Republican Cost-Cutting Plan Could Sink D.C.
||Friday, January 21, 2011
I'm not one for hyperbole, but here goes -- the Republican plan to cut billions of dollars in spending, including $210 million for the District, could well sink the city into a financial mess that it couldn't quickly emerge from.
Here's why. As a whole, the District just doesn't make much sense. The majority of the city's land is untaxable, as is all of the money that's made here by non-residents. All told, various reports have estimated that this situation -- known as the District's "structural deficit" -- rises above and beyond $1 billion in lost revenue per year.
Up until 1997, the federal government would pay the District a yearly sum -- the infamous federal payment. But since then, Congress has only allocated enough money to run certain agencies and functions that would usually be covered by a state, like the court system, the prisons and Medicaid payments. (A budget document linked to by the City Paper's Loose Lips pegs 2010 spending on courts alone at $248 million.) Along with having to cover the costs of the structural deficit, the District has also been saddled with the responsibility of doubling as the nation's capital, which involves stuff as minor, yet costly, as dedicating D.C. police officers to escorting motorcades around town. From 2000 to 2005, those costs came to about $10 million.
Seen in this light, the District's fiscal performance in recent years is pretty good. It's actually damn near miraculous that so many years could pass with balanced budgets and a growing rainy day fund.
But with the city facing an estimated $500 million budget deficit in FY 2012 after already having had to navigate a $188 million budget deficit this year, well, the picture gets much bleaker. If Congress cut that $210 million to the District -- a big if, but worth considering no less -- the District would have to deal with impossible demands and untenable decisions. Do the courts get funding at the expense of schools? Do programs to serve the homeless get cut just so we can maintain our police force? And even when all the cuts are made, how high would taxes have to get to even approach a balanced budget? It's so impossible that it's comical.
Obviously, the District might be in a better position if Congress allowed a commuter tax. Which, given what Maryland and Virginia representatives have said over the years, it won't. So not only would Washington be faced with Congress pulling back a necessary financial lifeline, but we'd also have them refuse to remove the weights hanging off of our feet. We wouldn't stay afloat for long.
None of this is particularly new. A few years ago, an advocacy group, Our Nation's Capital, was formed to address these very issues. Sadly, it didn't last long. In 2008, the Brookings Institution published a report titled "Building the Best Capital City in the World," which laid out the District's bleak situation and the federal government's role in perpetuating it. Even the financial powers that be know how badly off we are -- a December 2010 Standard and Poor's report on the city's finances recognized that because of the District's status, 70 percent of all money made here and 68 percent of all of the land is untaxable.
So yeah, Republicans, feel free to cut that $210 million. It'll surely feel great, until the District falls into abject bankruptcy and it's left to Congress to -- once again -- govern the city on a day-to-day basis. Sounds fun, doesn't it? Trying to tell us what type of gun laws to have every once in a while will seem like an absolute walk in the park compared to the fiscal mess you'll have to sort out.
Of course, the likelihood of this Republican plan passing is slim to none. The Senate won't have it, neither will President Barack Obama. But that the cuts to the District were even proposed show the blinders that some members of Congress have on when it comes to the money we get. We're not building bridge to nowhere with that $210 million; we're trying to make the city function with some semblance of normalcy.
But I'm not a hyperbolic person, so I'll try and not worry about this too much.