The District’s top finance officials will soon be heading to Wall Street to deliver a message that they’re prepared to make deep cuts to the city’s budget to preserve D.C.’s creditworthiness. Mayor Vincent Gray and Chief Financial Officer Natwar Gandhi will be joined by D.C. Council Chairman Kwame Brown and Ward 2 Councilman Jack Evans, who heads the finance and revenue committee, on a Feb. 10 trip to New York City to meet the top three bond-rating agencies. If they’re successful in convincing Standard & Poor’s, Moody’s and Fitch that the city’s finances are on the right track, they could save the District millions of dollars in interest on the cash D.C. borrows to construct buildings and roads. The city now has an almost perfect rating.
But the city is likely to face a half-billion-dollar budget gap in the next fiscal year. That’s about 10 percent of the budget. Even if taxes are raised, cuts to services, furloughs of city workers or even a reduction of the work force would have to be made to find a balance.
“It’s important for Wall Street that we deliver a message that we have a united city, with the council chairman and mayor working together,” said Brown, who will be taking his first trip to meet with the credit-rating agencies. Gray, Gandhi and Evans have all gone before. Brown said they’ll tell the agencies “how we’re not going to dip into our reserves and will substantially cut spending.”
Last year, Mayor Adrian Fenty told the rating agencies that the city wouldn’t dip into its reserve fund. During his administration, however, the fund shrank from about $1.5 billion to about $940 million. A month after the meeting, Fenty sent a budget to the city council that relied on $200 million in reserve dollars to keep the city running.
“That wasn’t helpful, and it’s why I think Fenty made a mistake,” Evans said.
Gandhi has repeatedly told city officials that there’s nothing left in the reserve fund to spend. Every fund dollar is designated for either programs or an emergency reserve that can only be used for one-time expenditures.
