Wall Street is watching District officials closely to make sure they make deep budget cuts and don’t dip into the city’s savings to fix a $600 million budget gap in the next fiscal year. That’s the message the city’s top financial officials took home with them after meeting with bond-rating agencies in New York City. Mayor Vince Gray and Chief Financial Officer Natwar Gandhi traveled north on the annual trip to convince the top three bond-rating agencies to preserve the city’s creditworthiness. Gray and Gandhi were joined by D.C. Council Chairman Kwame Brown and the head of the finance committee, Ward 2 Councilman Jack Evans, in their meetings with Standard & Poor’s, Moody’s and Fitch. The city has a near-perfect rating and keeping it would save millions on future loans. Overall, Brown described the meeting as “productive,” and Evans said it was “positive.”
“Once again, the bond-rating agencies, while confirming the District’s financial health, have expressed concerns over using our fund balance to address the deficit,” Evans said. “We have pledged not to dip into our fund balance or use similar gimmicks, but rather match our revenues with expenditures in balancing the budget.”
Evans added the rating agencies “will look to Mayor Gray’s budget submission on April 1, as well as council action thereafter, as they determine the District’s future bond rating.”
The difficulty is that’s the same promise former Mayor Adrian Fenty made last year, just weeks before he sent a budget to the council that relied on $200 million in reserve dollars to keep the city running. The council approved it.
In the four years Fenty was mayor, the fund shrank from about $1.5 billion to about $940 million. Now, every dollar that’s in the savings account is spoken for and there’s no room left to maneuver, Gandhi has said.
Gandhi was out of town and could not be reached for comment Friday, a spokesman said.
To make sure spending and revenue match, Brown said he’ll be looking for budget cuts before tax increases.
“Although revenue enhancements must be considered,” he said, “I will start first with requiring cuts in areas where we are overspending, and then put in place internal controls to collect the millions of dollars owed to the District in federal reimbursements to help fill the budget gap.”
