The District’s chief financial officer announced that tax receipts increased by an estimated $36 million above earlier projections for this fiscal year. He upgraded his estimate for the fiscal year that began yesterday by $49 million, to $6.3 billion in locally generated tax receipts. He said these surpluses have materialized despite uncertainty that still clouds the national and local economies. The potential downsides appear to be outweighed by the District’s population growth which has created a windfall in individual income taxes. Individual income taxes accounted for $42 million of the $49 million increase.
All this is generally good news, but there are a couple of things to note. First off, there is nothing that says these surpluses are permanent. Secondly, a separate report indicated that 25% of the individual income taxes paid in the District in 2011 were paid by federal employees. The federal government and its budget are going to be under considerable pressure for the foreseeable future. We are more likely to bleed federal employees than gain them. This adds urgency to the District’s moves to diversify its economy. We need to move more aggressively to stimulate the tech sector and adopt new technologies like additive manufacturing.