Kelly Seeks New Taxes To Fill Gap; Richest Residents, Hospitals Would Pay More in Mayor's Plan
District Mayor Sharon Pratt Kelly will propose raising up to $70 million through new and higher taxes and fees, including a tax on hospitals and an increase for higher-income residents filing individual returns, government officials said yesterday.</br></br>Kelly today will release her proposal to close a projected $233 million budget deficit and her spending plan for the fiscal year starting Oct. 1. The new tax on hospitals and other health-care providers is similar to a measure proposed by Virginia Gov. L. Douglas Wilder, which has ignited a fierce fight with the state's health-care industry.</br></br>Also included in Kelly's proposal is a plan to expand the application of the District's gross receipts tax, which now applies only to utility companies.</br></br>Kelly will not propose any across-the-board increases in income, sales or property tax rates, said Sharon Morrow, director of the D.C. Department of Finance and Revenue. "There will be some increases, but no broad-based tax increases," she said yesterday.</br></br>Kelly's staff said much of this year's deficit - about $90 million - was caused by lower than expected tax collections. The rest is the result of higher than expected spending on a variety of programs, including Medicaid, the mayor's anti-crime program and proposed pay raises for D.C. workers.