DC mayor presents 2026 budget amid forced cuts, impacts from federal job loss

Yahoo

5 days ago

WASHINGTON (DC News Now) — D.C. Mayor Muriel Bowser to the public Tuesday, which includes a $21.8 billion operating budget.
'We feel very good today. It's budget day which is always a good day for us,' Bowser said. ' … We are proud of the work we've done and the decisions we've made. And this is a budget for D.C.'s future.'
The budget comes amid massive changes to the federal government, including an estimated loss of 40,000 federal jobs in the District, which is expected to reduce D.C.'s revenue by $1 billion over the next four years.
PREVIOUS COVERAGE Council expects to receive 2026 budget soon after meeting with Mayor, CFO
The budget also accounts for federal interference that gutted the District's current FY 2025 budget by more than $1 billion.
'With this budget, we're not waiting for change to happen – we're making change happen. The Growth Agenda is about creating jobs for D.C. residents and generating the economic activity we need to keep D.C. a world-class city,' said Bowser. 'This budget acknowledges the challenges we are facing, but also includes bold, forward-thinking solutions to change our economic trajectory.'
PREVIOUS COVERAGE: DC councilmembers request to meet with Mayor, CFO amid 2026 budget delays
FISCAL YEAR 2025 SUPPLEMENTAL BUDGET
The presentation of the 2026 budget was delayed by nearly two months, after Congress passed a continuing resolution in March that reverted D.C. back to 2024 spending levels.
The city administration was forced to deal with a $1.13 billion gap and cut funding accordingly. That resulted in the FY 2025 supplemental budget.
To address the gap, the mayor first implemented the '6% solution,' which allowed D.C. to increase spending levels by 6% across all categories. Ultimately, the District was forced to reduce spending by $347 million in fiscal year 2025.
A hiring freeze was implemented on all vacant positions, resulting in $63 million in savings.
$175 million in non-personnel service reductions were made. Those cuts included contracts, grants, supplies and more.
New programs that had not started yet were stopped, including the Child Tax Credit, which has been eliminated — an issue that was pressed by several councilmembers during the questioning portion. It also halts the Baby Bonds Program which officials said faced legal challenges because it required Medicaid to share HIPPA information.
$3 million was cut from the Safe Passage program, a program that helps students safely get home from school. The program will remain intact during the school year but will not operate during the summer months.
No furloughs, layoffs or facility closures were proposed.
FISCAL YEAR 2026 BUDGET
To build the 2026 budget, Bowser said she considered three questions.
'Does this investment keep people and families in D.C. and attract new residents or attract new residents? Does it create economic activity to fund city services and programs? And does it attract new businesses and create new jobs for D.C. residents?' said Bowser. 'If the answer to those questions is 'no,' that's something we look very hard at.'
The largest percentage of funds was given to the District Department of Transportation and the District of Columbia Public Schools. Highlights of the budget include cutting 'red tape,' making it easier for businesses to operate.
Those include repealing Initiative 82, which would've required restaurants to pay a base minimum wage, not including any tips.
PREVIOUS COVERAGE: Hospitality workers rally in DC to save Initiative 82
The proposal repeals the Parking Benefit Equivalent Program, which required businesses to provide a transit stipend if the business provides a stipend for parking, and reforming TOPA, or the Tenant Opportunity to Purchase Act.
The budget increases $30 million in spending for MPD to hire more officers, create a new horse mounted unit and purchase crime fighting technology.
$681 million is earmarked for supporting horizontal construction and parking at the old RFK Stadium Site. This, as Bowser and the Commanders struck a deal to bring the team back to D.C. $500 million of that funding will come from the existing ballpark tax, which was freed up after D.C. paid off its debt for building Nationals Park early.
In terms of school funding, $2 billion will be used to modernize 30 schools, $270 million will support pay raises for teachers and $148 million will be used for small capital improvements like HVAC and window replacement at schools. There is $3 million proposed for high impact tutoring.
The Early Childhood Educator Pay Equity Fund will be fully funded in fiscal year 2026, but not beyond that.
Gone from the budget is funding to build a new jail.
According to City Administrator Kevin Donahue, the cost to build a new jail has ballooned to $1.4 billion. Instead, the District will shift to a privately funded jail that is staffed and run by D.C. employees.
'This is not a private entity running the jail,' Donahue said. 'This is an answer to a problem that is, how on earth to do we close the [jail] … in a timely manner,' he explained.
One councilmember pushed back asking how this year would be different from last year when the same idea was pitched.
Funding is included in the budget to finish the planning process for the jail. DGS will issue an RFQ and RFP for a private entity to take out the debt and build the jail.
Changes are also coming to D.C.'s Medicaid program. Because Medicaid costs are forecasted to increase by $182 million, Bowser proposed changing the eligibility requirements.
Specifically, the plan aims to 'shift childless adults and adult caregivers between 138% – 200% of the federal poverty level to a new health plan run by the D.C. Health Benefits Exchange with largely the same benefits, minimal to zero premiums and out-of-pocket costs, and ability to utilize existing managed care organizations to avoid coverage disruptions,' according to the Mayor's presentation.
This will impact more than 25,000 people. The mayor's team said that those individuals who will lose access to Medicaid could still be eligible for other coverage, federal tax credits and premium subsidies, or financial assistance programs at the federal level.
The Deputy Mayor of Health and Human Services said the District will work with them to find new coverage.
'We're going to work with the exchange… (and) look at the commercial marketplace to work with those individuals that will lose coverage under Medicaid,' said Deputy Mayor Wayne Turnage.
Paid Family Leave also took a hit in the proposed budget in an effort to balance overtime costs. Families wanting to take leave to care for another family member is limited to two weeks and only includes immediate family.
The Child Tax Credit was not reintroduced for the FY 2026 budget after its proposed cut for the FY 2025 Supplemental Budget. Ward 5 Councilmember Zachary Parker said he looked forward to seeking to reverse this decision with the council.
Electrification programs and renewable energy purchases are being scaled back, sparking at least two councilmembers to convey concern regarding the District's climate commitment.
COUNCIL SCHEDULE
The council will begin holding hearings on the budget on Thursday, May 27.
It's expected to take its first vote on the budget July 14.
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