Carol for Council

1005 7^th Street, N.W.
Washington, DC 20001
(202) 737-7337
Web site: www.carol2000.com
E-mail: carol@carol2000.com

Councilmember Carol Schwartz’s responses to D.C.C.C. PAC Election Year 2000 Candidate Questionnaire, July 28, 2000.

1. Taxes and Business Incentives

a. The 1999 Tax Parity Act, which reduces corporate franchise and real estate taxes thus beginning to put the District business climate on an even footing with that of surrounding jurisdictions, is of key importance to District businesses. Economists predict that District tax revenues will begin to fall starting FY 2001. How will you balance the importance of tax parity to District business against the city’s revenue requirements?

During my two terms on the Council, first from 1985 to 1989 and again since 1997, I have worked – with, I think, notable success – to achieve greater tax parity with our neighbors in Maryland and Virginia. In my first term, I was able to get our personal income tax rate lowered from a far-too-high 11 percent to a still-too-high 9.5 percent, and I introduced legislation that brought the inheritance tax closer in line with other states. With legislation I introduced last year, I got the ball rolling on tax reform. The Council ultimately passed a package of tax reductions – approved by the Mayor, the Control Board and Congress – that is not only making D.C. more competitive for new residents, jobs and businesses, but also helping to keep those that we do have in the District from relocating to the suburbs.

My "Tax Reduction Amendment Act of 1999" also addressed sales tax rates. The District loses too many shoppers – and too many sales – to stores in the suburbs. My legislation called for decreasing the general sales tax, bringing it closer in line with rates in Virginia and Maryland, and eliminating the sales tax entirely on articles of clothing costing $100 or less per item. By removing the tax on lower-priced clothing and shoes, we would provide our retail stores with a unique marketing tool to help attract more shoppers, who, while making tax-free purchases, also might buy higher-end items that are taxed. While this component of my legislation was not part of the final package of reductions, I re-introduced a similar version for this past budget cycle.

Tax relief and tax incentives do not provide additional revenue immediately, but I strongly believe that if we responsibly and selectively reduce tax rates – as we have and will continue to do, in spite of the opposition from the Mayor – the resulting increase in tax volume will, over time, more than make up for rate reductions.

To ensure that our future revenue demands are met, we must first do all that we can to help ourselves. On the Council, I have done my best in this regard. As a result of legislation I introduced, we now have free parking downtown on Saturdays and in the evenings to spur additional shopping – and revenues – in the District. I have supported and sponsored incentive tax reductions to lure businesses to the District of Columbia, and I co-sponsored the "New E-Conomy Transformation Act of 2000" to assist in transforming the District's economy by encouraging high technology companies to locate here. I co-sponsored the Tax Increment Financing (TIF) legislation, passed by the Council three years ago, and other such incentives designed to promote economic development across the city. I supported legislation to improve the business climate in the District by bringing workers’ compensation benefits into closer parity with Maryland and Virginia, and through my amendment to the legislation, we now have a reasonable cap on the duration of such benefits. Also, as Chair of the Committee on Public Works and the Environment, I have secured additional funding specifically to improve basic government services that will attract new residents who will contribute to a broader tax base for the city, and to a larger customer base for city businesses.

Beyond what we can do for ourselves and by ourselves, the most essential element needed to stabilize the District's revenue picture in the near future is addressing a new fiscal relationship with the federal government. In the 1990s, we had an economic awakening on both the local and national levels. Locally, we awoke to the fact that our fiscal structure was dysfunctional and a principal reason for the District’s financial woes. Unlike other cities, we cannot turn to a state for help. Moreover, the federal presence narrows the District's property and sales tax base and restricts the District's ability to raise revenue and inadequately compensates our city for the cost of those restrictions. The federal government must acknowledge and fully undertake its responsibilities to the District of Columbia. If I am re-elected to the Council, I will continue to push for a fair arrangement with the federal government that works to the benefit of our businesses and residents and to the benefit of our city’s fiscal health.

As is obvious from all of the above, I have always balanced the importance of tax parity against the city’s revenue requirements.

b. The many Chamber members are small businesses providing vital services to District neighborhoods. Would you support a $2 million corporate franchise tax minimum filing threshold that would benefit small corporations and family businesses?

I support the $2 million corporate franchise tax minimum-filing threshold to both encourage and benefit small corporations and family businesses. Attracting and nurturing these small businesses is not only an important component in our continued economic recovery, it is also an essential element in our efforts to revitalize neighborhoods across the city. Going back to my Council term in the 1980s, I have long been an advocate for using tax incentives to attract and strengthen small businesses, and also to bring larger businesses such has grocery stores to underserved areas. Tax Increment Financing (TIF), Enterprise Zones and other such incentives I have supported over the years are designed to promote economic development throughout the city, and I think that the $2 million filing minimum would be a strong addition to the enticements that we have already instituted.

c. The DCCC has proposed that the City designate certain areas of the city as tax freeze zones. Such legislation would fix the real property and franchise tax liability of firms making new investments in the area to their current levels for a period of five years. Do you support this legislative proposal? If so, how do you envision this plan working to attract business, such as technology firms, to our enterprise zones? If not, what is your plan to attract and retain businesses in underserved areas of the city?

I endorsed the Corporate Headquarters Tax Credit legislation and the New York Avenue Real Property Tax Freeze legislation. I think these bills, which the Council passed but the Control Board rejected, would have helped to attract major corporations to our city. I still believe that programs similar to those that would have been created by these bills are a good approach to attracting technology firms and other corporations to our federal Enterprise Zones, and I intend to support legislation in the future that would establish such programs. I also think that the federal Enterprise Zones, which I have promoted since my first term on the Council, should be expanded. The current lay-out of the existing zones can pit neighborhood against neighborhood. For example, one side of U Street, N.W., is in an Enterprise Zone and the other side is not. I have talked to members of Congress about this concern and will continue to lobby for expanding the Enterprise Zones.

Also, to attract and retain businesses in underserved areas, the city must do more to promote the use of Tax Increment Financing (TIF) in these areas. Under current law, the opportunity for TIF financing is scheduled to expire on January 1, 2003. It would be a tremendous shame if good opportunities for economic development in underserved communities are lost due to a lack of strong efforts aimed at bringing development to these areas.

a. Will you advocate for and vote in favor of an increase in the District contribution to The Washington, D.C. Marketing Center budget which currently is far smaller than that made by surrounding jurisdictions to their marketing organizations?

I think that the entities charged with marketing the district as "open for business," such as the Washington DC Marketing Center, should be adequately supported, and I look forward to receiving a comprehensive analysis of its funding needs and its goals. I hope to see better coordination by the Washington DC Marketing Center with other agencies that share the purpose of promoting the District as open for business, such as the Office of Local Business Development and, in a larger sense, the Executive Office of the Mayor. I also hope that while we are promoting the District as a good place to do business, we take advantage of the opportunity to promote our city in all other aspects, particularly as a good place for people to live and, as a result, become tax-paying citizens.

We have seen some improvement in the way our city aids and assists new and existing businesses, but much more needs to be done. I have heard repeatedly of the frustration business owners and new entrepreneurs have experienced as a result of the Department of Consumer and Regulatory Affairs’ (DCRA) all-too-frequent inability to efficiently issue licenses and permits, in spite of the Council voting to increase funding to streamline DCRA licensing operations. This inefficiency essentially creates a hidden tax on businesses because they often must hire someone to expedite their transactions, or spend long hours navigating the myriad processes themselves. The Council has provided additional support to improve the DCRA’s performance. However, it is ultimately the job of the Executive Branch to ensure that improvements are indeed implemented.

In addition to eliminating unnecessary and costly licensing and permitting procedures and regulations, I strongly support the creation of a "one-stop shopping" mechanism to streamline licensing and permitting procedures. If we can accomplish this through the establishment of business constituent/concierge services, then I would be supportive.

4. Technology

a. What are the top three strategies you will employ to attract technology entrepreneurs to the District? What sources have you used in formulating your approach?

Virtually everyone who is interested in the District’s continued financial recovery and future prosperity is on the same page when it comes to attracting new technology entrepreneurs and existing firms. We want them, and we feel as though we have a lot to offer them.

As I mentioned in my response to your first question, I co-sponsored the "New E-Conomy Transformation Act of 2000." This bill produces numerous tax and other incentives aimed at attracting technology firms to the District, including reducing the corporate tax to six percent for qualifying e-commerce companies, and exempting companies that locate in high-technology zones from the corporate tax for up to five years. It also provides for tax credits to help pay for employee relocation costs and wages paid to qualified employees, real property tax abatement for companies that make improvements to certain existing buildings that these firms might occupy, and a partial exemption from the personal property tax.

The tax and other incentives created by the "New E-Conomy Transformation Act of 2000" top my list of strategies to attract technology entrepreneurs to the District of Columbia. Second, we – the government and the private sector – must aggressively market the District as a prime location for technology firms to locate, spreading word across the country and around the globe of the District’s recovery and of its improved business climate. Third, we must look locally to help the talented individuals and start-up businesses that are already right here in the District take advantage of our economic development clusters, and create a market for the services they offer and the goods they produce. In addition, we must focus on producing a local workforce that is fully prepared to staff these companies.

In formulating my approach, I look to my experience as an elected official who keeps close tabs on economic trends, and to the expertise of the many people I come into contact with as a Councilmember, and as First Vice Chair – and soon-to-be Chair, if I am re-elected to the Council – of the Metropolitan Washington Council of Governments. The District is fortunate to have a wealth of talented and knowledgeable people who are willing to get involved, and I am always willing to listen to what they have to say.

a. A business interest proposes redevelopment of a site for a particular business use which will bring needed services as well as tax revenues to the District. The proposed development is "of right" but involves an alley closing which the neighboring residential community opposes on grounds of increased density will harm traditional residential uses. The proposed alley closing comes before D.C. Council for approval. What criteria would you use in deciding whether to approve or deny the requested alley closing?

On all such decisions – from the biggest ones, such as the construction of a new convention center at Mount Vernon Square (which I supported), to the smallest ones – I will continue to reasonably balance the interests of nearby residents with the city’s need to attract new businesses and new jobs. This has always been my approach.

6. Education and Workforce Development

a. What is your plan for holding the DC government and public schools accountable for helping students from all backgrounds reach higher academic standards?

The Council, which has fully funded the District of Columbia Public Schools budget for the coming year and has increased its budget over the last several years, will continue in its oversight role to ensure accountability on the part of the DCPS administration. DCPS’s success in helping students from all backgrounds achieve higher academic standards depends largely on its ability to achieve sound financial management. DCPS must become more efficient and reinvest resources on its most important asset, the children. DCPS' procurement and financing systems must be restructured to make it possible to track spending and deliver books and supplies to the classroom on a timely basis. The procurement contract negotiations process is also in need of major overhaul to assure that wasteful practices are eliminated and that we obtain the best possible services, products and fair prices. Guidelines must be established to ensure that programs to address the needs of impoverished students are meeting their goals, and DCPS must be able to take swift corrective action when a school is in crisis. We must continue to work on reducing school violence and on reducing crime, so that our children are safe when they are inside school buildings and when they are going to and from school.

Going back to my days as a parent of three children who attended only the DC Public Schools and as a member of the DC Board of Education (1974-1982) to my current role on the Council as a member of the Committee on Education, Recreation and Libraries, I have advocated that the curricula in our schools be updated and adapted to meet the changing needs of the workplace. Also, too many students fail to take full advantage of the educational opportunities presented to them because they do not understand the connection between their performance in school and their future economic well-being. Improved communication could go a long way toward alleviating this problem, and I think this is where government could play a constructive role in bringing school and government officials together with business representatives to expand individual apprenticeship programs, mentoring and internship opportunities for students.

The critical shortage of quality teachers, which affects school systems across the nation, has been a legislative focus for me during this Council period. I introduced one bill, which is now law, that authorizes paying signing bonuses to new teachers, and another bill to make teachers eligible for low-interest loans to purchase homes in the District. If I am re-elected, I will continue to seek out solutions to the myriad problems that our public schools face, knowing full well that improving the quality and reputation of the school system is critical to our future economic health.

b. Do you feel that traditional public schools should move toward becoming charter schools? If so, would you support more charter schools that train students in various business trades, i.e. hotel and hospitality?

I believe that parents and students want choice in educational programs and that public charter schools can provide a variety of attractive options in public education. I do not, however, believe that there should be a wholesale move of traditional public schools becoming charter schools. Traditional schools are still needed to provide a balanced education for our children, and they should be a large and ever-present part of choice in education. At these traditional schools, I do support a greater movement toward school-based budgeting and management, which is an attribute of charter schools that can work very well in the traditional school setting.

I certainly encourage the creation of public charter schools with diverse educational programs, such as training students in business trades, so long as they are centered on the same mission – giving our students an excellent basic education, and preparing our city’s children to lead productive working lives and to contribute positively to our community.

c. What is your plan for getting the DC business community more involved in the development of District-funded workforce development systems (both public schools and other training)?

I appreciate what business and industry have done for our schools, such as providing computers and other technology and by adopting individual schools. I think this is a win-win situation for the business community and for our schools, and I want to see such activities fostered and expanded. I support expanding apprenticeship programs such as the ones at the convention center. I am also very excited about the educational programs being implemented with the participation of businesses, such as the hospitality industry program at Roosevelt High School and the culinary arts programs at Eastern High School and Anacostia High School. These are precisely the type of cooperative efforts needed to enhance the skills of our future workforce.

If I am re-elected to the Council, I will continue to encourage greater cooperation between the business community and the Department of Employment Services in conducting job training for our young people, particularly the economically disadvantaged. I believe that the DC business community can be one of the most important resources we have to offer our schools in the preparation of our young people for the workplace.

Paid for by the Committee to Re-elect Carol Schwartz, Edward Hayes, Treasurer, 1005 7^th Street, N.W., Washington, DC, 20001.
A copy of our report is on file with the Director of the Office of Campaign Finance.