What’s in the mayor’s long-awaited budget proposal?

On Tuesday Mayor Muriel Bowser unveiled her long-delayed proposed budget for the 2026 fiscal year, along with a revised and slimmed-down budget for the current year. 

Both spending plans were eagerly anticipated, largely because they come as the city is facing financial headwinds and forced to cut back spending significantly – something that’s alien to many elected officials used to the steady increases in annual revenues over the past decade. 

The budgets are now with the D.C. Council, where lawmakers will have 70 days to scour Bowser’s proposals, make changes of their own, and cast final votes (expected in early August). Here are the biggest implications of Bowser’s proposed budget, from what she wants to spend money on to the consequential policy changes she dropped into the fine print.

To fund growth initiatives, Bowser wants to cut social services

Bowser’s proposed budget is titled “Grow D.C.,” and the underlying pitch is about as simple as that: With the federal government becoming a far less reliable employer, the city has to quickly find other sources of growth and revenue. 

“We can’t act like today is 2024 or 2023. It’s not, folks. We have a shifting economy, and if we don’t shift with it, we will be a city that people flee,” the mayor told lawmakers as she unveiled the budget.

To get more revenue, Bowser’s marquee investment is the proposed Washington Commanders stadium and surrounding entertainment district at RFK (at a total cost of more than $1 billion), but there’s a lot more: $515 million to help renovate the Capital One Arena; money to support the National Theatre, Lincoln Theatre, and Howard Theatre; new financial incentives for tech companies, an initiative to enliven Gallery Place and Chinatown; more office-to-housing conversions; and even legalized commercial bingo, poker, and blackjack. Bowser also wants to repeal the voter-approved initiative that phases out the tipped minimum wage, reform some tenant protections, and delay a sales-tax increase set for next year until 2027.

She hopes these initiatives – many of which are in the city's capital budget – will help bring in new revenue for the city at some point in the future. In the meantime, though, she's also scaling back on some social programs for low-income residents, arguing that their costs are unsustainable in an era of decreasing revenues and a changing economy.

To that end, Bowser is proposing some $500 million worth of reductions to social programs. That includes fully eliminating the nascent Baby Bonds program, scrapping an expanded child tax credit that was set to take effect next year, reducing some benefits for the paid family leave program for both D.C. government employees and private-sector workers, shifting more than 25,000 residents off Medicaid and into the private market for health insurance, and imposing new restrictions on who qualifies for the Temporary Assistance for Needy Families program.

Her proposed budget has already drawn howls of criticism from progressive advocacy groups, with Erica Williams of the left-leaning D.C. Fiscal Policy Institute deriding it as an “inequality agenda” that will leave already low-income residents further behind as the federal government cuts social services and the city possibly enters a recession.

Some lawmakers are sounding similar notes of opposition. “It is pretty bleak as it relates to human services and providing a lifeline to residents that need help the most,” said Ward 5 Councilmember Zachary Parker, while Ward 4 Councilmember Janeese Lewis George said she is “deeply concerned about how this budget is balanced: by making cuts to vital programs that support and protect families and children.”

This divide has existed for years between Bowser and more progressive voices, but it will only be amplified this year because there’s less money to go around – and the city’s financial future is looking shaky. For Bowser, some social services will only survive if D.C. can find other sources of revenue to sustain them. But At-Large Councilmember Robert White pushed back on Tuesday, saying that past efforts to focus primarily on economic growth had displaced many Black residents.

"We’ve got to be really clear: we can’t repeat the mistakes of the past," White said. "We can see revenue growth without pushing people out."

Progressive groups are pushing for the council to instead increase capital gains taxes on wealthy residents and beef up taxes on homes worth more than $1.5 million. Bowser, though, is dead set against any tax increases, arguing that only attracting new businesses to the city will offer a path back to sustainable growth – and funding for social programs.

"What we cannot do is suggest that we can only pay for programs that keep getting more expensive while also not increasing jobs and revenue we have,” Bowser responded to White. “What happens is you overtax your residents to the point they ask, 'Why do I live here?’”

D.C.’s fight with Congress is ending less dramatically than expected

The sky won’t fall over D.C. after all.

That it would was the foreboding message D.C. officials loudly expressed back in March, when Congress unexpectedly forced the city to cut $1.1 billion from its current 2025 budget. Lawmakers warned that such a harsh reduction would force steep spending cuts, necessitating a reduction in services and furloughing or laying off city government workers. While the Senate quickly worked to correct what many said was a simple mistake, the House has since failed to do the same. 

But city officials struck a less alarmist tone on Tuesday, saying the total tally of cuts ultimately only amounted to $347 million (the total local budget is more than $11 billion), and that no furloughs, closures of government facilities, or cuts to critical services would be coming. They reported that a combination of cost-savings within the government (largely hiring and spending freezes) along with some clever financial maneuvering had eliminated the need for more painful cuts.

“We have blunted what could have been a catastrophic situation for city services this summer,” said Bowser. 

That a potential budget bang ended with something of a whimper is of course good news for D.C., but it also raises a question I asked: Did city officials needlessly sound an alarm about dramatic spending cuts that never came to pass? Not so, they say. 

“Had we done this faster and not going through the painstaking details, we would not have been able to say no furloughs or facility closures,” said a senior D.C. official on background, adding that they scrutinized thousands of individuals contracts and hiring decisions to “make sure we had enough money to pay bills and not break the government in the process.” Furloughs, the official said, were only taken off the table at the last minute.

There’s still hope that the House could come back and fix the problem it caused; Speaker Mike Johnson has repeatedly said he intends to do just that. City officials say they would welcome it, but also are prepared if they don’t. 

Other legislative changes tucked into the bill

The budget isn’t just spending plans; it also often contains significant policy changes as well as hopeful (or head-scratching) initiatives that may or may not come to pass. Some of these are proudly touted by city officials, others are quietly shoved into sprawling legislation that accompanies the budget.

• A new D.C. Jail… eventually: There’s little question that the D.C. Jail is in terrible shape. A new audit released Wednesday added to the evidence, finding that the deteriorating facility saw more than three times the number of inmate deaths than the U.S. average. City officials have pledged to build a new jail for years, but this week they said the cost had ballooned to $1.4 billion and could take up to a decade to complete. Instead, Bowser now says she wants to have a private company build the new jail for D.C., which would then lease and operate it. It remains how quickly such an arrangement could be finalized and when a new facility would be completed, but city officials expressed optimism that it would be faster than the city financing the construction itself.
• (Don’t) hold the phone:  It’s been 20 years since D.C. adopted a law prohibiting anyone from talking on a phone as they drive, and levying a $100 fine if you get caught for it. Now Bowser wants to broaden the law to account for the many changes to our devices since then. Her proposal – which was included in the package of legislative changes that accompanies the budget – would prohibit drivers from using pretty much any mobile device (including handheld game consoles), clarify that the ban on phone use extends to texting, and make it illegal even to hold a device while driving whether or not it’s being used.
• So long, streetcar?: The D.C. streetcar was always somewhat doomed. When service kicked off along a 2.4-mile stretch of H Street NE back in 2016, it was already years late, tens of millions of dollars over budget, often stuck in traffic – and it represented only a fraction of what some initially envisioned as a 37-mile network across the city. It could soon be a relic of the past: Bowser wants to phase out the streetcar by 2029 and replace it with what she calls a “next generation streetcar that doesn’t require fixed tracks.” If that sounds like a bus to you, it kinda is – albeit one that will run on the electric power lines currently used by the streetcar. (Here’s an example.) It remains to be seen what this new service would look like, but Ward 6 Councilmember Charles Allen is already worried that unless it’s made part of Metro’s broader network, it could eventually suffer the same fate as the D.C. Circulator (RIP).  

Budget bombs may be yet to come

The council debate over Bowser’s proposed budget has now started, but whatever work lawmakers get done over the next month could well be upended by forces beyond their control.

At the end of June, the city’s chief financial officer will release a quarterly revenue estimate, the document that spells out how much revenue the city has taken in relative to prior estimates and what the revenue forecasts for years to come look like. Bowser’s budget was built on the last revenue estimate issued in late February, so any downward shifts in June’s estimate could force the council to consider more cuts than what Bowser has already baked into her proposal.

And then there’s the massive reconciliation bill on Capitol Hill. While the House-approved version did not include any of the worst Medicaid cuts or changes that would have saddled D.C. with up to $2 billion in additional costs a year, it remains to be seen what the Senate does with the bill. 

If you want to read the budget documents yourself, everything is here. The D.C. Council’s Budget Office also keeps an updated page of all the budget-related documents it obtains. And if you want to participate in the process yourself, you can testify at any of the oversight hearings. The full schedule is here.