Issue
Budget, Taxes & Federal Workforce
DC lost ~22,000 federal jobs in 2025. Out-year revenue is now projected $342M/yr lower.
Quick takeWhat you need to know
What you need to know
- DC lost about 22,000 federal jobs in 2025.
- Bowser's FY27 budget faces a $1.1B deficit; DC Council's first vote is expected June 9, 2026.
- Congress overrode a DC tax law (PL 119-78) on Feb 18, 2026 — the first such override on record.
Federal civilians make up roughly a quarter of DC's nonfarm employment — more than ten times the national average. In 2025, DC lost about 22,000 federal jobs, and the broader DMV region lost roughly 54,000. The OCFO's February 2026 revenue estimate revised FY26 local revenue up $75M but cut the FY25–FY29 out-year forecast by an average of $342M per year. Downtown office vacancy stood at 19.7% at the end of 2025; commercial property values are projected to fall $10.2B (15.4%) since 2020, costing roughly $464M in property-tax revenue over three years. The FY26 DC budget totals $21.8B. Congress overrode DC's tax-conformity bill in February 2026 — the first such override in 50+ years of Home Rule.
What's at stake
Tax base shrinking from above and below
Federal RIFs are removing high-income earners; office vacancy is destroying commercial property assessments. Both feed the long-feared 'doom loop' even as headline FY26 income-tax withholding has held up.
Congress can now strike tax laws
PL 119-78, signed Feb 18, 2026, was the first congressional disapproval of a DC tax law on record. Future DC tax legislation faces a precedent that didn't exist before.
Reserves are larger than they look
DC's four reserve funds (Contingency, Emergency, Cash Flow, Fiscal Stabilization) ended FY24 with $1.572B in fund balance. That's a real cushion — but it cannot absorb a multi-year $300M+ structural revenue cut.
PowerWho decides
Who decides
- DC Chief Financial Officer (Glen Lee)Independent of Mayor and Council. Issues quarterly revenue estimates and certifies the budget.
- DC Council Committee of the WholeFinal budget authority before it goes to Congress. Chair: Phil Mendelson (D).
- U.S. House and Senate Appropriations CommitteesApprove DC's local budget as part of federal appropriations; can attach riders that block specific DC spending (e.g., the Harris cannabis rider).
- Office of the President / OPMDrives federal RIFs, return-to-office rules, and contracting policy that determine roughly a quarter of DC's labor market.
Who decides
- DC Chief Financial Officer (Glen Lee)Independent of Mayor and Council. Issues quarterly revenue estimates and certifies the budget.
- DC Council Committee of the WholeFinal budget authority before it goes to Congress. Chair: Phil Mendelson (D).
- U.S. House and Senate Appropriations CommitteesApprove DC's local budget as part of federal appropriations; can attach riders that block specific DC spending (e.g., the Harris cannabis rider).
- Office of the President / OPMDrives federal RIFs, return-to-office rules, and contracting policy that determine roughly a quarter of DC's labor market.
Recent moves
- Council passes FY27 budget with $150M reserve injection — secures +$60M childcare pay equity, +469 housing vouchers, +$2M violence preventionDC Council ↗
- Mendelson identifies ~$420M in potential FY27 funding from reserves and tax-code changesWJLA ↗
- Mendelson: CFO is holding ~$160M in reserves from blocked tax decoupling; signals fight to spend itGW Hatchet ↗
- Council budget hearings wrap May 12; first vote on FY27 budget expected June 951st ↗
- Bowser presents FY27 budget: $469M cuts + ~$100M tax increases to close $1.1B deficitMayor's office ↗
- OCFO February 2026 revenue estimate: FY26 +$75M, out-years −$342M/yrOCFO ↗
- Trump signs PL 119-78 — first DC tax law overridden by CongressCongress.gov ↗
- Census revises DC's 2024 population down 11k; 2025 growth slows to 0.3%DC Policy Center ↗
- Council gives final 11–2 approval to $3.8B Commanders / RFK stadium dealCommanders / DC Council ↗
- Council passes $21.8B FY26 'Grow DC' budget on first readingDC Council Budget Office ↗
- OTR: TY2026 commercial property values fall sharply; ~$464M projected revenue loss over 3 yearsMyTaxDC ↗
AskQuestions to put to candidates
Questions to put to candidates
- How would you close a $342M/yr structural revenue gap without raising local taxes?
- What is the right level for DC's rainy-day reserves given federal-workforce exposure?
- Should DC challenge congressional disapproval of its tax laws in federal court?
Questions to put to candidates
- How would you close a $342M/yr structural revenue gap without raising local taxes?
- What is the right level for DC's rainy-day reserves given federal-workforce exposure?
- Should DC challenge congressional disapproval of its tax laws in federal court?