This post is adapted from testimony delivered today by Bread for the City's Advocacy Coordinator, Joni Podschun, to City Council's Committee of the Whole. (You can follow a live discussion of the budget hearing on Twitter under the #gapclosing tag; follow Bread for the City's tweets here.)
The health and prosperity of our city depend on public investments that expand economic opportunity and support families. In these difficult economic times, careful planning is needed to make sure we can continue to meet these goals.
Last week Mayor Adrian Fenty released his long-awaited FY2011 Budget Gap-Closing Proposal. Yesterday, the DC Fiscal Policy Institute published analysis of the proposal, listing cuts to programs like affordable housing, TANF, job training, Access to Justice, Interim Disability Assistance (IDA), mental health services, and LIHEAP utility assistance.
One of the proposals is to reduce TANF benefits by 20% for households that have been in the program over five years. When I read that proposal, I thought about Tameka, who I first met three years ago when she was receiving training through the Center for Employment Training. At the time, she was just barely making ends meet on $428 a month provided by the TANF program for her and her two boys, even though she was among the 1/3 of TANF recipients fortunate enough to live in subsidized housing. She now has a good job with a career path, after graduating from the program, but she has received TANF for over five years. But what happens if she has an emergency and needs to quit her job? What if her position is eliminated due to the recession? If she needed TANF again, her benefit would be cut by $85. For her and other women like her, 20% of their already meager household income would be gone.
This is just one example of a larger trend to cut services that low-income and middle-income residents depend on. Low-income DC residents in particular face long lines at IMA service centers, harried staff at non-profits, reduced hours at libraries, a growing wait list for IDA (a program designed to tide people over while they are waiting for federal disability benefits), and limited capacity at TANF job readiness vendors, among other things.
According to DCFPI, 39% of the cuts in the gap-closing plan we consider today are to human services programs, even though they only make up 26% of the total budget. And there is just $1 in proposed revenue for every $40 in spending cuts.
The alternative is to ask more of households in the top 5%. These families have suffered the least in the recession, pay a smaller share of their income in combined taxes than middle-income households, and have continued to receive city services largely unchanged. By creating a new tax bracket of 9.5%, an individual earning $300,000 would contribute about $85 a month, only 0.3% of their income. This proposal would generate approximately $75 million in new revenue.
If we are going to ask District residents to take a hit, shouldn’t the $85 a month come from those for whom it will be only 0.3% of their income, not households barely making it on $428 a month, for whom it is one-fifth their total budget? After the new brackets, a household at $300,000 will still have income net of taxes at $24,915 each month.
It is the role of government to provide a basic level of support and to reinforce the positive steps that people are taking to meet their goals. That is more important during an economic downturn than ever. With a limited job market, we should invest in education and intensive hard skills, retooling District residents for the 21st century and ensuring they can compete for jobs. Housing costs are down, the perfect time for the preservation and creation of affordable housing. These are just two examples of costly programs that yield huge benefits down the road.
We need to make smart, targeted investments in the local economic infrastructure, to help our city rebound from the recession. Investments that keep families out of costly emergency and remedial services, that bring dollars into the local economy. Let’s have a conversation about priorities, about what we can build with progressive revenue. What kind of housing do we need to keep our workers in DC? What types of job training should we provide? How can we support entrepreneurship and small businesses that employ DC residents? When DC residents consider what their tax dollars can buy, they will be excited to contribute to a thriving, diverse, healthy city.
In the immediate, we need better choices and bold leadership. Tell the City Council to stop the trend of asking more of those with limited resources, struggling to survive. Create new tax brackets of 1% higher on income above $200,000, to invest in an economic recovery that includes everyone.