The D.C. government ended the last fiscal year with a $248 million surplus, which includes $80 million in cash it could spend or opt to save for an expected economic crunch, figures obtained by The Examiner show.
The revenues for fiscal 2007 came in 7.3 percent higher than Chief Financial Officer Natwar Gandhi‘s May 2006 estimate and 6.6 percent more than his most recent projections, according to numbers culled from the unaudited results of the Comprehensive Annual Financial Report.
The release of the final CAFR, an annual independent audit of the District’s finances, has been delayed until March due to the continuing investigation into the tax office theft. Gandhi nevertheless briefed the D.C. Council on the 2007 numbers during a meeting earlier this week.
The increased revenue was chalked up to higher than anticipated property tax revenues and interest income. Sales and income tax figures came in on target, officials said.
Mayor Adrian Fenty and the council agreed late last year to spend $99 million of the projected 2007 surplus on schools and affordable housing. Another $89 million is already obligated to various causes and expenses. Gandhi added $20 million as an “accounting variance,” leaving $80 million as unreserved and available for spending.
Such a windfall should be put away given the city’s economic climate, which will slow dramatically over the next 18 months, said Dr. Stephen Fuller, director of the Center for Regional Analysis at George Mason University.
“It would seem wise to me not just to go spend,” Fuller said. “Cities just can’t raise money fast in a slow economy and the economy is gong to slow down in ’08 and ’09.”
Given the cloudy outlook, Gandhi pressed the council to sock the surplus away, according to officials present at the meeting. Much of his Powerpoint presentation detailed a softening housing market, rising commercial office space vacancies, slowing federal procurement and growing local debt burden.
At least one council member agreed that the surplus should be put away as a “cushion.”
Gandhi’s last revenue estimates, issued in early December, predicted an $80 million surplus for fiscal 2008 followed by negligible increases in 2009, 2010 and 2011. Current indicators for both the D.C. and the national economy “are mixed and difficulties in real estate and financial markets point to an unusual amount of uncertainty,” Gandhi has said.
