was criticized as less about shared sacrifice and more about cutting programs that help the last, the lost and the least. The Council has reworked that and the budget being presented [Wednesday] not only restores cuts in education, social justice and affordable housing, but also resets the District on the path to fight poverty and promote social justice,” Mendelson said at a hearing on Tuesday.
Mendelson also highlighted the following pieces of his budget proposal:
- Reallocating $25.4 million from DCPS Central to schools
- $3.5 million for one additional, permanent teaching position for each elementary school in Wards 7 and 8
- Increasing the number of new housing vouchers to 477
- Proposing an increase of $6 million in one-time funds, for a total of $26.9 million for Emergency Rental Assistance Program
- $1.8 million in one-time funds for a total of $11.5 million for Homeless Prevention Services for individuals and families
- Restores the budget for Access to Justice to $31.7 million, restoring cuts made in Bowser’s budget
- Increases universal paid leave program contribution rate from Bowser’s proposed .62% to .75%, generating an additional $76.1 million in fiscal year 2025
Mendelson also made note of his efforts to address Lee’s concern about the city’s lack of reserve funds. He has indicated that if $217 million is not added to the city’s reserve funds, he will refuse to support or certify the overall budget plan.
Lee said the city needs the extra money on hand due to the possibility of inadequate cash flow later this decade.
Bowser has disputed Lee’s notion that D.C. needs that much reserve funding.
According to Mendelson, under his budget proposal, any revenue increases certified in the next three revenue estimates through December will be deposited into the Fiscal Stabilization Fund, and if that fund is not full by February 2026, the FY-2027 budget will “budget the replenishment of the reserve.”
Mendelson said his budget would increase the amount of money that goes into the Cash Flow Reserve Account by approximately $200 million and would allow the CFO to use other large reserve accounts for temporary cash flow purposes.
A spokesman for Bowser’s office said the mayor had no comment on Mendelson’s budget plan.
WTOP’s Nick Iannelli and Kate Ryan contributed to this report.
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