DC Council Chairman Phil Mendelson presented the following statement at the Legislative Meeting on June 12, 2024, where Councilmembers took a second vote on the Fiscal Year 2025 Budget.

As I present the Fiscal Year 2025 budget, and revised Fiscal Year 2024 budget for final votes today, I want to break my remarks into four parts.

            First, we, the Council, can be proud of what we have accomplished.  When the budget was proposed to us on April 3^rd, yes, it was balanced, but the balancing seemed to be almost entirely the result of cutting safety net programs and other initiatives – Council initiatives – that advance the fight for equity.  We reversed all that.  Let me remind you:

∙ The Access to Justice initiative was cut by approximately 60%; we restored all of it;

∙There were no new vouchers to help the homeless and advance affordability; there are 577 vouchers as of today plus an additional $21 million in the Housing Production Trust Fund;

∙The Pay Equity program for early education & childcare was eliminated; we restored it at a sustainable rate of $70 million per year;

∙Approximately 80 schools were faced with having to lay off teachers and other educators; we put over $25 million back into the individual schools – into classrooms;

∙We restored funding for domestic violence programming and reentry grants; and

∙We not only restored the baby bonds program – an investment against poverty – but we created a new child tax credit.

            The budget the Mayor proposed was criticized as less about “shared sacrifice” and more about cutting programs that help the last, the lost, and the least.  The Council, collectively, has reworked this, and our budget resets the District on the path to fight poverty and promote social justice.

            The second point I want to make is that with this budget this government is taking important steps toward improving our fiscal future.  Not that I’m worried; actually, I think the District government is very healthy, financially.  We have double-A+ and triple-A bond ratings; we are one of the few jurisdictions in the nation with both pension and OPEB accounts that are fully funded; our reserves equal 51 days’ operating needs; revenues to support the government continue to grow; we have a balanced 4-year financial plan; etc.

            With this budget we are supporting both short- and long-term initiatives to revitalize downtown.  There will now be several programs to support the conversion of vacant office buildings to housing and other uses.  The Vitality Fund will be $6 million – more than before – to assist the Deputy Mayor in attracting new businesses.  The Mayor’s initiative to encourage so-called “pop-ups” is supported.  The BEST Act – to simplify business licensing – is fully funded.  We even double the small retailer property tax credit.  And we rejected the Mayor’s proposed E911 tax on hotels. 

            We are also taking important first steps to take a closer look at expenditures.  At our last vote I criticized our government – both the Council and the Mayor – for continuing to increase the size of government without looking for efficiencies and effectiveness.  The Mayor submitted a budget over $1 billion more than the last budget. We’ve added to it slightly (about $40 million).  We need to eliminate programs that are duplicative or ineffective.  Additional resources at the Council will help this effort.

            My third point is to lament how difficult this budget has been.  Not because it was tight.  But because of the unnecessary disputes and inaccurate information.  For instance, only after first reading did we learn that the need for a new Central Cellblock had been overlooked and needed to be added to the capital budget.  As another example, the Mayor’s BSA subtitle to expedite rapid rehousing exits was scored at zero.  But when we proposed to delete it because it denied due process to families, we were then told it would have a tens-of-million dollars fiscal impact.   As committees scrubbed budgets, they received inaccurate information from the agencies.  There were many more mistakes and omissions.  The Executive spends over five months developing the budget.  We have 56 days. 

            This budget has been unnecessarily difficult also because of disputes with the Chief Financial Officer.  You all know of his insistence that the Mayor cut programming in order to replenish the Fiscal Stabilization Reserve Fund, even though the law already prescribes the method – different than what the CFO demanded – to replenish the reserves.  When it finally became clear what the CFO needed, it was clear that the CFO was defining “balanced budget” to include guaranteed cash liquidity four years from now.  I disagree with that definition.  But, once we understood the concern we found another way to address it, which is in a subtitle of the Budget Support Act which we approved, first reading, two weeks ago.

            Then last week we learned of a False Claims Act settlement – new money to the District – and then learned that the CFO would not let us appropriate the $40 million.  Again, it was a stretch on the law: even though we have to balance this budget on the latest revenue estimates (which were issued February 29^th), the CFO argued that we have to also consider the June revenue estimates – which might be lower, but which will not be issued for another 2 & ½ weeks.  These are new rules, and they cannot be found in the law. There could have been a better way for the CFO to work with us, rather than impede our appropriation authority.

            Finally, I want to thank everybody who has worked on this budget we are about to adopt.  As I said at the beginning, we took a proposal and transformed it into one that is more sensitive to the needs of residents, especially those needing the safety net, and more sensitive to business attraction and retention.  I want to thank my colleagues for working together to identify and fund priorities, and to do so collaboratively.  And I want to thank staff.