Driver’s licenses. Trash collection. Affordable housing. Teachers and police officers. Library books. What do they have in common?
These things that affect our daily lives are all made possible in the District through one thing: the city’s annual budget. The budget also is the main tool for addressing DC’s economic and racial inequities and creating opportunity for all residents to benefit from our city’s growth.
The budget reflects our community’s priorities. It represents a competition for limited resources and lots of difficult choices, because there never is enough money for everything. The budget is where our elected leaders’ rhetoric meets reality.
Even though 2019 has just started, the process of planning the 2020 budget has begun, and there are opportunities right now for residents to voice their priorities. Mayor Bowser will submit her budget on March 20, and then the DC Council will have two months to review it and make changes.
This column walks through key features of DC’s budget and budget process, with tips for getting involved. For a deeper dive, see “A Resident’s Guide to the DC Budget,” published by the DC Fiscal Policy Institute.
Where Does the Money Go? Where Does It Come From?
DC’s budget process starts each spring with a budget submitted by the mayor to the DC Council for review and modification. By law, expenditures must balance with revenues. DC’s fiscal year runs from October through September.
The budget has two parts. The operating budget covers things to run the government day-to-day, costs like salaries of police officers and librarians, phone bills for government agencies and expenses for residents in the District’s health programs. The capital budget supports the costs associated with building and maintaining infrastructure such as roads and schools.
Where does the money go? When we look at the $8 billion that DC spends from locally raised taxes and fees, the clear priority is public education. DC spends nearly $2 billion on education, primarily for DC Public Schools and public charter schools. It also spends about $1 billion each on healthcare, human services and public safety. The current budget includes nearly $1 billion for “financing,” which is the cost of repaying bonds issued to pay for capital projects. Other parts of the budget – public works, economic development and government administration – are much smaller.
Where does the money come from? You may be surprised to learn that traffic cameras aren’t number one, or even close. Instead, we raise most of our resources from taxes on income, sales and property. When we look at all sources of money (known as gross funds), the $8 billion raised from local taxes and fees is the main source, covering about three-fourths of what is spent. The second main source is almost $4 billion of federal funds allocated for specific functions, like transportation, childcare or Medicaid. The federal money is the same that all cities and states get from the national government. By and large, DC gets no special fiscal treatment from the federal government. Among other things, this is important to know for anyone who care about DC statehood. If most of what we spend comes from us, through taxes and fees on residents, businesses and visitors, it’s a sign we’re ready to manage our affairs as a state.
How to Get Involved in the Budget
There are many opportunities to let the mayor and Council know what you want to see in the budget (though some opportunities have passed this year).
- Mayor’s Budget Engagement Forums. Each year, the mayor holds forums to hear the budget priorities of DC residents. This year, the forums were in late February.
- DC Council Performance Oversight Hearings. In February and March, the Council’s committees hold hearings on each DC government agency. Residents are invited to testify. (The schedule is on the Council’s website.) These are a great chance to comment on how well an agency is performing its key functions. It also is an opportunity to let the Council know if you think an agency needs more funding.
- DC Council Budget Hearings. Once the mayor’s budget appears, the Council holds another round of hearings, this time to get resident input.
- Connecting with the mayor and Council on your own. Residents should feel free to send a letter or email to the mayor or to councilmembers. Or let them know what you think if you see them in the community.
There is no guarantee this advocacy will work. But there is a guarantee that if you don’t get involved, your priorities will not be heard.
Does DC Save for a Rainy Day?
What happens when the economy takes a nosedive and revenue collections decrease? Does the District save money for a rainy day? Indeed, it does. Just as you might tap into your emergency fund to pay unexpected bills or when there is a drop in income, rainy day funds help states and cities maintain services during an economic downturn.
DC has lots of reserves, actually. The “emergency cash reserve” and a “contingency cash reserve,” which are required by Congress, hold over $400 million. In addition, the District established a fiscal stabilization reserve in 2010, which now has close to $200 million. Finally, the District also has reserves for cashflow during the fiscal year. Those reserves equal over $600 million.
DC’s reserve policies are strict, which helps financially but also restricts the ability to use reserves when needed. Withdrawals must be replenished within the same fiscal year or next. This makes it hard to actually use them – at the time we need to take money out, it’s hard to know if we’ll be able to repay quickly.
DC has run a budget surplus each year for almost a decade. Yet an overly cautious fiscal policy has put every dollar of the surpluses into savings, adding $2 billion over the past decade and bringing the total to nearly $3 billion. That represents a lost opportunity to use DC’s prosperity to invest in helping residents. Just this year, the District announced a $200 million surplus, while Mayor Bowser proposed cutting funds from the Fort Dupont Ice Rink and other projects to help repair schools, presumably because the city lacked funding to do it all. Tapping a portion of the 2018 surplus would allow the city to make needed school repairs while also supporting the ice rink and other projects that had been promised funding.
Ed Lazere is the executive director of the DC Fiscal Policy Institute (www.dcfpi.org). DCFPI promotes budget and policy solutions to reduce poverty and inequality in the District of Columbia and increase opportunities for residents to build a better future.