Washington, D.C., Mayor Muriel Bowser faces a near-record shortfall in the city’s budget — an issue with no easy solution.
The budget shortfall is estimated to be anywhere from $700 million to $1 billion. Bowser’s original budget was supposed to be published Wednesday but was delayed when Washington, D.C., Chief Financial Officer Glen Lee exerted his authority to require a $250 million cut to refill the government’s reserve fund. The move puts Bowser in an even more precarious position, forcing her to likely cut into programs that would put her at odds with other Democrats.
Bowser will likely have to make a number of unpopular moves to solve the issue, including tax raises and the funding cuts. Many of the cuts will likely have to be targeted at programs funded through excess COVID-19 relief funds, which have now run out.
The preferred method of activists in Washington is to raise the capital gains tax, which would mostly hit upper-income earners. The far-left Fair Budget Coalition urged Bowser to raise capital income taxes up to 14%. The letter from the group said the purpose was to distribute wealth from mostly white people to black people and other minority groups.
“DC should tax wealth more to reduce DC’s racial wealth gap,” the letter said. “The supermajority of wealth in DC and the nation is held in the hands of the few, with Black residents holding very little wealth compared to white residents. The concentration of white wealth stems from centuries of racist policies and practices that have stripped Black people of wealth they produced while allowing white people to amass extreme wealth and grow it across generations.”
A capital gains tax raise could hurt business investment in Washington at a time when northern Virginia threatens to overtake the city as the preferred investment destination for large businesses.
Other taxes will face fierce opposition as well. A sales tax would be shot down as a tax on the poor, while a property tax would hurt Bowser’s standing among homeowners.
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Tax increases alone cannot make up for the budget shortfall, however. Programs enacted largely with the aid of COVID-19 relief funds, including the Baby Bonds program, which aims to assist low-income children, may be cut.
Bowser is also likely to target the Pay Equity Fund, which subsidizes the salaries of child care providers, according to Axios.
The Washington Examiner reached out to Bowser for comment.