Testimony of Joanna Blotner, Director of Government Affairs, before the Committee on Business and Economic Development

April 8, 2024
Testimony
Person Testifying: Joanna Blotner
Title: Director of Government Affairs, DC Action
Testimony Heard By: Committee on Business and Economic Development
Type of Hearing: Budget Hearing

Good morning Chairperson McDuffie, councilmembers, and staff of the Committee on Business and Economic Development. My name is Joanna Blotner, and I am the Director of Government Affairs at DC Action. DC Action uses research, data, coalition building, advocacy, and a racial equity lens to break down barriers that stand in the way of all kids reaching their full potential. We are also the home of DC KIDS COUNT, an online resource that tracks key indicators of child and youth well-being.

Thank you for the opportunity to address the committee today on Fiscal Year 2025 matters pertaining to the Office of the Chief Financial Officer. Specifically, my testimony focuses on Budget Support Act (BSA) revisions to the Child Wealth Building Act (aka baby bonds) and the local match of the Earned Income Tax Credit, as well as opportunities to raise revenue this fiscal year to undo the many cuts in the Mayor’s budget that disproportionately harm lower income children and families. 

DC Action strongly opposes the BSA revisions that limit eligibility for baby bonds to just 100% of the Federal Poverty Level, reduce annual per child contributions, and eliminate indexing for inflation. Eligibility set at 100% FPL is the equivalent of earning just $31,200 annually for a family of four. Yet in the DC area, where a 4-person family needs to earn an estimated $100,563 to cover their basic necessities, the federal poverty level equivalent is a poor measure of wellbeing in the District. In 2022, median family income for Black Washingtonians was just $62,300 – well below an ability to afford necessities – meaning the Mayor’s revised targeting for baby bonds is far too narrow to achieve the legislative goal of closing the District’s staggering racial wealth and opportunity gaps. The original legislation was right to set eligibility to 300% FPL ($93,600 for a family of 4 as of 2024).

The legislation was also right to propose a substantial but progressively structured annual contribution model. Under the original legislation, a child born in 2024 who continues receiving the annual maximum amount could expect to access $31,635 for college or entrepreneurial pursuits when they turn 18.¹ Yet if the Council adopts the Mayor’s subtitle, that child will receive just $13,609, hardly enough for a single year of in-state tuition at many universities. This committee should strike the BSA subtitle that seeks to shrink the universe of children we can support – from 44,353 to 18,185 by 2040 – and should do everything possible to keep the progressive model of up to $1,000 in annual fund contributions, including indexing for inflation, in law. 

The District budget is an opportunity to leverage our collective resources to advance equity. To that end, the BSA should focus on revising the Child Wealth Building Act to expand access to baby bonds to ensure we are maximizing the potential to create massive shifts in access to wealth for Black and brown youth in the long run. DC Action recommends eliminating the requirement for continuous enrollment in Medicaid and continuous family earnings that fall below 300% of federal poverty. That is to say, if you meet eligibility criteria when you are born, you should be permanently enrolled in the program so long as you continue to reside in the District. Like many other benefit cliffs in federal and local social safety net programs, the rigid income eligibility rules have the perverse incentive of keeping a family in poverty – or otherwise disincentivizing them from growing their earnings or taking a job with employer-sponsored benefits – in order to continue receiving annual deposits into this game changing program. Additionally, a child whose parents are enrolled in the Alliance at the time of their birth or a DC native whose family falls into poverty some time after they are born should also be able to take advantage of a public child wealth building account; updating eligibility to include those circumstances would also help many youth launch their futures when they turn eighteen.       

Similarly, the Budget Support Act capping the local match of the Earned Income Tax Credit to 70% in Fiscal Year 2025 – and beyond – limits the District’s ability to advance financial stability and equity for low-income and middle class working families. EITC eligibility is capped at roughly $63,000,² so this is a tax credit currently well targeted to support lower income Black families in DC given equivalent median family income. Putting cash directly into the hands of working families each month – as the local EITC program allows – means they are better situated to stay housed, afford utility bills, buy healthy foods, send kids to school in clean clothes, and pay off debts. This committee should strike the BSA subtitle that restricts increases to the local EITC match.

There are many – too many – cuts in this budget to programs that help children, youth, and families thrive in the District and the reality is that the only solution to restoring them is through new revenue. That is not to discount the need to spend smartly and reduce waste where it can be identified; but this is going to be a ‘both, and’ budget year. We urge this committee to support the revenue proposals of the Just Recovery coalition All in for DC Tax Policy Platform to restore the integrity of baby bonds and EITC policies, among other funding needs. Per a priority Just Recovery tax policy recommendation, we also urge the committee to work with the Office of the Chief Financial Officer to develop appropriate BSA language that authorizes them to develop tax surveying forms that can gather data on gross receipts from registered District businesses to lay the foundation for adopting a Business Activity Tax which could make our tax base broader, fairer and more resilient. Thank you and I would be happy to answer any questions.

  1. These figures use the CPI-W price index and not CPI-U for Washington-Baltimore metropolitan area, as the 2021 bill requires. The reason for that is that there are no projections of future values for the latter index that we are aware of; however, this should have a negligible effect on the calculations.

  2. Federal eligibility for tax year 2023 were maximum earnings of $63,398 or $56,838 for a family with three children depending on joint/married or single filings, respectively.