WASHINGTON (Map, News) - Mayor Adrian Fenty on Thursday proposed slashing hundreds of vacant positions, slowing a promised tax cut and keeping new spending to a minimum in an effort to close an expected budget shortfall in fiscal 2009.

The $5.66 billion proposed local funds budget amounts to a .66 percent spending increase over the current year — significantly less than the 8 and 9 percent increases of the recent past. The $8.7 billion gross funds budget, including all federal funds and grants, represents a 3.26 percent increase.

“I think without any question you would describe this as a fiscally conservative budget,” Fenty said.

The spending plan closes a projected $96 million revenue gap by eliminating more than 500 noncritical vacant positions and repealing a commercial real estate tax break authored by Council Chairman Vincent Gray. Fenty proposed a lesser, phased-in tax reduction, slashing the impact of the council-approved cut by roughly $80 million.

Gray, who skipped Fenty’s news conference, said in a statement that with the economy “on the brink of recession,” the council would work with the mayor “to ensure the budget we implement is fiscally sound, but also sensitive to the needs of the District’s residents.”

The council will take up the budget once it returns from recess, though early reaction was positive. The budget appears to slow spending “that was really not sustainable in the out years,” said Ward 2 Councilman Jack Evans. Councilwoman Carol Schwartz said the mayor was “off to a good start,” though legislative “tweaking” was still to come.

Among his proposed tax and fee increases, the mayor suggested doubling the tax rate on abandoned property, increasing the emergency ambulance fee, raising the basic business license application fee, raising the E-911 fee, charging developers a new “public inconvenience fee” for use of public space during construction, and increasing excavation and occupancy permit fees.

The council has shot down five attempts since 2004 to raise the E-911 fee, a monthly charge on every phone line. As taxes already comprise 28 percent of the average phone bill, Councilman Phil Mendelson pledged, “I am going to stop it again.”

The $773 million schools budget includes an unspecified amount of money for teacher pay raises, Fenty said. The police budget includes $6.5 million to bring the force to 4,200 officers. There’s $5 million to improve infrastructure at St. Elizabeths Hospital, $6.9 million to expand summer youth employment, and $60 million for street, alley and lighting upgrades.

mneibauer@dcexaminer.com