District elected officials, faced with a $131 million revenue shortfall, don’t have the luxury of waiting to see what action Congress ultimately takes to rescue Wall Street. Mayor Adrian M. Fenty and the D.C. Council are already examining ways to close the gap.
“I’m sure council members will consider all spending and revenue [enhancement] possibilities,” says Eric Goulet, the council’s budget director. He’s preparing a list that includes recurring spending initiatives inserted by legislators in the fiscal 2009 budget. It’s not clear whether that includes the $62 million in earmarks for pet organizations like Ford’s Theatre. “But, the first bite goes to the mayor.”
Will Singer, the mayor’s budget director, suggests that nothing is sacrosanct. “We will have to look at all our options.”
While Republican presidential nominee John McCain may think a spending freeze, which exempts entitlements and defense projects, can help the feds, that kind of move does nothing for the District.
The majority of the city’s expenditures are in social service entitlements, public safety and education. If the District is going to address its shortfall, which is likely to widen significantly over the next few months, elected officials will have to slice into those agencies in order to balance the 2009 budget. (I hear the advocates screaming already.)
The cuts will need to deepen in 2010 and 2011: Chief Financial Officer Natwar Gandhi has projected larger shortfalls in those years.
“In 2010, it’s going to be real tough,” says Singer, adding that the cuts in 2009 will lay the groundwork.
Like the federal government, the District expanded rapidly over the past six years; new agencies were created, entitlements were extended to larger populations of residents, and generous tax reductions were offered. Then, the city was swimming in cash. Consequently, government bloating was acknowledged but mostly ignored. Now, the check is due.
Instead of merely tweaking, the mayor and the council should see this moment as an opportunity to right size the government. They could consider consolidating some agencies and eliminating others. Does the city really need a separate Department of Environmental Affairs? Couldn’t the Office of the Chief Financial Officer assume the responsibilities of the Department of Healthcare Financing?
Elected officials also may want to revisit their decision to set aside specific streams of revenue for special projects, limiting their ability to prioritize how money is spent during this lean time. For example, deed and recordation taxes are dedicated for the Housing Trust Fund; that money could be designated for other uses.
Wishing officials will put aside politics during these serious fiscal deliberations would be naive. After all, the November general election is a few weeks away. Budget decisions for 2010 will be made as the mayor and council Chairman Vincent C. Gray gear up for possible re-election bids. In that environment, there’s sure to be high drama and political shenanigans — like it or not.
