It’s that time again--the 2012 Chamber Lobbying Days are going on this week. Members have already read about this effort in our emails earlier in the week, but it’s important that everyone know what the Chamber is doing on behalf of the DC business community. Lobbying Days is one of our most effective efforts in terms of getting our voices heard in the halls of the Wilson Building, and the support of the Chamber members who are participating deserves some recognition as well.

In separate sessions on Wednesday and Thursday, we’ve been meeting with Councilmembers to discuss the issues that are of critical importance to DC businesses, large and small. In particular, we’re been impressing upon the Council the importance of keeping new taxes and fees out of the Fiscal year 2013 Budget, as in the Mayor’s proposal.

As I’ve said in this space previously, we applaud the Mayor’s decision in his proposed budget to refrain from adding to the tax burden on DC businesses. However, we’ve got to remain vigilant through the budgeting process to ensure that this intelligent policy is actually carried out. If we don’t keep a close eye on things, and make sure the voices of the DC business community are heard loud and clear, we could end up with a very different budget than what we started with--and with items not conducive to business growth and development.

Hopefully, you’re already following us on Twitter (handle: @dcchamber)--and if not, now’s the time to become a follower. We’ll be posting updates from Lobbying Days as well as all of our events and initiatives on behalf of DC business.

The DC Chamber of Commerce is happy that the Mayor found a balance in the new District Budget between looking to help those who need the most help, and the fact that in the past two years DC businesses have seen taxes and fees increase across the board. This budget has no new taxes, and while we're still reviewing the fees and fines, they generally seem to be focused on actions that will raise revenue.

We look forward to working with the Council to make sure that all necessary programs are funded, and that everyone can enjoy living, working and doing business in the District of Columbia over the coming years. We are also hopeful that with the lack of new taxes on businesses in this Budget, we will see an increase in employment here in the District. We have always stated that if you allow businesses to reinvest their profits back into their firms, they would employ more people. This is the first time in years that we're giving them that chance.

The District of Columbia runs on its businesses. It is business that brings jobs to the community and provides the amenities that make our neighborhoods vibrant and attractive places to live--and it is business that delivers a significant portion of the tax revenue that funds our municipal budget. Over the past decade, the city collected a total of $3.3 billion in corporate taxes, and in the coming year, business will bear an even larger share of the tax burden. Take a look at the following facts, from the District Government’s Chief Financial Officer:

• District businesses are expected to pay $388 million in franchise taxes in Fiscal Year 2012

• District permits fees and fines are expected to reach $107 million in FY12

• FY12 deed transfer, recordation and economic interest taxes could reach $315 million

• District businesses are expected to collect $1.046 billion in sales tax in FY12

It all adds up to nearly $2 billion in taxes and fees to be collected in FY12. That’s a lot of tax revenue, courtesy of DC’s business community. Meanwhile, the city has reported surpluses in FY11 and the first two quarters of FY12, while at the same time asking businesses and residents to contribute even more, through a series of new taxes and fees.

DC businesses are subject to a tax rate of 9.975%--among the highest in the nation, with the national average being 6.6% and Virginia and Maryland assessing taxes at 6% and 8.25% respectively. There is little incentive to conduct business in the District, due to the high tax rate compared with our neighbors. Our city is ranked 51st out of 51 in terms of small business friendliness--dead last. That’s not a statistic to be proud of! The District’s tax structure is a major contributing factor to that ranking, which is why we are most anxious for the newly-formed Tax Revision Commission to move quickly with their work to overhaul our tax structure. We at the Chamber are dedicated to working with the Commission in achieving this goal.

The District should take a close look at its priorities, and adopt policies that encourage business growth. Otherwise, future development will slow to a crawl--which ultimately hurts tax receipts. If the existing revenue is not enough to cover the District budget--which has increased by $1 billion since 2008--maybe it’s time we look at how that revenue is being spent, instead of how we can collect yet more from the pockets of DC’s beleaguered businesses. Millions of dollars could be saved through consolidation and streamlining of city programs, making the District run more efficiently overall. This is where we should be looking in order to balance our budget, not towards new taxes and fees. It is time to spend more effectively--and not just spend more.

It is of paramount importance for our City to project an image of fiscal responsibility, and the DC Chamber of Commerce will continue to do everything in our power to make the District an attractive place to do business no matter the economic climate.  Making DC a great place to do business, put residents to work, and grow our neighborhoods and communities can only be accomplished with proper fiscal management and restraint.

We call for Mayor Gray to exercise some fiscal responsibility, and refrain from spending any surplus, especially when the CFO has projected further shortfalls in revenue for fiscal year 2013 of over $100 million.  However, we at the Chamber would go even further; it is our contention that rather than simply banking the money, it should be used to revoke the recent income tax increase placed on residents and the new business taxes put forth in the FY12 budget.  It is time for the government to rein in spending instead of squeezing residents and businesses.

A further point for consideration--rescinding the tax hikes will inevitably lead to more business in our City and more jobs and opportunities for DC’s residents.  Currently (as pointed out by Mark Lee in his Our Business Matters column in the Blade), Virginia is reaping the benefits of being the metro region’s “sole business-friendly jurisdiction,” with a corporate income tax rate of 6%--significantly lower than Maryland’s 8.25%, and a far cry from DC’s 9.975%.  How can we expect growth in this City, when we foster such an anti-business climate?  And how does it help us to do so, when it’s business that provides the vast majority of tax revenue, jobs, and neighborhood amenities residents need and deserve in the first place?  It’s a self-defeating philosophy, and one the DC Chamber has, is, and will always be against.

Our city has played host to hundreds of uninvited guests for months now, and it is well past time that this illegal protest moves on. The DC Chamber fully supports Mayor Gray’s assertion that McPherson Square should be cleared immediately.

As the DC Department of Health points out in a recent report, the Occupy DC protest represents a serious public safety and health concern--not just to District residents, but to the protesters themselves. Campers, and members of the public, are at risk for hypothermia, food-borne illness and communicable disease, and the occupation has caused a major rat infestation.

Furthermore, Occupy DC has become a burden on our city’s economy. We have been shouldering the cost of this protest, which was estimated at over $1.6 million a month ago. Beyond the cleanup costs, businesses are also losing customers, while nearby retail and office space declines in value. This hurts District businesses and residents--all a part of the “99 percent”--and for them to be responsible for these costs is in itself is wrong, and goes against the very purpose of the Occupy DC movement.

A clear solution is to allow the protesters to seek a permit, and rightfully occupy an area of the City, much as the movement has done at Freedom Plaza. This should be accompanied by a clear plan to ensure the upkeep of the area, safeguard the health and well-being of those occupying it, and protect the nearby businesses that will be inevitably impacted by their presence.

The DC Chamber respects all forms of public awareness campaigns, and we support First Amendment rights wholeheartedly. However, as a recognized leader in promoting the growth and strength of our city, we cannot allow for children and others to be put at risk, and we cannot condone the costs of such protests being passed on to our constituents. A solution must be found and put in place immediately.

Up for first reading on Wednesday, the Winter Sidewalk Safety Amendment Act makes residents and business operators responsible for snow removal and clearing of public sidewalk spaces in front of their homes or places of business. This is a public safety issue, and the Chamber is fully supportive of keeping DC’s streets and sidewalks navigable and pedestrian-friendly.

However, this legislation contains some flaws as written.  Currently, the Act would impose fines on those that do not comply within 8 daylight hours after snowfall--$25 for residents and $250 for businesses. Although we support the idea of prompt snow removal and realize the importance of an enforcement mechanism for this bill, the Chamber will be working to alter the language of this legislation so that warnings can be issued before fines are imposed. We believe that people should be aware of this new fine structure, and issuing warnings to violators before fining them is one way to ensure that everyone is given a chance to comply before incurring a fine. DC businesses face enough economic challenges without having to worry about being hit with an unexpected expense on a snow day.

In the culmination of months of debate and public scrutiny, the DC City Council passed a comprehensive ethics reform bill yesterday. In a nutshell, this law will:

• Establish a three-member ethics panel,
• Allow the Attorney General to prosecute misconduct by elected officials,
• Remove councilmembers (or mayors) who are found guilty of felony charges,
• Restrict donations to campaign transition committees,
• Halve the amounts councilmembers can raise for constituent service funds, and
• Require the disclosure of all outside income.

The Chamber supports this measure. For too long, the behavior and actions of our elected officials have been a distraction from the real work of government. Dysfunction has permeated all levels of government, and the situation has been disheartening. Our city will be stronger and better when these types of issues are behind us, and we can focus on working to make DC a better place to do business.

In 2012, we will specifically focus on making the legislative and policy goals outlined in The Chamber Fix (http://www.dcchamber.org/city/policy_and_legislation.aspx) a reality. We’re very proud that the first item on the list--lowering the franchise tax--has already been accomplished, but there are many more tasks on our agenda. We have support from the Council, we are talking with the administration, and in the coming year we look forward to working with you, our members, on pushing these initiatives forward.

Today, I testified before the Committee on Government Operations at a hearing on the many ethics reform measures before the Council.  This issue is of paramount importance to the 1,700-plus members the Chamber represents (who employ hundreds of thousands of District region residents, and fill the city’s coffers with millions in tax revenue).  DC’s competitiveness in the regional market is being truly tested, and the ethical lapses we have all seen have only made it tougher to attract and retain businesses here. The Executive and Legislative branches need to right this ship not just for governmental stability, but to send a clear message that DC is a strong and stable place to do business.  These issues go beyond ethics, ultimately affecting revenue and the growth of DC.

The fact that ten ethics bills are under consideration demonstrates that while the Council may realize the prudence of publicly stating that we need major ethics reform, they don’t know how to deal with the issue.  I cannot recall another time in recent history when we’ve had ten bills introduced in a ten-month period, all on the same subject.  The business community cannot help but question if this is a case of our government officials just not understanding right from wrong. No amount of legislation can fix that. 

We have seen a marked increase of questionable ethical and criminal behavior in recent years. Millions stolen by DC employees, questionable use of public funds and constituent funds, and government officials under investigation—the City’s reputation has been battered.  DC’s reliance on self-regulation, without meaningful and independent enforcement mechanisms, fails to adequately ensure that the highest ethical standards are achieved and maintained.  The system must be meaningfully tightened.  A code of conduct for the entire government, both executive and legislative branches, must be produced immediately and enforced – and we believe it should be one ‘code’ that applies to all.

Perhaps the Council could use the examples of some private companies as a benchmark when consolidating these 10 bills into a single code of conduct. In my many years at IBM and Fannie Mae, I was given an ethical code of conduct every year—if I did not sign it, and follow it, I was fired. Simple as that.

Whenever I have had a problem of this magnitude in the private sector, I simplify the work by asking the three pertinent questions that define the problem:

1. Where are we?

2. Where do we want to be?

3. How do we get there?

The DC Government should take a page from the business playbook in this case. We at the Chamber will be happy to work with the Committee in these efforts.

Some District neighborhoods have been embroiled in controversy recently over the university enrollment cap issue.  Recently the Mayor was reported to have said at a local ANC meeting that he is reconsidering supporting lifting city-imposed limits on the number of student enrollments and university employees, should provoke a thoughtful and serious discussion about the impact of the university presence on the city’s business community and the District economy. This is an issue that impacts not just residents of those neighborhoods near large universities, but every District resident.

One thing we know for certain—the university system is a major economic engine in the District.  Some facts and figures from the Consortium of Universities of the Washington Metropolitan Area, and from the District’s own Comprehensive Annual Financial Report:

• Georgetown University is Washington’s largest employer outside the federal government
• Universities as a whole spent $1.42 billion in the city
• DC is ranked #1 in educational attainment among large metropolitan areas
• 15,970 jobs for DC residents are supported directly by Consortium universities
• 4,856 additional jobs are supported by university spending
• Payroll for university employees in DC tops $609 million
• 154,000 students are enrolled in universities across the region, bringing 307,000 visitors to the area

These facts must be weighed against the impact of student housing and university growth on our neighborhood residents.  District universities, many of whom are also Chamber members, are making a major contribution to the economic recovery of the District. At a time when the District’s unemployment rate is among the highest in the nation, it only makes economic sense to encourage smart growth in an industry that creates jobs as effectively as this one does.