Financing DC Tax Reductions

The District has enacted tax changes that will reduce its annual revenues by an estimated $287.6
million when fully implemented in 2004. The major tax reductions are summarized in accompanying
tables. Substantial tax reductions by a government that only eliminated its accumulated deficit in 1998
need to be carefully monitored to ensure that they are financially manageable. This report evaluates
the current outlook and concludes that the reductions in 2000 and 2001 will be manageable, but that
there are too many uncertainties to judge whether the reductions in the following three years should go