D.C. Council raises taxes, reverses some cuts in first budget vote

In a 11-1 vote, the D.C. Council has approved the initial budget for fiscal 2025, which includes tax increases and some reversals of proposed cuts. The budget, worth $21 billion, aims to address the city’s slowed revenue growth due to the COVID-19 pandemic and rising expenditures.

Chairman Phil Mendelson, who led the revisions of Mayor Muriel E. Bowser’s proposed budget, focused on protecting low-income residents from proposed cuts. He believes the budget will “transform peoples lives, helps the children, and continues the war on poverty.”

Notable changes to Bowser’s proposal include:
1. Increasing real property taxes on homes worth more than $2.5 million.
2. Additional increases on the tax businesses must pay toward the Paid Family Leave program.
3. Reallocating $25.4 million from D.C. Public Schools central office to individual schools.
4. Restoring the Early Childhood Educator Pay Equity Fund.
5. Overhauling the city’s sports gambling program to fund the baby bonds program.

In housing, the council approved:
1. 477 housing vouchers.
2. An additional $6.7 million for emergency rental assistance, bringing the total to $26.9 million.
3. Bringing the Housing Production Trust Fund up to $80 million.

The council also voted to enhance the earned income tax credit while establishing a new child tax credit. However, some of Mendelson’s proposals, particularly the tax hikes, met with opposition from Bowser, who expressed concerns about the approach taken by the council.

The budget will undergo further changes before the second vote next month. Some council members raised concerns about the proposed changes, including defunding a planned indoor sports complex, delaying the implementation of a new city jail facility, and removing $28 million in new investments to revitalize downtown.

The council’s proposal to use future proceeds from a sports wagering bill to fund the baby bonds program was met with some resistance, but it remains intact after the council’s vote. The measure aims to end the monopoly held by the Greek gaming company Intralot and open up the city’s mobile sports betting market.

Amendments to the budget include shifting about $1.9 million within Ward 3 schools to strengthen the Jackson-Reed and MacArthur High School feeder systems. However, this measure was met with opposition from some council members, who felt it amounted to overreach.

Council member Trayon White Sr. (D-Ward 8) was the lone “no” vote, stating that the budget did not do enough to fully fund D.C.’s violence programs, nor meet the needs of seniors or schools in his underserved Ward 8. Lawmakers will continue to discuss and make changes to the budget in the coming weeks.