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Washington: Nine-Hour Tax Hearing as D.C. Faces $600–800M Budget Gap Next Year
The D.C. Council held a nine-hour hearing last Friday on possible tax increases to close a $600–800 million budget deficit next year; the CFO's aides warned major new revenue options would take 12–24 months to implement.
Why it matters
Washington, D.C. faces a $600–$800 million deficit next year against a local budget of roughly $11 billion. The Council spent nine hours last Friday (Oct. 16) weighing tax-increase options — weeks before Ward 4 Councilmember Janeese Lewis George takes office as mayor in January.
According to The Washington Sun's Oct. 20 takeaways from the hearing, the only point of consensus was that D.C.'s last-minute tax-policy process is not working, with a push for a new commission or reviving the disbanded finance and revenue committee.
The proposals
Ward 1 Councilmember Brianne Nadeau proposed a 3% capital-gains surcharge on individuals earning more than $400,000 and couples over $500,000, projected to raise about $200 million a year; Matt Frumin floated a pied-à-terre tax on owner-unoccupied homes worth more than $2.5 million.
Incoming mayor Lewis George endorsed a 2% Business Activity Tax on law firms and lobbyists, projected at about $500 million a year to fund child-care cost reductions; Mayor Muriel Bowser and Chair Phil Mendelson pushed raising the 6% sales tax to 7% to create a reliable funding stream for Metro.
CFO Glen Lee's aides warned that major new revenue options would take 12–24 months to implement. His data showed that in 2024, about 12,000 top taxpayers (3.5%) paid more than $1.4 billion — 42% of the total.
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