The post attracted a response from David Umansky, a spokesman for DC Chief Financial Officer Natwar Gandhi.

Like Umansky, we’d like to start with points of agreement. We all agree that the District needs to maintain a healthy savings account, and we need to be judicious about using these funds. So far, we have a great track record in this regard: Research shows that despite the use of DC’s fund balance during the recession, at the end of next year our fund balance is estimated to be higher than in 43 other states.

 We part ways with Umansky on his statement that the fund balance will soon be depleted and his warnings of an imminent downgrading of DC’s bond rating and financial peril. As DeBonis points out, use of fund balance — particularly in one of the worst recessions on record — by itself isn’t likely to cause a downgrade.  If that were the case, nearly every city and state would have been downgraded already. 

In addition, unlike in most states, DC has hardly tapped into our rainy day fund.  In the chart Umansky included in his response, it clearly shows that DC has over $284 million still left in that account for emergencies, including revenue drops caused by a recession.  So we are not, as it’s been said, left with nothing. 

 Instead, DC spent down a savings account that had risen, at its peak, to $1.6 billion, or 37 percent of our budget, when the norm for most states was 8 percent.  DC’s leaders used that money to pay for a backlog of infrastructure improvements without borrowing, paying for DC government retiree health benefits, and most recently using funds to fill huge budget holes left by the recession.  As DeBonis points out, economists such as Paul Krugman believe that this is the responsible approach during a severe downturn.

The alternative is keeping money in the bank while we lay off workers and cut programs, which hurts residents and makes recovery even more difficult.

10 am: DC Council Chairman debate on tbd.com.

noon: Mayoral debate streaming live at www.washingtonpostlive.com

7:30 pm: Ward 6 candidate forum….in person!! Christ Our Shepherd Church, 801 North Carolina Avenue SE.

Monday, August 30: Early voting begins at the DC Board of Elections and Ethics, 441 4th Street NW. Check http://www.dcboee.us/ for further information.

Tuesday, August 31: ANC 6D forum, 401 I Street SW, 6:30 pm.

Wednesday, September 1: Washington Post mayoral debate, noon
The event will be streamed live at  http://washingtonpostlive.com/

Ward 6 candidate forum, 7:30 pm, sponsored by Fair Budget Coalition. Confirmed candidates include Tommy Wells (D-Incumbent), Kelvin Robinson (D), Jim DeMartino (R). Moderator: Mark Segraves of WTOP and Channel 50
Christ Our Shepherd Church, 801 North Carolina Avenue SE, 7:30pm

Thursday, September 2: DC Council Chairman debate, 8 pm
DC Jewish Community Center, 1529 16th Street NW

Huh?

It is a confusing and troublesome point. Jobs are being created in the District. That’s good. But, according to the data, DC residents are not getting hired for many of these new jobs. That’s not good. Over the past year, the data shows that even though the District’s overall economy may be rebounding from this devastating recession, those who live in the city have not fully benefitted from the job growth. It is a clear sign that a rising tide is not enough to lift all boats, and our elected leaders need to take conscious steps to make work possible for DC residents who want to get hired but may lack the skills needed for the jobs being created.

Here are the stats: The number of jobs in the District grew from 711,500 in June to 729,300 in July, according to preliminary data released by the Bureau of Labor Statistics. This jump — the biggest one-month increase in the number of jobs created in DC in at least 20 years — has more than offset job losses that the city suffered in 2009 as a result of the recession.

Meanwhile, employment among DC residents (whether they work in the city or outside) fell in July, from 303,500 to 302,000. Yet DC’s unemployment rate dipped slightly in July, from 10 percent to 9.8 percent, but that is because the number of people looking for work dropped. (The unemployment rate assesses the number of jobless residents looking for work as a share of the “labor market,” which only includes those with a job and those actively searching for a job.)

This mismatch in job growth is not merely a one-month phenomenon. Since last September, when employment in the city bottomed out at 699,000, about 30,000 jobs have been created in the District. During the same period, the number of DC residents with a job has increased by just 7,000.

It is true that in a large metropolitan area, we shouldn’t expect every job created in the city to go to a DC resident. It’s also true that many who live in DC work in the suburbs. Yet it is noteworthy – and disturbing — that employment among DC residents is not keeping up with overall job growth in the economy.

Defeat Poverty DC is an effort of more than 3,000 concerned DC residents and over 100 organizations, businesses, and faith groups that want our elected leaders to make a commitment to reducing DC’s high poverty rate. One of Defeat Poverty DC’s key goals is to urge elected leaders to take steps to “Make Work Possible” for DC residents who want to work. The new employment figures suggest that this need is more urgent than ever.

Eliminating barriers to work should be one of the top priorities for candidates running for office this fall. To learn more about the Defeat Poverty DC and to see what the candidates are saying about their plans to reduce poverty, check out www.defeatpovertydc.org.

Monday, August 23: Ward 5 Democrats Straw Poll, 6 to 9 pm
Michigan Park Christian Church, 1600 Taylor Street NE

Tuesday, August 24:
Mayoral Forum, Jewish Community Relations Council, 8-9:30 pm
6th and I Synagogue, 600 I Street NW

DC Chairman and At-Large Forum, Fair Budget Coalition, 6:30-8:30
True Reformer Building, 1200 U Street NW

Tax abatements have become so common in the District that developers like Brian Friedman – quoted above – have come to expect them as a matter of right.  His company plans to build a high-end hotel in Adams Morgan.  It is seeking $21 million in tax subsidies, in the form of a 15-year property tax break.  Friedman asserted that his quest for a large tax break is “like any other hotel in the city,” according to the Washington Business Journal.   We beg to disagree.

When developers routinely start to ask for tax subsidies, the effectiveness of this approach as an economic development tool is called into question.  Tax subsidies should be used selectively when they are needed to make an economic development project viable, especially if it will bring benefits such as jobs or neighborhood development. If a project would likely be developed anyway, the tax abatement represents money down the drain. 

There is a growing trend in DC of offering such tax breaks without asking the hard questions of whether it is really needed.  Under other DC economic development programs, like Tax Increment Financing, the Chief Financial Officer takes a close look to assess how much assistance, if any, is warranted to move a project forward.  There are no such rules for tax abatements.

In this rule-less world, we end up with a hodge-podge of tax abatements, often for large developments that might succeed without any DC help.  Take, for example, the 20-year partial tax abatement for Highland Park — a high-end residential building on top of the Columbia Heights Metro that was completed and largely full when the tax break was approved.  A large amount of tax dollars are devoted to these tax breaks, money that could otherwise be used for a more comprehensive approach to economic development —  targeting underserved neighborhoods, supporting projects that create living wage jobs, or helping small businesses, to name a few.

There are solutions to this problem.  First, the Council should approve the Exemptions and Abatements Information Act, which would apply to proposed tax abatements the same hard-edged analysis applied to most economic development programs.  Second, the District could create a budget for tax abatements —  deciding how much it wants to spend on them each year, just like it decides how much to spend on libraries and every other service.  That will help ensure that DC offers tax abatements only when they really are critical and that we keep abatements from eating too much into revenues needed for schools, public safety, health care, and other services.

Just take a look at today’s Washington Post article on school reform : “Analysis of test scores by ward shows the persistent gulf in achievement between the city’s poorest children and its most affluent. In 2007, 27 percent of Ward 8 elementary students read proficiently, compared with 78 percent of their peers in Ward 3….This year, the Ward 8 children were at 29 percent and those in Ward 3 at 86 percent.”

Reporter Bill Turque quotes Chancellor Michelle Rhee saying, “It’s maddening and it’s hard….Have our ward 7 and 8 schools progressed? Absolutely. But the gap is still ridiculous.”

It’s fair to say that even the most state-of-the-art classroom and talented instructor cannot overcome the impacts of malnutrition, abuse and economic insecurity on a child’s ability to learn. Turque’s article notes the emphasis Rhee and Mayor Adrian M. Fenty place on raw data in assessing success. Here are a few more numbers: One in three DC children live in poverty. Nearly half of all substantiated cases of child abuse and neglect come from DC’s poorest neighborhoods. Two in five DC families report that they at times don’t have enough money to buy food. Very simply, it’s hard to pay attention in class when you’re hungry or you didn’t get a good night’s sleep because your family lives in a car.

These factors contribute to the fact that even within the same school, poor children score lower on math and reading tests than classmates from higher-income families. Research shows that costly social ills—including poor health, illiteracy, and violence—are tied to poverty. So failing to address the problems kids bring with them into the classroom will take school reform only so far.

In these final weeks of the campaign, we urge you to ask candidates about their plans to make work pay, to make work possible and to make basic needs affordable. Check out the Defeat Poverty DC website. Improving DC’s public schools is key to a successful future, and so is making sure we do everything possible so children are ready to learn when they arrive in the classroom.

We made some similar comments in a blog post earlier this month. A four-point refresher:

Lesson 1: The budget for summer jobs needs to be realistic, based on agreed-upon assumptions of the duration of the program and the expected number of participants.  The budget for next year’s summer jobs program is even smaller than the one for this summer. It’s simple math that we need to alter the number of participants and hours worked in order to keep within budget.

Lesson 2: The summer youth employment program should be right-sized to fit its purpose. That purpose should be providing a high-quality, meaningful summer work experience for participants. As Ross says in the Post, the focus of the jobs program has been on size, not quality of experience. We agree with Ross that it needs to be the other way around.

Lesson 3: Vulnerable families should not be placed at further risk by poor budgeting decisions.  The costs of the summer jobs program are largely predictable. We shouldn’t be faced with last minute budget shortfalls.

Lesson 4: The time to prepare for next year is now, not next summer. The summer jobs program is supposed to teach kids about the world of work, but what have our city’s leaders learned about how to improve the summer jobs program? What would Mayor Fenty do differently next year? Chairman Gray?

We made some similar comments in a blog post earlier this month. A four-point refresher:

Lesson 1: The budget for summer jobs needs to be realistic, based on agreed-upon assumptions of the duration of the program and the expected number of participants.  The budget for next year’s summer jobs program is even smaller than the one for this summer. It’s simple math that we need to alter the number of participants and hours worked in order to keep within budget.

Lesson 2: The summer youth employment program should be right-sized to fit its purpose. That purpose should be providing a high-quality, meaningful summer work experience for participants. As Ross says in the Post, the focus of the jobs program has been on size, not quality of experience. We agree with Ross that it needs to be the other way around.

Lesson 3: Vulnerable families should not be placed at further risk by poor budgeting decisions.  The costs of the summer jobs program are largely predictable. We shouldn’t be faced with last minute budget shortfalls.

Lesson 4: The time to prepare for next year is now, not next summer. The summer jobs program is supposed to teach kids about the world of work, but what have our city’s leaders learned about how to improve the summer jobs program? What would Mayor Fenty do differently next year? Chairman Gray?

Yes, our fund balance has declined, but that is largely because we suffered the worst economic downturn in decades, with huge drops in tax collections and a rising need for services among record unemployment levels.   The recession has forced cuts in all parts of DC’s budget, from libraries to recreation centers to affordable housing.  Without using fund balance, our budget choices would have been much harder with much more severe effects on DC residents.  Also — it is important to note that use of fund balance has not put us in a crisis state.  Consider these 3 points:

 1)      Despite its use, DC’s fund balance remains higher than the large majority of states.  Most states — including DC — have used a combination of cuts, tax increases, and savings to balance their budgets and limit disruptions to programs and services in the midst of the recession.  Nearly all states have drawn down their fund balance during the recession and despite DC’s substantial use of its fund balance, DC will have a higher fund balance than 43 other states at the end of FY 2011. 

2)      DC had built up an extraordinarily high fund balance during times of economic boom.  As a result of a booming economy, our fund balance peaked at $1.6 billion —   37 percent of our budget — when the average for most states was 8 percent.  Policymakers put that extra money to good use: paying for a backlog of infrastructure improvements without borrowing, paying for DC government retiree health benefits, and most recently using funds to fill huge budget holes left by the recession. 

3)      You save in good times, to help you get through the bad times.  The last three years certainly have been some of the worst times both for DC residents and the DC’s coffers.  That is the right time to use your savings. 

If we hadn’t used our fund balance, we would have had to borrow more, raise taxes more, or cut more —  or all three —  while sitting on an unusually large savings account.  That would not have made sense.