A city that works requires fiscal discipline, economic growth, and effective government services. Following the release of the D.C.’s 2027 budget proposal, experts from the D.C. Policy Center are sharing key insights for policymakers to consider as they review the budget proposal and prioritize investments.
This brief highlights the Universal Paid Family Leave program as an area from which committed funding is diverted. D.C. has a growing habit of raising taxes for specific programs, then using that money to cover unrelated expenses down the road when budgets get tight. The fiscal year 2027 budget continues this pattern, weakening public trust and obscuring the need to make harder fiscal decisions.
Read the analysis below or download a PDF copy.
Other publications in this series:
- D.C.’s career education strategy leaves out adult learners
- In a job market downturn, workforce support policies are essential
- Streamlining IZ applications will open more affordable units faster
- Delaying BEPS creates an opportunity for reform without forcing unintended consequences
- Supporting childcare subsidies improves D.C.’s economic competitiveness
- A city that works
What the budget proposes
The fiscal year 2027 budget once again taps dedicated dollars from D.C.’s Universal Paid Family Leave program to cover broader budget shortfalls. And even though the payroll tax that pays for it generates significantly more money than it spends, the benefits for paid family leave recipients will be cut. It also eliminates the Early Childhood Education Pay Equity Fund, created in 2022 to raise wages for childcare workers, even though the city increased income taxes to pay for this fund in perpetuity in 2023.
What we found
The District has a pattern of creating programs with dedicated funding and then moving that money to fill gaps when the budget gets tight. For example, since paid family leave began, D.C. has spent about $700 million on benefits while transferring roughly $1.1 billion in dedicated payroll tax revenue to other uses—about $1.60 diverted for every dollar spent on benefits. Another $1.7 billion is projected to be redirected through 2030. These are not isolated budget fixes. They reflect a recurring mismatch between what the District spends and what it collects.
Why It Matters
Many of these programs are created with genuine belief in their policy merit, even when they may be divisive, as was the Paid Family Leave proposal. But that’s exactly why the pattern is so damaging. When well-meaning commitments become vehicles for budget flexibility, the programs lose credibility and taxpayers lose confidence that future promises will be kept. Good intentions are not a substitute for good budget practice.
What we recommend
The D.C. Policy Center recommends DC Council take the following steps:
- By the end of FY2027, require OCFO formal reviews of major subsidy and transfer programs whose costs have grown faster than underlying cost drivers such as inflation or enrollment.
- Examine where D.C.’s own regulations are generating costs to determine where the budget might later have to absorb spending pressures.
- Before redirecting any dedicated tax revenue, require a DC Council resolution and explanation, the impact on the original program, and a plan for restoring balance.