D.C. balances its budget with booze

Washington Mayor Vincent Gray applauds U.S. President Barack Obama as he delivers his third annual back-to-school speech at Benjamin Banneker Academic High School in Washington, September 28, 2011.

(Reuters) - The Washington, D.C. City Council passed a $9.4 billion budget on Tuesday that was balanced through expanding alcohol sales.

"I'd like to thank the Council for passing a budget that includes no new taxes or fees and that closely tracks my priorities," said Mayor Vincent Gray in a statement.

The city - the nation's capital, which is not part of any state - faced a $172.1 million gap between projected revenues and expenses for the fiscal year starting in October.

Council Chairman Kwame Brown said the budget would extend alcohol sales hours at bars for a handful of weekends and holidays throughout the year, "which provides the necessary revenues while respecting the serious policy concerns that were raised."

The budget also included provisions to keep the government open if the federal government shuts down. When the U.S. Congress stalled on passing federal spending bills last year, D.C. was particularly threatened by shutdowns because it is closely tied to the federal government.

In the budget, the council approved building two new middle schools and spending $71 million renovating two more; put $18 million into a stream of funding to "kickstart the backlog of housing developments"; gave a permanent tax exemption for affordable housing; provided healthcare to low income residents at a cost of $20.5 million, and authorized $3 million to encourage tourism.

In recent years, the council has cut affordable housing funds, said Councilmember Michael A. Brown, which, when "coupled with the poor economy has led to a major increase in homelessness, especially family homelessness."

(Reporting By Lisa Lambert; Editing by Leslie Gevirtz)