D.C. Tax Revision Commission narrows options, but it puts off final vote
It was supposed to be a red-letter day for the D.C. Tax Revision Commission, ending 16 months of work with a final vote on a package of recommendations to be forwarded to city lawmakers.
But, alas, there was no closure to be had at the commission’s meeting Monday. Some proposals, particularly those related to personal income tax, remained in flux as some commission members expressed concern about the price tag for the final package.
Commission Chairman Anthony A. Williams, the former mayor, drafted two sets of recommendations for deliberation Monday. One set has a projected price tag of $20.3 million yearly, which — considering that the D.C. Council has already set aside $18 million in next year’s budget for the commission’s recommendations — should be relatively easy for lawmakers to swallow. The other, more ambitious package costs $141 million yearly, meaning some elements would likely have to be implemented over time, if at all, and some commission members openly wondered Monday whether a more modest package would be more politically feasible.
Commission member Stefan Tucker, a tax lawyer with Venable law firm, said it was important for the group to offer recommendations that were feasible but also meaningful. The more modest package “might be the easy answer for people, but we need to take the long term view,” he said, and push for more expansive but politically workable changes.
The two sets of recommendations shared some elements. Among them: An expansion of the sales tax to some services (+$28.2 million yearly), an increase in the sales tax from 5.75 percent to 6 percent (+$22 million), and a higher threshold for application of the estate tax (-$15.8 million). Other elements varied in degree between the two proposals. For instance, the more modest package would cut business franchise taxes from 9.975 percent to 8.25 percent (-$57 million), matching Maryland’s rate, while the more aggressive package cuts that rate all the way to 7.75 percent (-$74 million), getting D.C. closer to Virginia’s 6 percent rate.
There appears to be agreement that the District’s current individual income tax structure should be more progressive, but there are differing opinions on how to achieve that. While there is apparent consensus on adding a new bracket for middle-income residents, in which those making between $40,000 and $80,000 would pay a top rate of 6.5 percent rather than the current 8.5 percent, there are differing views on how to handle married couples filing jointly. There are even more seriously differing views on whether to continue a top rate of 8.95 percent on those earning more than $350,000, passed in 2009 and set to sunset after next year.
The more liberal members of the commission, primarily Kim Rueben of the Tax Policy Center and Ed Lazere of the D.C. Fiscal Policy Institute, led efforts to keep the top bracket intact — arguing there is little evidence to suggest the slightly higher marginal rate would drive high-income residents out of the city. But commission member and entrepreneur Mark Ein pushed back strongly on the higher income tax rate, among other proposals, saying it contributed to the perception of the District as an unfriendly place for business investment and also cut against the commission’s stated goal of increasing the city’s standing vis-a-vis its surrounding jurisdictions.
“We’ve addressed our progressivity goals,” Ein said. “I don’t think we’ve come close to our competitiveness goals.”
Williams, who must now craft a new consensus proposal, tried to tone down the debate: ”What we’re trying to come up with here is a compromise package,” he told the group. “There are going to be some elements of this to which we disagree, which is the nature of a compromise.”
There was one unusual area of agreement: Assessing a new tax of city employers based on the number of employees they have. At a rate of $25 per employee per quarter, that is expected to raise $45 million yearly. The idea behind that assessment is to capture revenue from large nonprofit institutions like hospitals and universities that may not pay property or income taxes but also consume city services. For private-sector employers, the thinking goes, the new tax would be offset by cuts to the business franchise tax.
Past attempts to squeeze revenue out of large nonprofit employers, typically through payments in lieu of taxes, have not gone well, and the organizations representing D.C.’s hospitals and universities are again on the record against them. But the employee tax could be a more politically palatable way for the District to recoup some additional revenue from those institutions — and also their many out-of-town employees, who of course do not pay D.C. tax on their income.
In one hopeful sign for the proposal, D.C. Council member Jack Evans (D-Ward 2), chair of the tax-writing committee, didn’t dismiss it out of hand — particularly when paired with an offsetting business tax cut: “I would definitely take a look at that.”
But underscoring the political complexity of recalibrating the District’s entire system of local taxation, Evans gave his personal veto to a proposal likely to make it into the commission’s final package: the sales tax hike, from 5.75 percent to 6 percent, where it stood for years until Oct. 1 this year.
His reasoning makes clear that to political actors, “signals” and sentiments often matter more than research and rationality: ”It’s the only tax in the region we have that’s lower than Maryland and Virginia,” Evans said, adding, “We’re not going to raise taxes. We want to head in the other direction.”
Lottery contract lawsuit is narrowed but not dismissed
In announcing his decision Monday to seek a fifth term on the D.C. Council, Jim Graham cited in interviews the recent dismissal of a high-profile whistleblower lawsuit — one that had made him a central character of allegations of wrongdoing related to the award of the city’s lottery contract in 2008 and 2009.
“It helped to have that cleared away,” Graham said to The Post’s Aaron C. Davis.
Well, things aren’t cleared away entirely. A federal judge last week dismissed some key elements of former contracting official Eric W. Payne’s lawsuit against the District of Columbia and Chief Financial Officer Natwar M. Gandhi, Payne’s old boss. But other parts of the lawsuit survive, and Payne said last week he expects to ask the judge later this month to set a trial date.
At the center of Payne’s lawsuit is the claim that he was retaliated against and ultimately fired because he objected to political interference in the lottery contract award — including from Graham and then-council chairman Vincent C. Gray. Graham and Gray have vigorously denied the allegations of wrongdoing, which have them trying to steer the contract away from its original awardee for political reasons. Filings in the three-year-old litigation have already painted an unflattering picture of the various officials involved.
U.S. District Judge Richard W. Roberts ruled on Dec. 3 that Payne did not offer evidence that the stated reason for his firing — in the telling of his superiors, he was dismissed due to his abrasive management style — was in fact a pretext covering for illegal retaliation. Because of that, Roberts said, Payne could not prove his wrongful termination claim. But, Roberts found, Payne alleged other acts of retaliation — demotions, etc. — that involve significant factual disputes that can only be resolved at trial. Because Gandhi was not alleged have been involved in those acts, Roberts dismissed him as a defendant.
Graham is not alone is praising Roberts’ judgment. Last week, Attorney General Irvin B. Nathan, whose office is defending the case, hailed the ruling, saying it proved the city had “legitimate grounds for dismissing [Payne] from his position” and suggested the city will prevail on the other retaliation claims “should Mr. Payne decide to pursue this case.”
Payne has given every indication he will pursue the case, and the bad news for Graham et al. is this: Even a trial on much-narrowed claims will be a high-profile affair that keeps the issue in the public eye for many months and will involve city officials — likely to include Gandhi, Graham and Gray — taking the witness stand to answer uncomfortable questions under oath.
Vince Gray’s path to victory
So Vincent Gray is once again a mayoral candidate, and despite well over two years of unflattering headlines, he starts the Democratic primary race in pole position. Here’s why: Gray starts out with a political base remaining from his 2010 run, and is competing against possibly 11 challengers — including four D.C. Council members with decent bases of their own. And a flourishing city economy should hold down throw-the-bums-out discontent that could hurt the incumbent. Gray’s campaign team believes he has the opportunity to expand his support, too, but that may depend on to what extent Gray will be willing to address the 2010 campaign shenanigans. “Forgiveness and redemption is a powerful feeling, and everyone is entitled to it,” says campaign manager Chuck Thies. “But to get it, you have to ask.”
In other news:
Colby King: “Gray sat at the helm of a campaign team willing to cheat to win. And instead of taking responsibility for the things his team did, he now wants to say nothing about it.” (Post column)
Mark Plotkin: “Vince Gray should not be underestimated — but neither should the challenge before him” (Post op-ed)
“The changing nature of the city requires strong, committed leadership” (Post editorial)
A new D.C. election news blog (DCision14media.blogspot.com)
How Wal-Mart’s Chicago incursion set the stage for D.C. (Capital Business)
Umm, no (Answer Sheet)
Jos Williams and Eleanor Holmes Norton remember Nelson Mandela (WRC-TV)
Mandela tributes will culminate in National Cathedral memorial service Wednesday (Post)
Norton will travel with congressional delegation to funeral (WAMU-FM)
Prosecutors run afoul of Superior Court judge by checking backgrounds of mostly black jurors (Post)
Vincent Orange: “Nothing has come” of federal investigation (Loose Lips)
Many reasons why Kaya Henderson probably isn’t heading to New York (Answer Sheet)
Metro needs money from local governments now for upgrades to come (Dr. Gridlock)
Why, contra D.C. Council bill, only citizens should be able to vote (Post editorial)
Darrel Thompson, from baseball star to Hill aide to Ward 6 council candidate (Hill Rag)
New allegations of sexual assaults by Wilson pool employee (WRC-TV)
Georgia contractor is indicted for dumping waste into Hains Point storm drains (Post)
Picking Washington’s ugliest buildings (WBJ)
Who got the better deal: Don Graham or Oliver Carr III? (Capital Business)
Ben’s Chili Bowl seems to have smoothed things over after preservation dustup (Hill Rag)
Preservationists may seek to protect interior of Riggs Bank headquarters (Capital Business)
United Medical Center is poised to make deal with nursing operator (WBJ)
Walter Reed campus will host language-immersion charter school (GGW)
What’s the best way to preserve affordable housing funds? (Housing Complex)
Peace House goes to landlord-tenant court (City Desk)
One law firm’s downtown relocation calculus (Capital Business)
Mentors Inc.: Another D.C. charity worth your holiday support (Post)
How the Redskins play media favorites (Post)
Learn about the old Aqueduct Bridge (Post column)
Jimmy Kimmel has an ideal mayoral candidate (Loose Lips)
H.D. Woodson is your D.C. high-school football champion supreme (Post)
Lisa M. Mallory, top D.C. employment official, is departing
This post was updated at 12:45 p.m. with official confirmation and comment from Mallory
The District’s top employment official is leaving government for a private-sector post, leaving one of Mayor Vincent C. Gray’s top priorities in the hands of interim leadership as he embarks on a reelection campaign.
Lisa M. Mallory will become the new chief executive of the D.C. Building Industry Association, the Gray administration announced Friday. Mallory will leave her post as director of the Department of Employment Services in early January, and will be replaced by the agency’s chief information officer, Thomas Luparello, on an interim basis.
Mallory, in an interview Friday, said it was a “very personal decision” to depart government. “It’s a really exciting opportunity for me,” she said. “I have just had to insert balance in my life.”
Tackling unemployment was at the center of Gray’s 2010 election pitch, and he tapped Mallory, a longtime federal official who also served as a consultant and an executive at the Fannie Mae Foundation, to lead his efforts.
She launched Gray’s signature jobs effort, One City, One Hire, which aimed to match unemployed D.C. residents with available jobs through a rigorous pre-screening process and a series of targeted job fairs. The Gray administration credits One City, One Hire with placing more than 9,000 unemployed city residents in jobs, but it has been difficult to discern how many of those hires have been due to new efforts versus how many have been due to existing programs.
Mallory said the agency’s approach to getting unemployed residents into jobs has been transformed: “The big thing that’s different now is that we do a lot of work with the unemployed to prepare them for interviews, to get them in front of people who are hiring. We do a lot of pre-screening, pre-testing, and that is totally different.”
During her tenure, the District’s unemployment rate dropped from 10.1 percent to as low as 8.4 percent, though it has risen back to 8.9 percent in recent months — a phenomenon Gray has blamed on federal-sector cutbacks.
Mallory has also overseen the city’s Summer Youth Employment Program, which has generally run smoothly under her watch after several years under Mayor Adrian M. Fenty when the program, then serving more than 20,000 children, experienced significant management lapses.
At DCBIA, the city’s leading real-estate development trade group, Mallory will replace Gail Edwards, who is leaving the group after 41 years. Gray on Thursday attended a retirement celebration for Edwards and proclaimed it “Gail Edwards Day.”
Mallory will move to the opposite side of one sometimes fiery debate -- over city “First Source” laws requiring the hiring of city residents on some city-subsidized construction projects. In her current role, Mallory has been charged with enforcing those requirements, often with subpar results; in her new role, she will be advocating for builders and developers who have called the requirements unfair and unworkable.
Mallory said she “developed a great relationship” with the development community while in her current post. “I’m very aware here about some of their concerns, and we have worked very hard to ensure that employers have a viable pool of candidates,” she said. “In the past there was not a very good pipeline that was not brought to the attention of the employers, and that has been addressed.”
Troubling times in 7D
First, an officer was charged Monday with producing child pornography. Now another officer, in a wholly separate incident, is under investigation for allegedly running a prostitution ring out of his apartment on Stanton Road SE after a missing 16-year-old was found there Tuesday. What is going on the Metropolitan Police Department’s 7th District? Two incidents of alleged sexual crimes involving minors had Chief Cathy L. Lanier issuing this statement Thursday: “The misguided actions of a few in no way reflect on the professionalism, dedication, and integrity of the Department.” But the circumstances of the latter investigation are shocking. More from WJLA-TV, WRC-TV, WTTG-TV, WaTimes and D.C. Crime Stories.
In other news:
Nelson Mandela and D.C. (Post)
Eleanor Holmes Norton remembers the D.C. protests against apartheid and Mandela’s captivity (WAMU-FM)
Other D.C. leaders reflect (WRC-TV)
IG: Oversight of delinquent youth is lacking (WAMU-FM)
Vincent Gray returns to the hustings (Post)
Petula Dvorak slices and dices the electorate: “Fentyville, the Gray Area, Barrytown and Loathemburg” (Post column)
ABCs of the mayoral race (GovBeat)
Reta Lewis advertised illegally low wage for petition circulators (Loose Lips)
Chuck Thies’ embrace of Hizzoner is nothing new (City Desk)
The GGW crowd has no major beefs with Gray (GGW)
Minimum wage hike shows government hard at work in Washington (Post column)
Significant Metro fare hikes are being mulled (Post)
Inquiry into Capitol Hill shooting better be made public (Post editorial)
D.C. health exchange site goes down while Senate staffers try to sign up (Politico)
DCPS schools see more salad bars (WAMU-FM)
Make a kunsthalle out of the Franklin School? (Post)
Truckers push back on Gray sustainability goal of ending diesel vehicle registrations (Heavy Duty Trucking)
DPR botched the bus ride to Florida for a Ward 5 youth football team (WJLA-TV)
City sports fields aren’t geared to females (GGW)
Why Congress is to blame for D.C. judges’ poor financial disclosures (Legal Times)
Early, early, early Metro planning includes Georgetown Metro station (WAMU-FM)
More money pledged for Kennedy Center expansion (AP)
Metro: Women created our sexist ad so it’s not sexist (Dr. Gridlock)
Man, 35, indicted on more than a dozen animal cruelty charges (WTOP)
Howard Theatre eyes more rock acts (City Desk)
This year’s Wilson Building Christmas tree is fake (City Desk)
Taw Vigsittaboot, the man who brought authentic Thai food to a Florida Avenue rowhouse, prepares to expand (Express)
Now the clergy’s pressuring Dan Snyder on the Redskins name (Post)
Could be some heavy weather this weekend (CWG)
Tonight: H.D. Woodson vs. Friendship Collegiate for all the high-school football marbles (Post)