Harry Jaffe
Has D.C.’s gravy train finally hit the skids?
By: Harry Jaffe
Examiner Columnist
December 21, 2008
It had to happen.
For years, the District government expected surpluses each time Chief Financial Officer Natwar Gandhi reported the city’s actual balance sheet. Revenues would exceed estimates, and Gandhi would bestow gifts of around $100 million to the happy council members — which they would promptly spend.
But when Gandhi announced his revised revenue estimates last week for fiscal 2009, the news was bad, though hardly dire. He and his bean counters gazed into their crystal balls, crunched their numbers and estimated that D.C. would come up $127 million short of what they had projected in September.
What that means is that the mayor and the city council have to trim $127 million from next year’s budget; worse, Gandhi estimates that D.C.’s revenues will fall $304 million in 2010 from previous estimates.
Before anyone starts stashing food and water in the basement, keep in mind Gandhi’s numbers are guesses. They could rise or fall. Bear in mind also that the city’s accountants estimate that revenues will increase in 2013 enough to match their September numbers.
So — is the party over?
“No way,” says Jack Evans, chairman of the council’s finance and revenue committee. “We continue to be one of the financially healthiest cities in the nation — certainly in the region.”
Compared with governments in Maryland and Virginia that have announced massive cuts in programs and jobs, the District of Columbia appears to be a paragon of fiscal health. Virginia Gov. Tim Kaine wants to eliminate hundreds of state jobs and close down road projects. Some suburban counties will actually shut down operations to save some bucks.
Deep in Gandhi’s letter, you can find signs of D.C.s strength: Average sales price of single family homes has dropped just 1 percent; jobs in D.C. rose 1.5 percent; commercial vacancy rate, at 6.7 percent, is “excellent” by national standards.
The way Gandhi and Evans see it, the nation’s capital will not have to cut a dime more this year. The city council already has salted away $47 million to cover anticipated shortfalls, and Gandhi says he expects an $80 million surplus from 2008.
They add up to $127 million, which will zero out the expected revenue shortfall.
“What we’re not going to have is great growth spurts in revenue,” says Evans. The Ward 2 council member says he and his colleagues will have to trim budgets rather than add new programs.
Will the estimated shortfalls affect quality of life in D.C.? Depends on where you live, and how much you need the government. Trash will get picked up, streets will be cleaned, cops will police as they do at the moment. But next time Schools Chancellor Michelle Rhee asks for another $80 million, Mayor Adrian Fenty might not be able to find it.
Says a Gandhi assistant: “The days when the city could open another pocket and find more millions are over.”
But D.C.’s “pockets” are still far more full those in the suburbs.
E-mail Harry Jaffe at hjaffe@washingtonian.com.
For years, the District government expected surpluses each time Chief Financial Officer Natwar Gandhi reported the city’s actual balance sheet. Revenues would exceed estimates, and Gandhi would bestow gifts of around $100 million to the happy council members — which they would promptly spend.
But when Gandhi announced his revised revenue estimates last week for fiscal 2009, the news was bad, though hardly dire. He and his bean counters gazed into their crystal balls, crunched their numbers and estimated that D.C. would come up $127 million short of what they had projected in September.
What that means is that the mayor and the city council have to trim $127 million from next year’s budget; worse, Gandhi estimates that D.C.’s revenues will fall $304 million in 2010 from previous estimates.
Before anyone starts stashing food and water in the basement, keep in mind Gandhi’s numbers are guesses. They could rise or fall. Bear in mind also that the city’s accountants estimate that revenues will increase in 2013 enough to match their September numbers.
So — is the party over?
“No way,” says Jack Evans, chairman of the council’s finance and revenue committee. “We continue to be one of the financially healthiest cities in the nation — certainly in the region.”
Compared with governments in Maryland and Virginia that have announced massive cuts in programs and jobs, the District of Columbia appears to be a paragon of fiscal health. Virginia Gov. Tim Kaine wants to eliminate hundreds of state jobs and close down road projects. Some suburban counties will actually shut down operations to save some bucks.
Deep in Gandhi’s letter, you can find signs of D.C.s strength: Average sales price of single family homes has dropped just 1 percent; jobs in D.C. rose 1.5 percent; commercial vacancy rate, at 6.7 percent, is “excellent” by national standards.
The way Gandhi and Evans see it, the nation’s capital will not have to cut a dime more this year. The city council already has salted away $47 million to cover anticipated shortfalls, and Gandhi says he expects an $80 million surplus from 2008.
They add up to $127 million, which will zero out the expected revenue shortfall.
“What we’re not going to have is great growth spurts in revenue,” says Evans. The Ward 2 council member says he and his colleagues will have to trim budgets rather than add new programs.
Will the estimated shortfalls affect quality of life in D.C.? Depends on where you live, and how much you need the government. Trash will get picked up, streets will be cleaned, cops will police as they do at the moment. But next time Schools Chancellor Michelle Rhee asks for another $80 million, Mayor Adrian Fenty might not be able to find it.
Says a Gandhi assistant: “The days when the city could open another pocket and find more millions are over.”
But D.C.’s “pockets” are still far more full those in the suburbs.
E-mail Harry Jaffe at hjaffe@washingtonian.com.
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