The District of Columbia faces a $175 million revenue gap heading into the new fiscal year, according to D.C. Chief Financial Officer Natwar Gandhi.
New revenue estimates for fiscal 2011 are down almost $100 million from Gandhi’s February estimates.
“The national economy, in terms of its impact on tourism, its impact on the business activity, all has been catching up with the District,” Gandhi said.
The new estimates, which come days before fiscal 2011 begins on Oct. 1, may prove to be the first major political test for D.C. Council Chairman Vincent Gray’s incoming administration, according to political observer Chuck Thies. Gray will have to show voters that he can do the job where Mayor Adrian Fenty failed, by reaching out to the city to get them involved in closing the gap.
Revenue estimates are down as much as 5.5 percent for all but one source — deed taxes — according to Gandhi’s report. But the District no longer has any rainy-day funding to fill the gap. All that’s left is a federally mandated emergency fund that can only be used if the mayor declares a state of emergency — a situation usually reserved for environmental disasters or security emergencies, Gandhi said.
“Whether we make this up by increasing revenue or making cuts to the budget will definitely be an indication of how this new government may proceed,” Thies said. “We’ll be able to see, to a certain extent, where the mayor-elect’s priorities are.”
Fenty, Gray, and Councilmen Kwame Brown, Harry Thomas and Jack Evans were all briefed on the estimates by Gandhi on Monday.
Council Member David Catania questioned the accuracy of some of Gandhi’s predictions, and was disappointed the full council was not briefed as well.
“I don’t understand how we can have spending pressures exist before the fiscal year has begun,” Catania said. “I’m not suggesting we don’t have a budget problem, but I think we need to know the full scope of the problem before we go public.”
While D.C. will look to Gray, the responsibility for presenting a solution to fix the gap still falls on Fenty’s shoulders. It may be in Fenty’s best interest to work with Gray, whom he endorsed following his primary defeat, to come up with the necessary answers, Thies said.
