District of Columbia

State Fiscal Briefs

January 2020

The District of Columbia’s budget basics

According to the National Association of State Budget Officers (NASBO), the District of Columbia’s total expenditures in fiscal year (FY) 2019 were $13.3 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, the District of Columbia’s combined state and local direct general expenditures were $13.3 billion in FY 2017 (the most recent year census data were available), or $19,053 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,449. The District of Columbia functions as both a state and locality, but the Census Bureau classifies all its expenditures and revenues as local government.

The District of Columbia’s largest spending areas per capita were public welfare ($5,649) and elementary and secondary education ($3,999). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices. Further, although the District of Columbia functions as a state and locality, its population and economic activity (and thus per capita spending) resemble a major city more than a state.

The District of Columbia’s general revenues were $13.8 billion in FY 2017, or $19,812 per capita. National per capita general revenues were $9,573. The District uses all major state and local taxes. After federal transfers, The District’s largest sources of per capita revenue were property taxes ($3,496) and individual income taxes ($2,815). The District’s federal transfers are high partly because it is the nation’s capital and receives funds that support the federal workforce (who are not counted in the state’s population).

The District of Columbia’s politics

The District of Columbia’s government functions as both a state and locality. For example, it both funds Medicaid and administers school spending. However, its elected offices parallel a municipality, with a mayor and a 13-member council.

Mayor Muriel Bowser, a Democrat, was elected in 2018 with 76 percent of the vote. The next mayoral election is in 2022.

The DC Council is composed of eight members representing the city’s eight wards, four at-large members representing the entire city, and a council chair. All current councilmembers are Democrats except for two at-large members who are independents. The District requires that no more than two of the at-large members be nominated by the same political party.

The District of Columbia’s budget institutions, rules, and constraints

The District of Columbia uses an annual budget. The DC Council must pass a balanced budget and is prohibited from carrying a deficit over into the following year. The District has no tax or expenditure limits and no supermajority requirements for raising revenue or passing a budget. However, it limits its debt service, and its tax- and fee-supported debt is limited to 12 percent of general fund expenditures and transfers.

Further, although the DC Council and mayor prepare and approve the District’s budget, Congress has authority over the District of Columbia and must authorize its budget. As such, the District’s fiscal year begins on October 1 (the same as the federal government). Congress can also overturn legislation passed by the Council.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

The District of Columbia’s recent fiscal debates

The District of Columbia’s current budget

Mayor Muriel Bowser’s proposed FY 2020 budget included increasing the District’s Housing Production Trust Fund (HPTF), expanding a property tax credit available to both homeowners and renters, and increasing taxes on commercial property transactions.

Although the mayor’s budget is sent to the DC Council, the council adopts its own budget. The mayor can then sign or veto the council’s budget. The DC Council approved its budget on May 28, 2019, which invested in the HPTF, increased the property tax credit, and reduced tax incentives for high-tech companies (a local think tank, the DC Fiscal Policy Institute, offers a summary). The DC Council and CFO disagreed over transferring funds from the Washington Convention and Sports Authority to the HPTF, but the CFO eventually endorsed the council’s budget.

For more on the District of Columbia’s budget, see