D.C. Council Votes to Restore Social Services, Defying Bowser Cuts

The D.C. Council moved Tuesday toward restoring hundreds of millions of dollars for social services and programs that Mayor Muriel Bowser had proposed cutting as part of the 2027 budget, using money from the city’s reserves and pulling in new revenue by decoupling from federal tax cuts approved by Republicans in Congress last year.

In their first vote on the city’s $21.2 billion budget, lawmakers did not consider any tax hikes, despite one proposal that would have imposed a new tax on wealthy residents’ capital gains, dividends and rental income.

But lawmakers could still consider the option before a final budget vote on June 23. Regardless, Chair Phil Mendelson said he would hold a public hearing in the fall on new ways for the District to bring in more revenue.

“It is more than likely we will see a tax increase next year,” Mendelson said.

The first budget vote came against the backdrop of mounting challenges to D.C.’s economy and fiscal situation, driven in large part by the downstream effects of widespread layoffs that have cost the city more than 44,000 public- and private-sector jobs since the start of 2025.

Revenue growth that drove ever-expanding budgets over the last decade has largely stalled, and Bowser’s proposed budget – which she unveiled in April – cut almost $500 million from programs and services.

Bowser said the city needed to become more fiscally conservative and focus on spurring the local economy. But critics said her proposed budget would slash critical social services like health care, housing vouchers and cash assistance for low-income families just as poverty rates and the number of residents receiving government assistance have ticked up.

“The executive went down a path where the budget was balanced on the backs of the most vulnerable but didn’t ask anything from families like mine,” Ward 6 Council member Charles Allen said. “The proposed budget felt like trickle-down economics: incentives to those who have means and at best you hope the incentives will trickle down.”

The estimated $420 million Mendelson was able to cobble together from reserves and decoupling will restore funding for a program that increases pay for child care workers; increase enrollment and eliminate an existing waitlist for the city’s child care subsidy program; add 659 new housing vouchers for families facing homelessness; reverse Bowser’s proposed cuts to a paid family leave program; and delay cuts to the TANF cash assistance program and health care for immigrant residents.

It will also set aside $100 million for pay raises for unionized government workers, which Bowser had not included in her proposed budget; fully restore funding for a program that offers low-income residents free legal representation in civil legal matters; and provide $15 million in additional funding for charter schools.

“Hundreds of millions of dollars in critical programs were reduced substantially,” Mendelson said. “The budget I am proposing restores all of these programs without significant tax increases.”

But whatever victories lawmakers might claim in a difficult budget year are largely temporary. Much of the funding Mendelson restored is on a one-time basis, meaning that a new mayor and council will face the exact same funding challenges – a “fiscal cliff,” as some have termed it – next year.

Mendelson’s move to pull $150 million out of one of the city’s four reserve accounts – which contain some $2.2 billion, with limits on how it can be spent and has to be paid back – also drew opposition from D.C. Chief Financial Officer Glen Lee, who wrote in a letter to the council that drawing down reserves would imperil “the District’s ability to meet its basic obligations and pay bills throughout a fiscal year.”

Mendelson has dismissed those concerns, saying that even after withdrawing $150 million the city would still have sufficient money left in those accounts. But the disagreement between the chairman and the CFO underscores broader concerns about D.C.’s fiscal situation.

“I am concerned we are running into a buzzsaw of sorts,” Ward 5 Council member Zachary Parker said during the budget debate Tuesday. “The council is going to need to work on revenue or to more seriously address cutting back our spending across government.”

Bowser has leaned on the council to focus more on what she says is government overspending, and work to avoid tax increases. Even still, the mayor put forth some tax increase proposals of her own, including one that would have raised the levy on medical marijuana and another on nightly hotel stays. The council rejected both.

Some lawmakers, including Ward 1 Council member Brianne Nadeau, have shown more interest in raising taxes. Nadeau successfully inserted a new 20-cent fee for every delivery made by third-party services like DoorDash and UberEats into the budget, a move aimed at restoring funding for food-access programs for low-income residents.

Nadeau had also floated a 3 percent tax on passive income – which already exists at the federal level – held by households earning more than $500,000. That proposal was supported by advocacy groups that said the estimated $160 million in annual revenue could help provide funding for everything from emergency rental assistance and housing vouchers to environmental programs and mental health workers in schools.

She ultimately held back on inserting the proposal into the budget during the debate on Tuesday, saying that she didn’t think it was ready for full consideration. But she hinted that it could still come up, whether before the final budget vote later this month or in the fall.

“We should keep it on the table,” Nadeau said. “What I’d love to do is help the next mayor and council get on strong footing with their revenue streams so they’re not immediately saddled with having to face a fiscal cliff.”