You can have stable or even increasing budgets and still be underfunded. Not saying this is necessarily the case here, just that it's definitely possible to pull that off.
It's not the case as far as I can tell--the DC Metro PD reports show crime there is dropping steadily over time[1]. There's a lot of factors that go into why crime rates change, but suffice to say that if the police weren't funded properly they wouldn't be able to handle the workload.