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Emergency accounting helped to cover the massive spending cap, but what does that mean for next year?
WASHINGTON — The continuing resolution (CR) that recently failed in Congress may have done more than just heighten the risk of a federal shutdown — it appears to have dealt a severe blow to the District of Columbia’s ability to reclaim $1.1 billion in local tax dollars this year.
This issue stems from a controversial move by a Republican-led Congress in March to strip the substantial amount from D.C.’s budget, a move that forced District leaders to immediately freeze spending and re-prioritize funding.
Many congressional leaders had hoped to use the now-stalled continuing resolution to release these local funds back to the city. Now, with the deadline for the fiscal year rapidly approaching, the question remains: Will D.C. ever get its money back?
The Roots of the Problem: A $1.1 Billion Hole
This fiscal emergency started in March when Congress passed a continuing resolution to fund the federal government. For D.C., however, the bill’s fine print contained an unprecedented provision: it omitted language that would allow the District to spend at its already-approved FY 2025 budget levels.
Instead, the measure forced D.C. to revert to the previous year’s budget, creating a $1.1 billion hole in the city’s current spending plan.
“You know Congress took this action, none of us know why,” said Yesem Sayin, head of the DC Policy Institute. “Was it a mistake? Was it a statement?”
Sayin clarifies that the problem is not a deficit, but a legislative block on D.C.’s own tax revenue. “This is not a reduction because we don’t have the money — the taxes are coming in, the money is coming through the door — it’s a cap on spending.”
DC’s Emergency Accounting Measures
To cover the Congressional cap, District leaders were forced into emergency accounting to manage the shortfall. Sayin says the leaders requested approval to spend approximately $550 million via emergency legislation. Then another estimated $450 million was covered through delayed payments and shifting money between accounts.
These rapid actions left a smaller, but still significant, problem. “So in my best estimate this was a $100 million problem [that remains],” Sayin explained.
However, critics continue to point out ─ the money is still DC’s.
Lawmakers Divided on Restoring Funds
The recent fight over the continuing resolution brought the D.C. funds issue back to the forefront. We asked lawmakers on Capitol Hill about releasing the funds, and the divide was clear.
Republican James Comer supported the return of the funds. “Well, I’ve been very vocal that that money should be returned to Washington, D.C.”
His sentiment was echoed by Democrat Glenn Ivey. “We should also not forget the $1.1 billion of the District’s money that the Republicans are withholding. That money should be released.”
However, other Republicans, such as Maryland’s Andy Harris, were vehemently opposed.
“They hold the money. They can’t spend it. That’s right. They can’t,” Harris said. “They should look carefully at where they spend their dollars.”
The Fiscal Cliff: Time Running Out
A provision to release the funds was included in the recent CR that Congress was fighting over. But with that bill now dead and the fiscal year ending on Sept. 30, D.C. officials are running out of time. If Congress fails to pass a funding bill with the D.C. fix before the deadline, the District will likely be forced to move on.
The overarching worry for District leaders is the precedent set by this action. If Congress can impose this kind of budget control on local D.C. tax dollars this year without reason, they could do it again.
After the Federal police and National Guard surge, the Congressional hearings into DC’s laws-some Republicans continue to call for greater Congressional oversight.
“There has to be accountability. We can’t just give them a blank check. I think we need to take a more administrative role in that,” Tennessee Republican Tim Burchett said.
This continuous pressure from Congress is just another reason for District leaders to keep a close and wary eye on Capitol Hill.
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