If you live or work in D.C., get ready to pay more in some taxes.
The D.C. Council chairman unveiled his plan on Tuesday to increase some property taxes and a tax imposed on employers.
Chair Phil Mendelson said it’s part of his plan to restore programs that Mayor Muriel Bowser wanted to cut as part of the upcoming budget vote.
Facing a $700 million budget gap next year, the council is poised to raise taxes in order to restore funding for some programs Bowser has cut in her budget proposal. Bowser’s budget includes gradually increasing the District’s sales tax rate and terminating Circulator bus service.
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Mendelson told reporters those items will remain in the budget the council will vote on Wednesday. Cuts to other programs will be softened, he said.
The council’s budget would restore $70 million for the Early Childhood Educator Pay Equity Fund and $31.7 million for the Access to Justice Fund. Both funds had been eliminated in Bowser’s proposed budget.
The council’s budget includes an additional $50 million in housing and rental programs.
Mendelson was able to fund these programs through:
- tax increases above what Bowser proposed
- increasing the property tax rate on houses selling for $2.5 million and more
- increasing the payroll tax for paid family leave from 0.62% to 0.75%
- eliminating tax exemptions on municipal bonds
“It means people with more wealth pay a higher percentage of their income or wealth toward taxes than people with little wealth. That's progressivity in tax terms. And, typically real property tax has no progressivity around it, so, I think this is a good thing,” Mendelson said.
He also is funding the programs by ignoring the District’s chief financial officer’s insistence that the District fully replenish its reserve funds – a move that would take $217 million out of the budget.
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Mendelson dismissed questions that without the CFO’s full support, Congress could use the dispute as reason to block the District’s budget, much in the way it did with the crime bill.
“I expect that it’s possible, maybe probable, he will articulate that concern about liquidity, but with regard to whether that budget is balanced, it will be balanced,” Mendelson said.
The council is set to vote on the budget on Wednesday.
