DC Mayor Seeks Business-Friendly Policies to Spark Growth Amid Loss of up to 40,000 Federal Jobs

WASHINGTON (AP) — With the nation’s capital facing a pair of overlapping budget crises, D.C. Mayor Muriel Bowser has unveiled a budget proposal that bets heavily on business-friendly policies designed to boost investment and move the city away from dependence on a dwindling number of federal jobs.

“We have a shifting economy and if we don’t shift with it, we’ll have a city that people flee,” Bowser said Tuesday as she presented her proposals to the public — and to the D.C. Council, which will now begin debating the plan. “If you don’t have enough money, something has to go or you have to make more money.”

In the short term, Bowser has been scrambling to fill an immediate budget shortfall that was essentially created by the U.S. Congress. She announced Tuesday that her team had managed to navigate that sudden deficit without the mass layoffs that had been originally feared.

In the longer term, her government faces an estimated $1 billion shortfall over the next three years created by President Donald Trump’s ongoing campaign to radically shrink the federal workforce. The city’s Chief Financial Officer has estimated that 40,000 jobs for District of Columbia residents will ultimately be lost.

The more immediate budget crisis started in March when the House of Representatives approved a federal government funding bill with an obscure change that forces the District government to revert to its 2024 budget parameters — effectively cutting $1.1 billion from its previously balanced budget midway through the financial year. The Senate approved that bill, but also immediately approved a simple fix that would make the D.C. budget whole again. That fix has languished in the House for two months without a vote, despite President Donald Trump publicly pushing for its immediate approval.

Bowser said she still hoped the House would address the issue, but added that she couldn’t wait any longer for that fix. Her government has already invoked a 2009 law allowing the city to increase spending by 6%, shrinking the 2025 shortfall to around $410 million. Now she has proposed a supplementary 2025 budget plan that — through a combination of creative bookkeeping and temporary hiring freezes — papers over the shortfall without any layoffs, furloughs or significant service cuts.

“We have had some unprecedented things to work through,” she said Tuesday during a public event to present both her 2025 emergency changes and her 2026 budget proposal. “We think we have a sound budget here.”

Both proposals will now come before the D.C. Council for debate and potential modification. Council members are expected to be sympathetic to Bowser’s maneuvers on the 2025 budget emergency, but her proposal for next year’s budget could spark some fierce resistance and debate.

One of the most controversial aspects of Bowser’s long-term budget proposal would be a tightening of the admissions requirements for Medicaid, which could result in an estimated 25,000 residents being removed. At the same time, Bowser is proposing a package of business-friendly policies designed to spark more real estate development and construction, including tax incentives, streamlined zoning procedures and a pause on some environmental restrictions and requirements.

The 13-member council is currently down one member; Ward 8 representative Trayon White, who faces federal bribery charges, was expelled by his peers in February. His seat will be filled in a July special election. Most of the remaining 12 D.C. Council members were in attendance at Tuesday’s budget unveiling, with some asking pointed questions about Mayor Bowser’s priorities.

“A first read of this proposed budget shows DC is walking away from our commitments to lower utility bills and reduce our largest sources of carbon output and pollution from our buildings,” Ward 6 Councilmember Charles Allen said in a statement.

Bowser responded that a business-friendly environment was precisely her goal as she seeks to diversify the local economy away from federal jobs while preventing a talent exodus and without raising taxes.

“We’re proud of the work we’ve done and the decisions we’ve made,” she said. “We have to have a city that grows. We have to have more jobs, more businesses and more people.”