Wednesday, June 08, 2011

Municipal Bonds and Ward 3

A resident has shared a correspondence from Mary Cheh on the passage of a tax on Municipal Bonds. As the Councilmember notes, this retroactive action affects seniors living on fixed incomes and ward 3 residents disproportionately:

I’m sorry, I am reading your emails, but I’ve been inundated of late, as you might imagine. I was opposed to this tax but accepted it because (1) we are now the only jurisdiction to offer an exemption on out-of-state bonds and, contrary to the past, the District offers a wider array of its own tax-exempt bonds, and (2) it was linked to a promise that the extra revenues we anticipate in the balance of this year would be used to eliminate the retroactive effect, thereby grandfathering in bonds purchased before October 2011.

Regrettably, Councilmember Tommy Wells and others introduced an amendment that took away the promise to grandfather the tax exemption and instead use future revenues to pay for other programs. And, in an instance of rank politics, that group of Councilmembers secured their necessary seventh vote for the amendment from Councilmember Vincent Orange by promising him that he could use a half-a-million dollars of the expected revenues for the Lincoln Theater and Emancipation Day Festivities. I think that that action was unprincipled and unraveled an arrangement that was previously fair.

There is also an underlying issue of fairness here. In tax year 2008, there were 19,917 taxpayers that had reported some tax-exempt interest. Of those, 70% lived in Ward 3. There are many retired people--a great many of them in Ward 3--who rely on the interest of these bonds as part of their retirement plans. I have spoken to Chairman Brown and impressed upon him the urgency of having that amendment reconsidered, and he tells me he is attempting to do that for the second and final vote. So we'll see.

Given the state of the Council and Government leadership at this time, this hardly feels like a fair action to those who have saved, rather than those who are squandering city resources on pet projects or for private gain. Perhaps the Council and Executive Branch ought to ensure the financial house and safety systems on taxpayer monies are sound before burdening District Seniors with a retroactive tax.

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