BUDGET MADNESS IN DC, PART 1
THE $19.7 billion Fiscal Year 2024 Budget and Financial Plan submitted earlier this year by Mayor Muriel Bowser demonstrates her administration’s chaotic and shortsighted public policy development coupled with poor thinking around municipal management. Unfortunately, the changes to that spending proposal discussed over the past several weeks by the DC Council, led by Chair Phil Mendelson, appear to offer little improvement to the fiscal and government madness.
In fairness, there are some recommendations expected to come before the legislature worth praising like those from the Committee on Housing, headed by at-large Council member Robert White. He and his colleagues are hoping to redirect millions of dollars that could make life a tad easier for low-income renters. Bowser assaulted tenants with her spending plan.
“This was a very tough budget proposal from the mayor,” White said during a telephone interview with me earlier this week.
He cited as an example Bowser’s decision to provide only $8 million in 2024 for the Emergency Rental Assistance Program (ERAP). It is funded at $43 million for the current fiscal year — although a significant amount of that money came from the federal government.
Bowser also failed to fund any new vouchers for people experiencing chronic homelessness. And, she cut staff and funding from the Office of the Tenant Advocate, which as the name suggests is supposed to assist renters experiencing problems with landlords or the government.
“So many steps in that ladder were removed,” added White. His committee, with the aid of fund transfers from other council members, managed to increase ERAP funding for 2024 to about $14 million. However, he has called on legislators to meet the FY 2023 allocation of $43 million — all of which has already been committed in the first six months of this fiscal year.
In an errata budget letter Bowser sent to the council on April 28, she referenced another $33.5 million in ERAP funding for the current fiscal year (FY 2023); those funds are coming from the federal government under the pandemic recovery act.
That all sounds good. However, from my reading of other draft budget reports prepared by various committees, legislators are poised to make decisions that serve primarily to implement their favorite programs or policies. They also appear animated by demands of special-interest groups and vocal advocates, without full consideration of the potential adverse, long-term effects on the city and its residents.
It was difficult to discern in those materials a clear, concise and comprehensive vision for the District. The committee recommendations in many instances do not demonstrate a full appreciation for the financial position in which the District finds itself. The nearly three-year pandemic from which we are now emerging instigated major changes to the nation’s — and DC’s — work culture, leaving some downtown federal and commercial office buildings nearly empty of in-person employees while retail outlets and restaurants hunt for customers. Together those outcomes have wreaked havoc on the government’s revenue projections as well as the city’s overall economy.
Interestingly, earlier this month when legislators met to discuss their preliminary budget recommendations in advance of their first vote on May 16, Mendelson asked each to name three top priority issues that could have citywide impact. Aside from general categories of education, public safety and housing, most council members stuck to topics covered by their respective committees. It was tangible evidence that the legislature suffers from an inability to see and think globally. They may want to be a state plenum, and they have the expanded responsibilities of a unique state/county/municipality hybrid, but they function much like a city council — small and hyperlocal.
In the past, residents have relied in no small measure on Mendelson — a politician perceived for many years as a fiscal moderate — to serve as a bulwark against fanciful policies and reckless spending. Now, however, he appears to be embracing some programs and actions against which he previously fought.
He once advocated using a pay-as-you-go process for DC government capital improvements to help reduce the amount of money the city needed to borrow, thus lowering its debt service obligations. Now, he is lending his credibility to a raid of those funds.
At least initially, Mendelson has recommended converting $142 million of Paygo money for fare-free buses and “baby bonds.” The latter program would provide $1,000 annually for 18 years to children born into poor families; the council has called it a wealth-building vehicle. This would considerably deplete the Paygo fund, which is set at $378.8 million according to budget documents that appear on the website for the Office of the Chief Financial Officer.
Mendelson previously seemed to appreciate the sometimes time-consuming and protracted nature of urban development, especially turning around an ailing economy. Now Mendelson offers the lame commentary that “revitalizing downtown is something that has to happen in a year or two” and that the mayor should think about using festivals to bring people downtown or fund arts organizations. Ironically, Mendelson wants more festivals while the Committee on Business and Economic Development actually recommended reducing funding for festivals.
Mendelson’s flawed thinking, as evidenced by his focus on the short run to the detriment of the long-term needs, is a product of his attempts to counter criticism of a plan pushed by him and Ward 6 Council member Charles Allen, chair of the Committee on Transportation and the Environment. Not only would they snatch Paygo funds, but they would also swipe millions of dollars from the K Street Transitway project to fund the fare-free-bus law. Critics, including the mayor, have accused the council of killing or at the very least crippling her administration’s downtown comeback plan. The K Street Transitway may be just one aspect, but once completed it will make working in the offices along that corridor more attractive while also improving bus speeds for multiple cross-city routes.
The free-bus-rides-for-all has seemingly become the elixir for everything. In particular, it’s pitched as an economic equity strategy for poor people in the city — although it does not guarantee anyone any jobs or money.
Just to be clear, the fares are not free — the District government would pay the Washington Metropolitan Area Transit Authority (WMATA) for those rides — hence the reason for the raid. The project could cost more than $200 million over the course of the four-year financial plan. That’s money that could be used for any number of programs that really could create equity and economic justice. Despite the council’s contortions thus far, it seems a change in course is inevitable now that WMATA’s board has sent a letter to the mayor and council asking that fare-free buses be paused for at least a year, because the agency is facing a number of challenges and prefers a regional approach.
Funding for fare-free buses is hardly the only reason for doubt about the council’s thinking on the budget. While Mendelson has claimed to abhor government inefficiency and waste, he has raised no objections to leaving in thousands of funded but vacant positions. Bowser proposed cutting only 749 of the 3,500-plus funded but vacant positions. Instead of further reductions to that pool, some council committees added new workers to the city’s employment rolls, providing an even larger slush fund to be exploited by the executive.
If that weren’t enough, it appears the council has accepted the mayor’s proposal to use $578 million of traffic revenue that would be collected from yet-to-be-installed traffic cameras to balance the budget. Allen said he objected to Bowser’s decision, because the money generated from the cameras was supposed to be used to address transportation safety needs.
He missed the point, however. Recent media reports have revealed that 6 million traffic tickets currently remain unpaid, depriving the District of substantial revenue that was once expected.
Call that a curtain-pulling, abracadabra moment.
See what I mean by madness? That may be why I decided to cling to White and his Housing Committee. It restored two filled OTA staff positions critical to aiding renters. White also expanded by $227,000 the agency’s emergency housing assistance fund that is used to help families whose apartments have been rendered inhabitable, often because landlords, violating DC laws, were allowed to let them fall into dangerous disrepair.
According to OTA Director Johanna Shreve, 65 buildings were shuttered in the first six months of fiscal year 2023, leaving 208 tenants without homes and living in hotels that charge as much as $259 per night. By the end of March, taxpayers had spent $444,943.05 — a significant increase over the $311,316.85 that the city had spent by the same time in the prior fiscal year.
Landlords weren’t charged a dime.
“The cost is going to increase,” Shreve told me during a telephone interview. “Hotels in the city have said they are going to get to $500 a night.“
Shreve said she has been thinking about asking the council to force landlords to pay everything over $500. White told me that his committee has recommended an expansion of the OTA’s authority so that it can “capture money it brings in,” rather than channel it to the general fund.
The committee also sought to resolve a few issues at the DC Housing Authority (DCHA), recommending that it be subjected to an annual audit like other government agencies and that its executive bonuses be capped at 10% of the individual’s salary. That latter mandate was triggered by DCHA Executive Director Brenda Donald receiving an inexplicable $40,000 bonus, despite a scathing assessment by the federal Department of Housing and Urban Development that concluded that she wasn’t qualified for the job.
“There were plenty of other things I wanted to do that I couldn’t do,” White told me, noting that he wanted to add funds to the agency’s budget that could help expedite renovations of its properties. Donald asserted that DCHA lacked the operating capacity to use the increase in 2024. Given her response, he said he was hard-pressed to enhance the public housing budget. That may all be moot, since even as the council was discussing its budget decisions, Donald had already told key people in her executive circle and DCHA’s board that she planned to end her contract before its September deadline.
Despite my praise for the Housing Committee, its approach is also inadequate. What, for example, prevents the DC government from using the Housing Production Trust Fund to advance a more holistic, integrated program that links all elements of the city’s affordable housing strategy and capitalizes on DCHA properties? By doing so, the city could serve more very low-income residents — those who earn less than 50% of the area median income (AMI) — while using new construction to accommodate those who earn between 50% and 80% of the AMI. What prevents the entire government, especially during these challenging financial times, from removing silos, thinking and operating as a cohesive entity?
As a government, White said, “We have to come to some agreement about the basics. For me it’s education, housing, jobs and mental health. Without all four of those, the city is going to limp forward.”
While that may be the best approach — notwithstanding his omission of public safety and public works, two of the true fundamental services of government — he acknowledged that “like every other jurisdiction we are in the process of trying to fill in gaps” at the moment.
“Doing something different requires not just discipline but a change in culture,” added White.
Don’t expect that to happen any time soon.