Making DC a competitive place to do business has been a top priority for the Federal City Council and the major business organizations in DC, organized loosely as the Business Coordination Group (BCG). And it has been a busy month of action to fight for DC’s regional competitiveness.
The Mayor released her FY20 budget in late March 2019, which included a hefty spending increase that is paid for largely by a tax hike on the commercial property sector. There have been five changes to commercial taxes in two years. This kind of unpredictability makes it hard for businesses to plan. The city already had the highest real estate transaction costs in the region. Now it will have the highest deed and recordation tax in the country. This budget also has bad fiscal fundamentals. Expenditures are growing at 8 percent while the revenue base is growing at 3 percent, and there will be more budget gaps to fill next year. Members of the BCG have been testifying and holding meetings with DC Councilmembers to voice their opposition.
Last week, FC2 CEO and Executive Director Anthony Williams submitted testimony, reminding Councilmembers of the importance of fiscal discipline. Moreover, piling so much tax burden on the commercial property sector, he writes, threatens to “slay the goose that lays the golden egg.” Downtown office vacancy rates are already higher than they should be. Now is not the time to add more overhead costs.
At the same time, the BCG has been working to make the universal paid leave system’s rollout as smooth as possible. The new payroll tax of 0.62 percent will start on July 1. The BCG sent DC Councilmember Elissa Silverman and head of DOES Unique Morris-Hughes a joint letter expressing concern over such a tight timeline. Too many businesses still aren’t ready and don’t know what to expect.
After an initial constructive meeting with Councilmember Silverman, she and Chairman Phil Mendelson hosted a roundtable to air concerns about its implementation held yesterday (May 6). Members of the business community, including FC2’s Kevin Clinton, discussed where the problems lay. Dr. Morris-Hughes promised that the payroll collection system would be ready on time and that she would redouble DOES efforts at communicating with and preparing the business community.