August 29, 2007
Morning Roundup: Surprise Surplus Edition
Good morning, Washington. Yesterday we started the Morning Roundup by noting the early stages of what seems likely to be the end of Sen. Larry Craig's political career. Today we have cheerier news: the resumption of another senator's work. Sen. Tim Johnson is back on the job after suffering a brain hemorrhage eight months ago.
D.C. Has A Budget Surplus: NBC4 has the goods. Apparently the city collected about $100 million more in tax revenues than anticipated. City officials aren't commenting yet, but we're sure they're already thinking about how to spend it.
Final Word On Metro Problems?: We're not at all sure that it will be, but yesterday afternoon's press conference at least tried to put the issue to rest. The Post recounts the details: aging equipment failed to handle a power surge that may have been caused by lightning. Officials stressed the unusual nature of the problems, and that the incidents were purely accidental in nature.
Protest At P.G. County Gun Shop: The AP, via WTOP, brings word of a protest outside of Realco, the gun store closest to the District border. About 100 protestors turned out to voice their dissatisfaction with the business, which they say has sold a disproportionately large number of guns used in crimes. The event was organized by Jesse Jackson's Rainbow/PUSH Coalition, which was running similar rallies across the country to commemorate the anniversary of Dr. King's March on Washington.
Briefly Noted: Charles Ramsey considered for Baltimore police chief position... Judge says Va. transportation authority can levy taxes... Va. launches DUI checkpoint campaign... Md. teacher pleads guilty to sex with student... Marie Callender pies recalled due to bacteria...
This Day In DCist: One year ago we were encouraging you to eat for a good cause and talking to Courtney Jordan. Two years ago a new contributor reviewed Pesce and we welcomed the Post's Fairfax blog to the internet.
Image posted to DCist Photos by Flickr user intemporelle
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What do you mean thinking about how to spend that money? Between SE General Hospital and the latest school repair bill, that $100 mil is already spent.
And since DC is usually a few years behind the economic curve (the suburbs were prosperous in the 1980s while DC was close to insolvency), history would dictate that today's nine-figure suburban defecit spending will make its way to DC by 2009 at the latest.
"but we're sure they're already thinking about how to spend it."
MORE IPHONES!
Anyone think that an ice road trucker has an iphone?
So the city creates a budget and gets an extra $100 million as a gift. Since it hasn't been appropriated to anything, why not do the fiscally sound thing and save it? Economies are cyclical and an extra 100 mil would make a nice rainy day fund. Hell, if invested properly, that money would be worth a lot more by the time it was actually needed.
What is missing from the gun story - the number of crimes other than DC possession traced to the 76 Realco guns seized by police. Criminals in DC and MD share guns, often renting them to each other for a few hours.
Can't wait to see how Ed Lazere spins that news about the surplus to argue for more taxes.
Perhaps this will silence those making the false dichotomy between stadium spending and school spending, at least for a week or two.
And speaking of schools, good luck to Rhee as she seeks the power to fire useless administrators that do nothing but collect a paycheck. God if she can get that, there might be hope after all. Of course the unions will do what they can to stop her. They wouldn't want the future of DC's children to get in the way of their members' home renovation plans. Those tacky columns aren't going to pay for themselves!
My biggest concern is what happens when property tax revenues start drying up? Instead of coming up with all sorts of new programs and ways to spend that additional $100M, I'd be socking it away in the rainy day fund or paying down some of the outstanding bonds with high interest rates.
How about match grants to local businesses to open near the new stadium and other devleoping parts of the city.
to #6:
Come on ... which is it? The stadium funding has no relation to the general fund or the budget surplus was achieved despite the bloated stadium bill?
My biggest concern is what happens when property tax revenues start drying up?
Well, one thing that will happen is that you won't have any businesses left to buy anything from, except maybe $5k leather couches, charcuterie, banana-flavored blunts, and cheese heroin.
I wouldn't worry too much though. I'm sure the DC Tax Assessment Office will continue to claim that your property has increased in value 120% and send you the requisite bill. I don't see logic getting in the way of revenue collection.
I doubt it's following a suberb trend. DCs makeup has changed more people in higher income brackets means more revenue from taxes. Schools need it. Please, let's not spend the money on more whistle blowing idiots in the intersections.
Re the surplus:
Ben Folds said it best:
"Give me my money back, give me my money back, you bitch!"
That 100 mil should go back to the federal gov who appropriates money to dc.
How about using the $100 million to build 4 ultra magnet schools for the top students. Each school would get a new building, with the latest technology. Teachers for these schools would be recruited nationally and paid salaries equal to what the highest paid suburban teachers make. These school principals would answer directly to Rhee and would exist outside of the DCPS bureaucracy. The goal would be to attract kids that live in DC but are currently sent to private schools (like, for example the Mayor's kids).
Parents of these students would be required to be actively involved in their kids educations by doing things that are largely unheard in the DCPS system, like attending mandatory conferences and even coming in to bring their expertise to the classroom from time to time.
Right now, the fear that so many young professionals who live in DC, including this one and his wife, have what will happen when their kids reach school age. Sending your kids to the DC public schools is one level above child abuse and the DCPS system simply doesn't afford good students the type of opportunities to grow that they deserve. Private schools are insanely expensive. Next thing you know, that move to VA or MD is looking more and more like the only realistic option.
Give these parents, who will be actively involved in their kids educations, a real option in the city. Give them a school that can compete with the best schools in Montgomery County, or watch them move there.
Come on ... which is it? The stadium funding has no relation to the general fund or the budget surplus was achieved despite the bloated stadium bill?
Both. The stadium funding has no relation to the general fund, thus its huge amount didn't prevent the city from having enough cash to spread around.
To #14, I don't think 100 million dollars is enough to build four magnet schools, at least not like you're talking about.
Not every DCPS school sucks, but enough of them do, and we certainly know the administrative system is largely dysfunctional. Walls and Banneker are examples of successful DCPS schools with thriving students. Parents of students at these schools would take offense at the implication of child abuse for enrolling their kids in DCPS.
Guest 11: No, the schools don't need the money. We already spend more than almost every other school system in the nation. We literally throw money at the DC schools.
Guest 13: Nonsense. The GSA has shown over and over again that because of the FEDS there is a fiscal structural imbalance in DC..... in reality, the FEDS owe DC hundreds of millions each year.
Can't wait to see how Ed Lazere spins that news about the surplus to argue for more taxes.
Well, gee, lessee. Based on Lazere's previous missives and that fact that according to him DC residents pay the lowest taxes in the Nation, he will probably claim that since DC's progressive tax rate has not kept pace with inflation, that $100 million surplus is actually a $300 million defecit.
There ya go, DC needs to raise taxes.
"Economies are cyclical and an extra 100 mil would make a nice rainy day fund."
DC has a general fund balance (not deficit) of $1.4 billion, which includes $293.7 million in an emergency/contingency cash reserve.
Taxable retail sales in DC were $10 billion in 2006. In 2003, taxable retail sales in DC were around $7.7 billion. And, wait until DC USA opens in Columbia Heights. Retail sales are going up as sales leakage to the suburbs subsides.
DC revenue sources are continuing to diversify. A relatively new revenue source is coming from financial activities, particulary from DC's leading captive insurance industry. It is the fourth largest domicile in the US now as of 2007. This will be a respectable revenue source in the future as the number of captive insurance companies continue to migrate and open up in DC.
otavio - What's a "domicile" in the financial sense you use there?
Example: A business entity is domiciled in the state in which it is formed. The location of a business for legal and tax purposes.
Captive insurance companies domiciled in DC pay taxes to DC for the license to operate and are regulated by the DC Department of Insurance, Securities, and Banking (DISB).
Financially, DC permits captive insurance companies domiciled in DC to securitize risk and allows access to capital markets through special purpose captives. The insurance publication Best’s has predicted that hundreds of millions of dollars will flow to this form of capitalization in the near future.