DC Mayor Says City Can Weather ‘DOGE Economy’ Without Tax Hikes

Washington, DC can weather the impact of the Trump administration’s actions on the city’s financial health without needing to raise taxes on individuals or businesses, Mayor Muriel Bowser said.

The District is grappling with what she called the “DOGE economy” after mass reductions in the federal workforce and a federal stopgap spending measure earlier this year that effectively forced a $1 billion cut to DC’s current fiscal year budget. The city faces a $1 billion shortfall over four years and the loss of 40,000 jobs, according to budget projections.

Speaking at a Bloomberg Government roundtable Thursday, Bowser said that while the District’s revenue forecasts are down about $350 million annually from 2026 to 2029, her recently proposed budget plan avoids the need for tax hikes. “We didn’t do it for this year, and we think if we maintain the forecast as such that it is, then we wouldn’t have to,” she said.

She also made her case for bringing back a package of tax incentives for tech companies that was phased out in 2020 after much criticism from budget watchdogs and the city’s own chief financial officer.

The third-term mayor called the fiscal 2026 budget she introduced last month a “growth agenda” that relies less on the federal government and projects more economic activity from the hospitality, leisure, and tech sectors. While the federal government is expected to shrink as a part of the city economy, the mayor is prioritizing her budget around several large projects, including nearly $1 billion on the planned replacement of Robert F. Kennedy Memorial Stadium with a new stadium for the NFL’s Washington Commanders and $171 million on renovations at Capital One Arena, home to the NBA’s Washington Wizards and NHL’s Washington Capitals.

Tech Tax Incentives

Bowser is also asking the DC Council for $2.2 million to restore the city’s Qualified High Technology Credit, a series of tax incentives which was largely phased out in 2020. The program, created in 2000, faced years of criticism that it was awarded too broadly, favored large employers over startups, and lacked mechanisms for recouping credits issued to firms that left DC. According to a 2018 report by the city’s Office of the Chief Financial Officer, the District issued $184 million in QHTC incentives between 2001 and 2015—about 5% of total franchise tax revenue over that time—and the program had grown in cost to $35 million a year.

“I think what we’ve included is modified,” Bowser said Thursday. “I can’t say that I agree with all of those criticisms. I’m one of the people who don’t think it should have gone away in the first place but it should have been adjusted.”

Bowser said reviving the high-tech incentive would help keep the District competitive with its neighbors, and that the city is home to many government technologists, many of whom “are looking for something else to do right now.”

“You can make the argument that if we hadn’t thrown away the baby with the bathwater, then we would be much further ahead at attracting and retaining high-tech companies,” Bowser said. “We don’t have the luxury of saying we don’t want to have a toolbox that every other jurisdiction, especially the ones around us have to attract companies to the district.”

The District’s outlook remains uncertain, though. While her budget proposal also includes, among other things, a delayed sales-tax hike, scaling back a tax funding a paid family leave program, and the legalization of commercial poker and blackjack games—with a 25% tax on gross gaming receipts—the city is still assessing the impact of federal downsizing.

“We don’t know the actual numbers,” she said. “We’re kind of bracing for October to see if we have some real hard hits to our unemployment fund and if that will truly tell us how many people are out of work and also out of pay.”