October 3, 2014 at 9:00 am EST | by Mark Lee
Falling revenues will force city to cut spending
spending, gay news, Washington Blade

A budget reliance on traffic-rule violators hasn’t proven a smart bet.

D.C. politicians got a cold hard slap in the face on Monday.

The party is officially over.

A day before the close of the fiscal year, the city’s CFO announced that District revenues from traffic camera enforcement have plummeted. The preliminary projection is that total revenue collections will net at least a full 1 percent less than the $6.3 billion local budget portion.

Based on revenues through August, traffic camera fines had generated only $26.1 million for 11 of 12 months. The report indicates a decline from the nearly $70 million generated during the same period in the previous fiscal year – down a whopping 62 percent.

City officials had projected a full-year increase to $93.7 million. Funds from automated roadway enforcement fines combined with forfeitures may come in as low as $70 million under the projected amount.

D.C.’s budget has unraveled and is now unbalanced.

And it gets worse.

When approving the 2015 fiscal year budget last summer, District legislators projected an astounding $156 million in traffic camera fines – a two-thirds increase above 2014. D.C. CFO Jeffrey DeWitt warned that, if these trends hold, the impact on city budgets would be huge. DeWitt estimates that the annual budget for the period beginning Oct. 1 could require reduction by another $50 to $70 million, assuming other sources of monies continue to tally as expected.

The controversial proliferation of traffic and speed cameras, debated as whether city funding source or public safety motivator, looks to be one government program that actually changed behavior. A budget reliance on traffic-rule violators hasn’t proven a smart bet.

And the city’s financial worries do not end there.

Like the proverbial coal mine canary, sensible observers have been warning in recent months that the gravy train is running out of railway track. Long insulated from the vagaries of the national economy, the District may be headed toward difficult financial times.

The city’s economic wellbeing is vulnerable to a range of potential perils.

An insufficiently diversified local economy continues to be adversely affected by federal government spending reductions that aren’t going to be reversed anytime soon. An increasing number of residents are suffering stagnating wages – with a corresponding negative affect for community businesses and ultimately city tax collections.

Recent months have seen a notable slowdown in the explosive population growth of the past several years and the city now projects a substantial decline in the rate of growth for coming years. The local economy suddenly slid into a technical recession last year, experiencing more than a half-billion-dollar decline in growth.

Booms go bust and upticks go down. Politicians and residents alike can choose to be mesmerized by construction cranes, glossy developments and expensive restaurants or can scratch below the surface. A city budget in sudden distress allows no capacity for expanded programs or new initiatives.

It appears that going-to-gone are the days of revenue surpluses for the foreseeable future. A new mayor and D.C. Council with several new faces will be tasked with figuring out what expenditures to cut instead of fighting over an annual largess to divvy up.

The task will instead become one of choosing priorities, ferreting out waste, focusing on oversight, monitoring performance and ensuring efficiencies.

Then there are the scheduled tax cuts.

Pity the politicians who return to voters having reneged on the recently approved reforms introducing more low- and middle-class tax structure progressivity, rate reductions for seniors, and a mere modicum of much-needed tax relief for both residents and businesses. These long-overdue yet modest measures, to be phased in over five years, are disingenuously predicated on sufficient surplus revenue to make good on them.

More than a pledge to the populace, these reforms are critical to expanding the local economy. An uncompetitive business environment, extraordinarily elevated tax rates and serially burgeoning government spending provide no solution.

Political candidates currently making grandiose promises they can’t keep face far more humble tenures they loathe to admit.

Mark Lee is a long-time entrepreneur and community business advocate. Follow on Twitter: @MarkLeeDC. Reach him at OurBusinessMatters@gmail.com.

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