Washington, D.C., Mayor Muriel Bowser addressed City Council members on Wednesday afternoon after publishing the city’s fiscal 2025 budget, with budget cuts garnering strong reactions from council members.
While balancing the budget, Bowser and her administration staff were dealing with a $4 billion deficit over the course of the next four years. In lieu of raising income taxes, Bowser proposed $500 million in budget cuts to city programs, such as the Early Childhood Educator Pay Equity Fund, which costs the city $70 million annually. This program subsidizes the wages of caregivers and day care workers, but with it slashed, workers will have to return to earning significantly less.
“There is no other group of women to whom we are saying, ‘There is a career path for you in early childhood, get your associate’s degree, go get your bachelor’s degree; but now we are telling you that you have to go back to accepting minimum wage,'” Councilwoman Christina Henderson said during the hearing.
Officials say the move to ax programs came at the request of Chief Financial Officer Glen Lee to allocate funds to replenish the city’s local reserves, which will cost the city an additional $215 million as city revenue growth is projected to be flat for the next four years. Council Chairman Phil Mendelson opposed the CFO’s requirement for replenishing the city’s local reserves.
In an effort to raise revenue, Bowser will implement a sales tax increase. The sales tax will increase from 6% to 6.5% starting in 2026 and then up to 7% in the following two years, generating an estimated $100 million in revenue each year.
Bowser also proposed raising the tax that businesses must pay toward the paid family leave program. Officials say this move could bring in $250 million annually for the city’s general fund.
“I don’t take revenue increases lightly,” Bowser wrote in her letter to the council. “If we make the right investments and put the right interventions in place today, I am hopeful we can reverse these policies in the out years.”
And for the first time in nine years, Bowser will not be investing at least $100 million in the Housing Production Trust Fund. The fund is responsible for creating affordable housing, but it will only be budgeted for $60 million.
While working within tight constraints, Bowser’s proposed budget shifts its focus to increasing public safety measures and focusing on revitalizing the downtown area. Her budget allocates $4.6 million to fund the newly passed crime bill, Secure D.C. Measures include increasing security in commercial corridors and creating a task force to expand upon diversion programs.
The budget allocates $63 million in tax incentives to convert vacant office spaces into residential use and $68 million for three streetscape projects.
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“Investments in our Downtown are investments that directly benefit all eight wards,” Bowser wrote in her letter. “This is a critical time for our city’s economic future as we work to attract, retain, and grow our business community.”
The budget comes a day after the City Council approved a $500 million investment to Washington Wizards and Capitals owner Ted Leonsis to renovate Capital One Arena in downtown. The funds for this investment will not come from the operating budget.