The District’s budget gap for the next fiscal year once predicted to be more than a half-billion dollars has shrunk to $322 million thanks largely to expected growth in the city’s commercial real estate market, city officials said. It’s the first time since December 2007 that Chief Financial Officer Natwar Gandhi has said the city’s future finances appear to be better than previously predicted. The smaller budget shortfall had Mayor Vincent Gray on Tuesday downgrading a budget crisis that he once described as the “Grim Reaper knocking at the door” to a “problem,”
| Looking forward D.C.’s economic outlook for fiscal 2011 and 2012: |
| Employment gains: 14,100 jobs added (2 percent increase) in 2011; 9,700 added (1.2 percent) in 2012 |
| Unemployment rate: 9.6 percent in 2011; 8.7 percent in 2012 |
| Wages and salaries of D.C. residents: 4.9 percent growth in 2011; 3.8 percent in 2012 |
| Source: Office of the Chief Financial Officer |
although everything from deep cuts to city services and tax increases are still “on the table.” In April, Gray will send the D.C. Council a budget proposal for the next fiscal year. The 2012 fiscal year starts Oct. 1.
“It’s good news that we have more money, but we still have an enormous problem,” Gray said during a Tuesday news conference.
Revenues, Gandhi said, are now expected to be $105 million higher in 2012 than previously predicted. Much of the boost comes from an extra $163 million in commercial real estate taxes, he said. That’s offset by expected drops in fines and fees, particularly from parking tickets that are going unpaid, Gandhi said.
The CFO said it’s the federal government’s “stabilizing force” that has helped to keep the District’s financial picture relatively rosy compared with the balance sheets in other major cities nationwide.
But even as the budget gap closes, it could have been closing more. The city is losing out on $23 million that Gandhi had previously expected to be included in the fiscal 2012 budget because neither the mayor nor the council has acted on a bill that would bust a corporate tax shelter. In 2009, the council approved the idea of requiring combined reporting, a tax-restructuring measure that prevents multistate companies like Home Depot, CVS and Starbucks from hiding profits earned in the District in states that won’t tax them.
“In the midst of what’s still an awful budget situation, will the mayor and the council move to force large corporations in the city to pay their share of taxes so we can improve education and keep city services?” Ed Lazere, director of the D.C. Fiscal Policy Institute, asked rhetorically.
When pressed on the issue during the news conference, Gray said, “the decision has yet to be made in the upcoming budget discussions.”
