the budget rundown

The Mayor released his budget today and there wasn’t much good news for us. There was a $172M budget shortfall which the Mayor filled with $102.7M in spending cuts and $69.4M in new revenue. Our initial calculations tell us that around $65M of the cuts were from Housing and Human Services. Which is the same story as last year: the vast majority of cuts come out of safety net services.

Upon first blush, some of the most damaging cuts were to the Health Alliance, the Housing Production Trust Fund, Homeless Services and Childcare Subsidies, among others.

OUR REACTION

All of these major cuts left us with some questions:

►Why is the Mayor cutting $19.9M from the Housing Production Trust Fund (in what amounts to a financial gimmick to pay for Local Rent Supplements) when he could have used the $240M revenue surplus to make a one-time investment? Instead, he put the entire surplus in DC’s savings account and chose to vastly reduce the creation of new affordable housing in DC.

►The top concern at the Mayor’s One City Summit was “affordable housing”. Why didn’t he listen?

►How much in back-end costs will result from the major cuts to the Health Alliance when people can’t afford to pay their hospital bills?

►When 85% of District residents have said they prefer raising high income taxes rather than seeing budget cuts, why did the Mayor again choose massive cuts and no new taxes?

►With teen moms already dropping out of high school because they can’t find childcare, what will the impact of cuts to childcare subsidies have on high school graduation rates?

►With all these major cuts, why is the mayor prioritizing a tax break for people who are investing outside of the District? Why would he even consider repealing the bond tax if he finds extra revenue?

THE NUMBERS:

Here is as much as we know about the cuts and revenue at this early stage. These numbers are not fully confirmed, they are our best understanding from the information we have. We will update you as soon as we have more solid

information. Please let us know if we’re missing anything:

Major Cuts:

•DC Health Alliance Cut $23M: They are planning to restructure DCHA so that it only covers primary care, preventative care and specialty care. It cuts out hospital visits altogether.

•Housing Production Trust Fund Cut $19.9M : Mayor Gray took that money out of the Trust Fund in order to fund Local Rent Supplement Program. Same maneuver he did last year which lost the HPTF $18M in FY2012’s budget.

•Medicaid Reimbursement Rates Cut by $8M

•Homeless Services Cut $7M: Our understanding is that this was a loss in federal funding that is not being replaced. But the budget is really unclear on these numbers so we may discover more about the state of Homeless Services in the next couple of weeks.

•DHCD Housing Grants Cut $6.1M This was also a loss in federal funds that is not being replaced.

•Childcare Subsidies Cut $5.7M Childcare subsidies has already been cut $20M over the last 5 years.

•Victim’s Services Cut $1.2M, a 12% cut for them.

•Permanent Supportive Housing Cut $1.4M

New Revenue:

•Forgoing Pay-Go drain out of operating budget: Raising $50M

•Increased traffic calming initiatives (mostly speed cameras): Raising $24.8M

•Expanded sales hours for alcoholic beverages (until 4am): Raising $5.3M

•Reduced inflation adjustment for standard deduction, personal exemption, and homestead deduction from five years to one year: Raising $12.0M

THE MAYOR’S WISH LIST

The Mayor’s “Revised Revenue Priority List”, basically a “Wish List”, is more like a symbolic acknowledgement than a real possibility. But acknowledge us he did, with safety net services dominating the list (which make sense given how unbalanced his cuts to those services proved).

His list:

1. Homeless Services $7M

2. TANF $14.7M

3. Health Alliance $23M

4. Housing Production Trust Fund $19.9M

5. Victim’s Services $2.6M

6. Repeal the Out-of-State Bond Tax $1.1M

7. Infant and Toddler services $8.6M

8. Special Education capacity building $5M

9. Replace loss of federal grants to DHS $1.6M

10. HPAP for affordable housing assistance $2.9M

11. School based mental health initiatives $1.9M

12. Small Business Property Tax Relief $10 M

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