The District stands to lose at least $100 million in federal funds under President Trump’s budget — and that’s without factoring in losses in entitlements such as Medicaid and Medicare.
The $100 million figure is revised upward from the District’s earlier Monday estimate of $80 million.
City officials said Monday that the losses could threaten the economic progress the city has made since the days of the financial control board.
The District, which gets about 75 percent of its funding from local taxes, has balanced its budget for 21 consecutive years, has about $383 million in emergency reserve funds and is set to cut taxes for businesses and residents next year because of better-than-expected revenue, officials said.
“As outlined, President Trump’s budget would undermine much of the progress we have made in Washington, D.C., over the past two years,” City Administrator Rashad Young said at a press conference. “This proposal would force the city to make some very hard choices in order to keep our commitment to expanding prosperity for all D.C. residents.”
Under Mr. Trump’s budget, the District’s affordable housing initiative would be hit hard.
In its nearly $14 billion annual budget, the city receives about $3.3 billion in federal funds — $2.19 billion for Medicaid and $1.1 billion for everything else.
The city would lose about $4 million in federal HOME Investment Partnership Program grants for the Department of Housing and Community Development. Those grants fund building, buying and rehabilitating affordable housing for rent or ownership.
HOME is the largest block grant to state and local governments for affordable housing, according to the U.S. Department of Housing and Urban Development.
When asked if the budget gap could be filled by using rainy day funds, Mr. Young said that money is for one-time emergencies, not budget items.
City revenue estimates over the next four years have triggered tax cuts for next year. This month, Mayor Muriel Bowser said revenue projections for fiscal 2017 increased by $128 million and estimates for the next fiscal year increased by about $100 million.
The tax cuts aim to reduce the burden on low-income residents and provide some relief for D.C. businesses.
The D.C. Council would have to opt to stop those tax cuts and use the money to fund programs bereft of federal dollars. Mr. Young said officials are talking with lawmakers about the possibility, but it’s too early to tell if those funds will be needed.
Predicting that a Trump budget would decrease federal funds to the District, the D.C. Fiscal Policy in January sent a letter to the mayor and council imploring them to delay the tax cuts.
“The new Congress and president-elect are threatening to cut federal funding for critical safety net supports for D.C. residents, such as Medicaid and SNAP. We hope that advocacy to minimize the cuts will be successful, but we should prepare to address the resulting hardship to families,” the letter reads.
But in a late-February blog post for the nonpartisan Tax Foundation, Joseph Henchman said holding off on the tax cuts would be shortsighted.
“While we understand this coalition’s concern about federal policy uncertainty, what is certain now is that reduced income tax burdens in 2018 for low-income families and individuals will not be realized if the council delays the provisions set take effect,” Mr. Henchman said in the blog post.
D.C. leaders have a long way to go before any decisions are made. Miss Bowser will introduce her fiscal 2018 budget in early April. After the council adjusts its numbers, it will head to Congress to be included in the federal spending bill.
Congress then will have to pass its own spending package the fiscal year starting in October with the D.C. budget included. That could be tough because Congress has yet to pass this year’s fiscal 2017 budget. A continuing resolution was approved in December to keep the government open until the end of April.
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