WASHINGTON - Mayor Sharon Pratt Kelly is expected within the next several weeks to propose a reform package designed to "democratize" the District of Columbia, including a controversial plan for a commuter tax, the mayor's spokesman said this week.
Vada Manager, the spokesman, said the proposals will be completed by mid-December.
Though the tax plan has not been finalized, suburban jurisdictions have threatened economic warfare against the city if the levy is imposed. They have warned they will step up efforts to get district-based businesses to relocate to the suburbs in retaliation for the tax.
But before the district could impose the tax, it would have to get approval from Congress, an uncertain proposition.
The commuter tax, technically known as a nonresident reciprocal tax, would allow the city for the first time to tax income earned in the district by workers who live elsewhere. Such a levy would raise about $1 billion annually at current city tax rates, district officials have estimated.
Manager said three options for a commuter tax are under consideration: assessing a flat fee on nonresident workers, assessing current district tax rates on their incomes, and assessing home-state tax rates on their incomes.
According to Manager, imposition of the levy need not increase the taxes of suburban dwellers. "They would end up paying about the same amount of tax, but instead of paying it to [suburban jurisdictions], they would pay us," he said.
Under the city's limited home rule charter, the district is prohibited from imposing a commuter tax. Past attempts to lift the ban have been defeated in Congress, largely because of opposition from Virginia and Maryland lawmakers.
The reform package being readied by the Kelly administration will be designed to increase the city's autonomy, such as empowering the district to choose its own prosecutor and attorney. Though city residents were given the right to elect their own mayor and city council members in the mid-1970s, the district government in some respects has less say in local affairs than does the federal government.
For example, legislation approved by the council must be reviewed by Congress before being allowed to go into effect, but the city is limited to one nonvoting delegate in the House of Representatives. Violations of district law are prosecuted not by a city prosecutor, but by a U.S. attorney appointed by the President.
In addition, the city's budget often becomes a political football. The city's fiscal 1993 budget, in addition to being stripped down in Congress, was used by Sen. Richard C. Shelby, D-Ala., as a vehicle for forcing the city to hold a referendum on whether to allow the death penalty. Voters overwhelmingly rejected the referendum this month.
The distriet also is hurt financially by the presence of the federal government. The city is unable to tax property held by the federal government or foreign embassies, reducing the district's tax base by about 50%. The tax base is further hurt by a congressionally imposed limitation on the height of buildings in the city, which cuts down on the amount of office space on the district's tax rolls.
Unlike President Bush, President-elect Bill Clinton supports statehood for the district. Consequently, city officials believe they now can gain greater autonomy for the distriet, if not statehood, giving rise to Kelly's forthcoming reform package.