DC Council chairman suggests additional tax increases to offset Bowser’s reductions in early education funding

Council of the District of Columbia Chairman Phil Mendelson is proposing tax increases on businesses and homeowners to counteract Mayor Muriel Bowser’s budget cuts to early education funding.

Mendelson’s plan increases property taxes on homes worth more than $2.5 million, increases the tax businesses must pay toward the Paid Family Leave program, and reinstates the Early Childhood Educator Pay Equity Fund.

When she unveiled the city budget last month, Bowser cut the early education funding, which costs the city $70 million annually, as part of her push to cut $500 million from city programs.

In a letter to the chairman obtained by the Washington Examiner, Bowser asserted Mendelson’s proposal would cost taxpayers $530 million in new taxes and fees.

The Washington Examiner obtained the letter ahead of the city council’s first budget vote on Wednesday.

Bowser’s letter attacked the budget revisions, saying, “The Council’s proposed budget and fiscal policy sets up our residents and businesses for additional tax hikes next year or large cuts to services and programs.”

She added, “If natural revenue growth does not provide the revenue needed to satisfy must-fund obligations next year, let alone keep up with the unsustainable cost growth of new initiatives the Council has raised taxes to finance, then we will be left with no choice but to initiate another round of reductions in next year’s formulation.”

Mendelson’s new tax plan would bring in approximately $100 million in revenue for the city. It comes on top of Bowser’s proposed tax increases, which raise the sales tax from 6% to 6.5% starting in fiscal 2026 and up to 7% in the following two years.

As Bowser and Mendelson seek to raise revenue for the city through tax increases, a report published by the D.C. Policy Center found that the district lost approximately $40 million in revenue from fare evasion during fiscal 2019. In 2023, the transit agency estimated that fare evasion continued to cost the city $40 million in revenue a year.

With the passage of Washington’s new crime bill, Secure D.C., the loss of Washington revenue is projected to decrease. Before the legislation was signed into law, police were not allowed to penalize the city’s public transit fare evaders unless they gave a real name. Law enforcement can now target evaders by issuing a $50 civil fine to offenders. Additionally, police can arrest people who refuse to give their names.

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Bowser has come under widespread criticism during her time as Washington mayor, with a recent poll showing that 48% of the district’s residents disapprove of her job as mayor. The number represents a 10% increase from her 37% disapproval rating in 2022.

The mayor’s tenure has overseen a rise in crime and homelessness. There were 162 homicides in 2015, the year Bowser was elected. By 2023, the number reached 274. Last year, crime increased 26% over 2022 data.