WASHINGTON – The District of Columbia Council passed its $13.4 billion fiscal 2017 budget this week, despite a warning from House Republican lawmakers that the action would be unconstitutional without congressional approval.
The council unanimously passed the spending plan on Tuesday, which would make it the first time in which the district has exerted control over spending its own tax-generated money.
Council members argued that the move was protected under the district's Local Budget Autonomy Act approved in 2013, which eliminates the need for Congress and the president to sign off on appropriations of D.C.'s own funds. A District of Columbia Superior Court judge in March ruled that act lawful under district law.
"The council persisted in its approach to approving the budget under the terms of the budget autonomy initiative which is currently the law of the land," members said following Tuesday's meeting.
The local funds, which make up roughly 90% of the annual budget, are subject to a 30-day congressional review period, where the House, Senate and president would need to reject or veto it to prevent it from being enacted.
Tuesday's vote comes less than a week after the House passed the Clarifying Congressional Intent in Providing for DC Home Rule Act of 2016, which would block the district from passing its annual budget without congressional approval.
That bill, sponsored by Rep. Mark Meadows, R-N.C., chairman of the House Oversight and Government Reform Committee's government operations panel, would repeal the district's Local Budget Autonomy Act. It would also amend the Home Rule Act of 1973 to clarify the roles of both district government and Congress in the local budget process. The bill has received support from House Speaker Rep. Paul Ryan, R-Wis., who is also opposed to the district gaining budget autonomy over local tax revenues. The Senate has not yet voted on the bill.
Soon after his bill was passed in the House by a 240-179 vote on May 26, Meadows said, "The actions of the D.C. city council directly undermined the law and could potentially set a dangerous precedent if left uncorrected."
But President Obama said he would veto any such legislation, which he said "imposes both operational and financial hardships on the district."
D.C.'s annual budget must be approved by a two-thirds council vote as well as an appropriation passed by Congress and signed off by the president under current federal law. Meadows has warned that the passage of a local budget without congressional approval could lead to administrative and criminal charges against district employees.
Fiscal independence is seen as a first step toward statehood; D.C. Mayor Muriel Bowser has called for a vote by residents to petition Congress to make the district the 51st state. But Republicans have opposed district statehood because it would likely mean adding more Democrats to Congress.
Bowser has previously said she would move forward with an autonomous budget for fiscal 2017 until Meadows' bill is passed by both houses and signed into law by the president.
The district is also currently embattled in a lawsuit filed in November in U.S. District Court for the District of Columbia by political watchdog group Judicial Watch on behalf of district taxpayer Clarice Feldman. The group alleges the Budget Autonomy Act violates the Home Rule Act, which states no district funds can be expended by the district unless approved by Congress. That suit is still pending.
The District of Columbia is also expected to sell $421.78 million of general obligations this month, according to Fitch Ratings.
The series 2016A bonds are expected to sell in a negotiated transaction the week of June 6, according to the rating agency. Fitch assigned an AA rating to both the bonds, with a stable outlook, and the district's issuer default rating.
The bonds will be backed by revenue pledged from a special real property tax levied in an amount to pay debt service on the GO and parity bonds. Fitch said the AA rating was due in part to the district's ability to weather several financial and governmental storms.
"The economic base has proven resilient to volatility in federally-driven economic activity in recent years including sequestration, a federal government shutdown, and the ongoing risk of federal government contraction," Fitch officials said.
They also said the ongoing legislation regarding the legality with the local budget autonomy act "is not a key consideration" in its rating.
"Debt service on district bonds must be paid under the home rule act, regardless of whether a budget has been approved by Congress or locally," Fitch officials said.
