Anyone charting the recession and its effect on state and local governments probably isn’t surprised by the fact that D.C. Chief Financial Officer Natwar Gandhi adjusted downward his revenue estimates for the city. The signs of decline were all around: High unemployment, increase in office vacancy rates, drop in property values, steep stock market losses, and the arrival of penny-pinching consumers, reluctant to use cash or credit.
So, the announcement that the District is short $190 million for this fiscal year and perhaps as much as $245 million for 2010 isn’t earth-shattering. The city has money in its rainy day fund to address the immediate problem.
What’s particularly troublesome, however, is the nearly $90 million in overspending that occurred this year under Mayor Adrian M. Fenty’s administration. (Treasury Secretary Timothy Geithner may want to reconsider bringing on board former D.C. City Administrator Dan Tangherlini as combination financial, management and performance czar.)
Who approved allowing the Child and Family Services Agency to discontinue billing Medicaid? That action alone cost the city $45 million. Meanwhile, the agency paid out almost $3 million in overtime, according to financial documents provided by Gandhi’s office.
Despite objections by Clark E. Ray, then-director of the Department of Parks and Recreation, Tangherlini shuttered day care centers and fired senior managers. He claimed it would save money. But those moves added $6 million to the city’s fiscal burden.
Bad or inattentive financial management combined with the recession have converged to wreak havoc on the city. Some D.C. Council members are in serious denial.
At-Large Councilman David Catania talked of using federal stimulus money to fill the gap. Ward 1’s Jim Graham spoke of raising taxes or other fees. Still other legislators reject any push for eliminating, as a start, the more than $20 million in earmarks to special interest groups approved for fiscal 2010.
Dream, dream, dream. All they want to do is dream.
It appears Ward 2’s Jack Evans is in the minority: “We can’t fix this by raising taxes. We have to deal with it by cuts in spending,” the chairman of the Committee on Finance and Revenue told me during an interview.
There are tough choices before the council — not the least of which is what services and benefits to reduce. Currently, the District is one of the most generous governments in the country, which accounts for the $15 million in overspending for the locally subsidized health care program.
“We cannot continue to offer benefits that are unprecedented,” Evans said. “Can’t we be in the same boat as Maryland and Virginia? I’m not talking Mississippi.”
The answer could be yes — except we’re approaching an election year. Some incumbents already are facing competition. What decisions will those seeing re-election make over the next three weeks? What will drive them: self-preservation or the fiscal health of the city?
Stay tuned.
