D.C. leaders received positive news from their finance chief this week about the District’s economy: It hasn’t gotten any worse. Chief Financial Officer Natwar Gandhi’s newest revenue estimates, issued to Mayor Adrian Fenty and D.C. Council Chairman Vincent Gray, remain unchanged since his June projection. While sales tax collections “have deteriorated in recent months,” Gandhi said, withholding tax collections are up 3.5 percent for the year and the collapse in deed taxes is slowing. “Although the general economic outlook has improved somewhat since the June revenue estimate, uncertainty is still great and risks remain for both the national and local economies,” Gandhi wrote. The CFO’s four estimates issued between September 2008 and June all posited significant downturns in revenue for each of the next five years. The September projection is the first indication that the economy might be stabilizing.
“It’s definitely a positive sign,” said Ward 2 D.C. Councilman Jack Evans, chairman of the finance and revenue committee. “We’ve had four quarters in a row where we’ve gone down for a total of approximately $600 million. So this revenue estimate says to me there’s hopefully a leveling off and we’ve hit bottom.”
Virginia and Maryland, meanwhile, continue to bleed revenue at astounding rates, forcing those government to make major service cuts and fire or furlough thousands of government employees.
Whether the District meets Gandhi’s projections will depend heavily on real estate tax collections, the CFO said. Second-half payments were due by Sept. 15. In September 2008, property tax payments comprised 21.5 percent of total tax collections.
Gandhi’s projection is a positive sign amid a host of bad news.
The District’s August unemployment rate reached 11.1 percent, and the CFO has predicted that residential employment might not fully recover to pre-recession levels until 2012 at the earliest, or as late as 2015. D.C. still faces $1 billion-plus deficits in 2011 and 2012, according to Gandhi’s numbers. And sales tax collections were $73.7 million in August, about $10 million less than August 2008.
