D.C. Council votes to end municipal bond tax, spend Internet sales tax

|
Local,Business,DC,Transportation,Alan Blinder,Eric P. Newcomer,Taxes,Metro and Traffic,Municipal Bonds

The D.C. Council, setting aside its members' annual frustrations about a public budget fashioned in private, voted unanimously on Wednesday to support a $10 billion plan that would increase Circulator bus fares, end the city's tax on certain bonds and earmark a potential spigot of Internet sales tax dollars to ease traffic fines.

But for the most part, the District's budget for the 2014 fiscal year will be similar to what's already in place.

"The spending plan is not going to change radically from one year to the next," Chairman Phil Mendelson said. "Each year, it's about subtle shifts."

Mayor Vincent Gray had hoped to avoid imposing higher taxes or fees, but the council opted to finance an enlargement of the Circulator bus network with fares as high as $2 per ride. Passengers now pay $1.

"It may turn out that because of other revenues we may not have to increase the fare, but we have to have some source of money identified to pay for the extension," said Ward 3 Councilwoman Mary Cheh, the expansion's architect. "It has become a means of transportation for people in the District."

But lawmakers agreed to forgo other revenues and endorsed Gray's request to end the District's tax on out-of-state municipal bonds, which he and others said would be a boon to elderly residents.

"Nobody was buying them," Ward 2 Councilman Jack Evans said of the bonds. "I'm glad we reversed course."

The council's vote came 55 days after Gray submitted his proposal and followed weeks of public testimony and committee-level votes. But, sticking with the legislative branch's longstanding practice, Mendelson enjoyed the sole authority to craft the council's version of the spending plan.

Lawmakers received a copy of Mendelson's proposal at 5:11 p.m. on Tuesday, about 17 hours ahead of the council's scheduled meeting, and several legislators publicly voiced concerns about his modifications.

Cheh and Ward 1 Councilman Jim Graham took issue with Mendelson's plan to use revenues generated by Internet sales taxes to help reduce traffic fines in the future.

"There's been no hearing on this," said Cheh, who previously urged the city to use those dollars to combat homelessness. "By making this change less than 24 hours ago, this will have frustrated our ability to make this moral, compelling goal within our reach."

Mendelson replied that he believed he could reach a compromise on the taxes, which have not won congressional approval.

The council will hold a final budget vote in June.

ablinder@washingtonexaminer.com

enewcomer@washingtonexaminer.com

View article comments Leave a comment