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Posted at 3:43 PM ET, 10/ 1/2010

The economy gives D.C. a one-two punch

By Martin Austermuhle

This week, the District got two pieces of news that don't work well together.

On the one hand, preliminary Census numbers show that the recession has been particularly hard on the District's poorest residents. Between 2007 and 2009, the childhood poverty rate in D.C. rose from 22 to 29 percent, while the number of residents living in deep poverty (less than $11,000 a year for a family of four) jumped from eight percent in 2007 to 11 percent in 2009. And, not so shockingly, the pain of the recession has been distinctly centered on areas east of the river. Median household income increased in the District, but the most significant gains were seen in parts of Ward 2, the western half of Ward 6 and the southern tip of Ward 1. In Wards 7 and 8, it fell from $32,100 to $30,700. (The D.C. Fiscal Policy Institute has a handy rundown of the numbers.) And on a somewhat related note, the District was recently ranked as the smartest -- and most functionally illiterate -- city in the country.

Meanwhile this week, Natwar Gandhi, the District's chief financial officer, announced that the city was already looking at a $175 million budget gap for fiscal 2011, forcing the D.C. Council to start trimming expenditures from a budget that only really took effect today. (The majority of the budget gap comes from the fact that the city is looking at losing $100 million in sales and income taxes.) The Examiner is reporting today that Council Chairman and presumptive mayor Vince Gray has proposed a freeze on city hires and promotions, as well as cuts that may well include education and human services. Council member Kwame Brown (D-At Large), who will likely take over from Gray as council chair, has also said that there will be "revenue enhancements" to close the gap.

A number of organizations focused on the city's budget are expressing concern that any cuts to human services such as rental assistance or job training -- which makes up around one-third of the budget -- would only make things worse, especially for those most affected by the recession. (They point out that close to $100 million in funding for social services has been cut over the last three years.) In their view, cuts need to be targeted, rather than leveled across the board, and council members should "use a scalpel, not a hatchet," as one source told us. Council member Tommy Wells (D-Ward 6), who chairs the council's Committee on Human Services, has already pleaded for spending reductions to be focused elsewhere, especially considering the cuts that have already been made to services aimed at the city's neediest residents.

Other organizations are focusing more intently on the "revenue enhancements" side of the equation, which is a nice way of saying tax and fee hikes. The Save Our Safety Net campaign, which advocated for tax increases on the city's highest earners earlier this year, still thinks a tax increase is necessary to prevent further cuts to human services. "Now is the time to ask more of those who have suffered least during the recession. By correcting an imbalance in our current tax system (the top tax bracket currently starts at $40,000 a year), we invest in an economic recovery that includes everyone," said Joni Podschun, who coordinates the campaign.

Either way, most activists are calling for a balanced approach. Cuts where necessary, revenue enhancements where possible -- but not an indiscriminate dose of either.

Many people will be watching the council and Mayor Adrian Fenty closely as they begin to discuss where cuts will be made. (We're particularly curious if Ward 2 Council member Jack Evans will continue to push for a rollback of parking meter increases, which would cost the city between $6 million and $8 million.) But regardless of which way it goes, it's clear that the city's poorest have been hit hard -- and it might be a while before things start looking up.

Martin Austermuhle blogs at DCist. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Martin Austermuhle  | October 1, 2010; 3:43 PM ET
Categories:  D.C., D.C. politics, HotTopic, Local blog network, Mayor Fenty, Vincent Gray  
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