WASHINGTON – A recent Superior Court ruling, a pending district lawsuit and a renewed push for statehood have all set the stage for a potential budget showdown in the nation's capital.
District of Columbia Mayor Muriel Bowser on Friday called for a November vote by residents to petition Congress to make the district the country's 51st state -- a move that would give D.C. control over its tax dollars and give its taxpayers representation in Congress.
The Republican-led Congress is unlikely to support statehood because that would probably mean adding more Democrats to Congress.
The district is currently recognized as a "mutual corporation" subject to laws enacted by Congress, but the fiscal 2017 budget is the first in which the district rather than Congress may have control over spending its own money.
Historically, the district has relied on Congress for funds. Congress authorizes and appropriates funds for the district for its fiscal years in legislation that must be signed by the president. Should Congress fail to pass appropriations legislation for any given fiscal year, federal agencies and the district would be denied the ability to spend any funds for that year. Financial autonomy would allow D.C. to spend its local tax and fee revenues without the annual appropriation.
The call for a citywide vote for statehood followed a March 18 ruling by a D.C. Superior Court judge that permits the district to only ask Congress for appropriations for federal funds, which is roughly 10% of its budget. That ruling declared the District of Columbia's Local Budget Autonomy Act of 2012 lawful under district law, which removes Congress as well as the president from having to sign off on the appropriation of the district's own funds, including tax revenues and fees – about 90% of the budget.
Immediately following that decision, Jeffrey DeWitt, the district's chief financial officer and a defendant along with Bowser in the case, issued a release stating, "Now that we have received direction from the Superior Court, the city can develop its budget independently and not as a federal agency. This ruling will benefit the district in many ways, including eliminating the rating the agencies' concerns about the impact of federal shutdowns and the historical delays in the federal budget process."
The ruling would also allow the district to coordinate its fiscal year with the school year, similar to most other municipal and state governments. That suit had been filed by the district counsel and neither side plans to appeal the decision.
However, a civil lawsuit filed in the U.S. District Court for the District of Columbia is still pending and could jeopardize D.C.'s fight for fiscal independence.
In November, Judicial Watch, a political watchdog group, sued Bowser and DeWitt in district court on behalf of D.C. taxpayer Clarice Feldman, alleging the district's Budget Autonomy Act is unlawful. Feldman and Judicial Watch want to prevent D.C. from "unlawfully spending" taxpayer money in fiscal 2016.
The suit claims the Budget Autonomy Act violates a provision of the Home Rule Act that states no district funds can be expended by D.C. government unless that amount was approved by Congress. It also challenges the legality of removing the local portion of the D.C. budget that includes local funds from income, sales and property taxes from federal appropriations and, instead, approving them through district procedures.
Federal law states that D.C.'s annual budget must be approved by a majority or two-thirds district council vote as well as appropriation passed by Congress and signed off by the president.
"This taxpayer lawsuit ensures that local district politicians can no longer misspend tax money in violation of the law," said Judicial Watch president Tom Fitton. "It bears repeating that it is a federal crime to spend federal dollars without congressional authorization."
In February, DeWitt filed a motion to dismiss Feldman's complaint.
But the U.S. House of Representative's Bipartisan Legal Advisory Group, which is made up of five Republicans and Democrats, on March 31, filed a friend-of-the-court brief urging the court to deny DeWitt's motion.
The group said the House has a significant interest in the case because it "directly implicates Congress's institutional powers, both with respect to federal appropriations generally ... and with respect to the district in particular." It argued that Feldman's case has merit and also challenged the constitutional legality of district budget autonomy.
"The Local Budget Act is a naked and unabashed effort to strip Congress of powers vested in it by Article I of the Constitution, and to circumvent the constitutionally-prescribed legislative process that the district and its supporters previously and repeatedly have acknowledged is the one constitutionally-appropriate way to proceed," wrote lawyers from the House Office of General Counsel, which is representing the legal advisory group. "The validity of the Local Budget Act should be decided by an independent federal court … in which the jurisdiction of the court is clear. This is such a case, while the Superior Court proceeding was not."
Speaking on Emancipation Day, the annual holiday celebrating the end of slavery, Bowser called for legislation to appear on the November ballot that would allow taxpayers to vote on district statehood.
"Each year, we use this historic moment to renew our push for full democracy and statehood for the residents of the District of Columbia," Bowser said. "We will not stop until we achieve full statehood."
But the Republican-led Congress is unlikely to ever support statement for the district because that would likely add two Senate Democrats and House Democrats to Congress. Bowser is a Democrat and the district historically has had a liberal base.
Bowser called it a "travesty" that district taxpayers do not have representation in Congress.
Currently, D.C. does not tax in-state or out-of-state municipal bonds, meaning district residents can purchase tax-exempt bonds and are not be required to pay state or district income taxes on the interest.
Bowser's call for statehood comes at a time when the district's population has swelled by 11.1% to 680,000 over the past half-decade. DeWitt attributed the proposed 3.1% spending increase for fiscal 2017 from the previous year to that population growth.
The district's proposed six-year capital improvements plan includes $6.3 billion in infrastructure spending, nearly $4.3 billion of which would be financed with the issuance of munis. The plan calls for $1.3 billion of capital expenditures in fiscal 2017, roughly $1 billion of which would be financed with bonds.
