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Closing the budget gap

April 6, 2011

Mayor Vincent Gray recently released his FY12 budget, with an expected gap of about $322 million. Within the proposal the Mayor offered a variety of ways to close the budget gap including cutting services and raising taxes.

Before raising taxes and cutting services, Mayor Gray and the Council must make a concerted effort to collect business taxes already on the books, collect millions in outstanding fees and fines and eliminate fraud, waste, and abuse. Additional money can be found and saved in a variety of places:

Parking Tickets
Approximately $300 million in parking tickets remain unpaid. We must establish an amnesty program like the Office of Tax and Revenue to help recoup a significant portion of this money.

Combined Reporting
Each year the District fails to collect approximately $20 million in taxes from large corporations that shift the profits they make in D.C. to other states that have lower — or no — business taxes. This money must be collected and the Council must provide effective oversight to ensure that it is. In 2009, the Council passed such legislation but has failed to spell out the rules and details so that corporations can actually start abiding by combined reporting.

Overtime
Although the Mayor has proposed eliminating D.C. government personnel, we also must reign in overtime within certain agencies such as the Metropolitan Police Department, the Department of Public Works and D.C. Fire & Emergency Services. While there is no doubt each of these agencies plays a vital role in the welfare of our city and overtime is often a necessity, it is not an entitlement that employees should expect to supplement their base salary.

Medicaid Reimbursements
The District of Columbia is owed $300 million in reimbursements from the Medicaid program—money that the city has failed to collect. We must make collecting these reimbursements a top priority.

Cost Overruns
The city must work to reign in contractors doing city-funded work. For example, the city has spent 10s of millions of dollars to renovate one school (School Without Walls) with a smaller footprint than both Sidwell Friends and Thurgood Marshall Public Charter School did to expand and rehabilitate their facilities. While renovations are important, with a better contracting system in place, these costly cost overruns could be avoided.

Taxes
The entire District of Columbia tax code must be re-written. I support a progressive tax code that will create six tiers of taxation within in the District. Tax rates would begin at $10K, another increase at $40K, another increase at $124K, another increase at $350K and a final increase at $1.5M. While this would lessen the tax burden for some our cities neediest residents, it would also more equitably distribute the tax burden and increase revenues without dramatic increase in taxes.

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