A couple of hours before the DC Council completed the final step in its budget process, approving unanimously by voice vote the Fiscal Year 2025 Budget Support Act — with amendments — one member sighed, “We made it through.”
No one in the legislature should be relieved.
Councilmembers have made a mess of the city’s finances. Their plan spends every penny — including $25 million of the $40 million settlement from the false claims lawsuit brought by the DC Office of the Attorney General against Michael Saylor, the former CEO of MicroStrategy who had avoided paying local taxes by asserting he didn’t live in the city.
Interestingly, Council Chair Phil Mendelson had lamented two weeks ago, after the first vote on the FY 2025 Budget and Financial Plan, that Chief Financial Officer Glen Lee was allowing the legislature to tap only $2 million of those funds. That wasn’t accurate, a CFO spokesperson told me via email.
In fact, Mendelson had been given authority to use $9 million of the settlement money. Ultimately, he and his gang of spendthrifts got much more.
To the very end, councilmembers were divvying up public money as if it actually does grow on trees while passing laws that jeopardize the fiscal health of many individual residents, including senior citizens, and District businesses, especially small companies, many of which are minority-owned and -operated.
While at-large Councilmember Robert White has called for fiscal and program reforms, he and others approved a BSA that mandates the CFO create a new agency within the financial system and reallocate funds “necessary to implement the Reparations Foundation Fund.” Ironically, that action came as they swept a host of existing accounts, in a stealing-from-Peter-to-pay-Paul scenario. Money that was being set aside for things like maintenance of the West End Library and adjacent fire station, the Inspector General’s Support Fund and health benefit fees was snatched and dumped in the general fund.
Councilmembers also expanded the CFO’s ability to tap money for cash flow problems. Maybe they realize the budget they have produced will exacerbate more than a few such issues. So not only can Lee use the Housing Production Trust Fund as long as he replenishes it within the same fiscal year, he can now similarly use the slush fund Mayor Muriel Bowser and Mendelson have created by burdening employers with a higher tax under the false claim of paying for family leave.
Somebody somewhere in this city is channeling Marvin Gaye: “Oh, make me want to holler /
And throw up both my hands / …The way they do my life.”
Can private-sector employers file a false claims lawsuit against the District government?
And speaking of fake solutions: Mendelson and his chair pro tempore, Kenyan McDuffie, presented an amendment to the BSA designed to assuage complaints by small businesses around a new sports wagering model aimed at currying favor with billionaire team owners who have presented themselves as victims of an illusory monopoly; they apparently are among the most recent members of the grievance brigade popularized by former President Donald Trump.
The District’s initial sports wagering law provided that only sports team owners could hold Class A licenses. Only sports team owners could create and operate a separate app for sports betting within a two-block radius of their own venues. Only sports team owners could set up betting lounges at their local arenas and stadiums or anywhere within that same two-block radius. All those benefits would apply to the Commanders owner should he decide to build a new stadium in DC.
I’m having trouble seeing any genuine disadvantage for Ted Leonsis and other members of the big money club.
Small businesses, many of them Black-owned, got the crumbs. They were allowed to have kiosks in their establishments through which bets could be placed. The money brought in through that arrangement was miniscule — $20,000 here, maybe $100,000, according to numbers quoted by one councilmember.
The Mendelson-McDuffie new sports wagering model continues the inequity.
Sports team owners will be able to operate their apps throughout the entire city, competing against the District and potentially depriving it of much-needed revenues. The legislation incorporated in the BSA immediately drew objections for jeopardizing the meager earnings of small Black businesses.
This week, McDuffie introduced an amendment that would require in part that Intralot, the primary lottery and sports betting contractor hired by DC, continue to provide kiosks for online betting. That seems ludicrous since Intralot has entered into a subcontract with FanDuel to handle mobile sports betting as a replacement for the city’s beleaguered GambetDC app.
FanDuel has said that it will terminate its contract with Intralot if the city moves forward with opening up the market to other mobile platforms. That means things would essentially be back to square one.
Except, while the CFO submitted legislation on June 11 that would provide for a two-year extension of Intralot’s contract as the city’s lottery and gaming operator, McDuffie has indicated that he intends to block the request, according to sources.
McDuffie did not respond to my request for a comment about his apparent willingness to push out Intralot and its subcontractors.
CFO Lee’s spokesperson also did not respond to my request for a comment about McDuffie’s plan to block the contract extension and the potential adverse impact such a move may have.
This much is clear, however: Small businesses remain at risk.
McDuffie’s amendment mandates that if one sports betting licensee refuses to provide a retail kiosk, the lottery office, overseen by the CFO, must ensure one is provided by another licensee within 15 days.
That click you hear is a lawyer dialing the DC Contract Appeals Board to get details on how to file a complaint when the government has attempted to impose a material change to a contractual agreement.
Equally problematic, McDuffie’s amendment dictates that upon expiration of the city’s lottery contract, the city “shall continue the program under terms prescribed in rulemaking or statute.”
That is such a disingenuous provision. Isn’t McDuffie trying to terminate the Intralot contract sooner rather than later? Doesn’t that mean small businesses will be back knocking on the doors of the John A. Wilson Building, fighting for a few crumbs from the feast-filled tables set for billionaire sports team owners by Mendelson, McDuffie and other councilmembers?
Ward 5’s Zachary Parker was the only councilmember to vote against McDuffie’s amendment. Ward 1’s Brianne Nadeau voted present, which essentially means she recognized the problems but lacked the courage to do the right thing. Ward 7’s Vincent Gray was absent.
Pouring salt in that wound while continuing its stellar execution of government waste, fraud and abuse, the council increased the cap on the amount of money they can spend for “official reception and representation activities” from $100,000 to $150,000. In other words, they expect to party hard on your dime.
To be fair, not every council-made decision was bad. Understandably it restored funding for some programs — including education and affordable housing, which were victims of Bowser’s undisciplined budgeting process that included deep cuts with a sort of slash-and-burn approach that frequently came without sufficient reasonable explanations.
Nevertheless, Mendelson and his colleagues do not deserve laurels. The budget may be balanced but it certainly isn’t responsible.
It is, however, the glide path most of the councilmembers hope will ensure their reelection this year and into 2026. That’s when Mendelson is expected to face opposition from the far-left wing of the local Democratic Party and McDuffie is rumored to have his sights set on the mayoral suite.
Here’s the quintessential question: How will District voters respond after witnessing the indisputable decline of the government under the leadership of the current elected officials?
jonetta rose barras is an author and DC-based freelance journalist, covering national and local issues. She can be reached at thebarrasreport@gmail.com.
