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GOVERNMENT OF THE DISTRICT OF
COLUMBIA
DC Faces $128 Million in Budget Pressures(Washington, DC) Five months into its fiscal year, the District of Columbia has identified additional pressures in its local source budget totaling $128 million. Approximately $52.5 million is attributable to a revised, lower revenue estimate for the current fiscal year. The remainder is due to increased demands on mandated programs, such as Medicaid and unemployment compensation, and other service needs, including court-ordered spending and snow removal. “These budget pressures constitute approximately three and a half percent of the city’s local source budget of $3.635 billion,” said Chief Financial Officer Natwar M. Gandhi. “In a budget of this magnitude, it is not unusual to encounter such pressures as priorities change and forecasts of revenue or spending change. In these uncertain economic times, other jurisdictions are encountering problems of a similar or greater magnitude.” To help resolve these budget pressures, the District may use $28 million set aside at the beginning of the fiscal year to address any problems that could arise. For the remaining $100 million, Mayor Anthony A. Williams and the Council are reviewing with the Office of the Chief Financial Officer a range of options that can be used to rebalance the FY 2003 budget. Approximately $64 million of the $100 million is structural in nature, meaning that the fall in estimated revenue or increase in costs is not expected to be a one-time event. As a result, in addressing the shortfall, most of the spending cuts to be made will need to be permanent in nature, thereby lowering spending patterns in subsequent years. Last September, Mayor Williams and the Council of the District of Columbia agreed to $323 million in spending cuts and revenue increases in order to ensure that the District began its 2003 fiscal year with a balanced budget. “If not for the mayor and the Council’s hard work last fall, these new budget pressures would be a great deal more difficult to manage,” said Gandhi. Government of the District of Columbia FY 2003 Net Budget Pressures
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| Pressures | Comment | Amount | % | |
| Economy: | ||||
| Potential Net Revenue Shortfall | Planning estimate for revenue shortfall (not a revised estimate) | $(52.5) | ||
| Increased Demand/Higher Utilization | Health Care Safety Net ($10.5m); Medicaid operations - higher state costs ($13m); and Unemployment Compensation Fund ($3.9m) | (27.4) | ||
| Subtotal, Economy | (79.9) | 63% | ||
| Court Order Related | MRDDA ($12m) and Youth Services Administration ($1m) | (13.0) | 10% | |
| Emergencies | Snow Removal | (3.1) | 2% | |
| Management Issues | Surplus TANF funds used in prior years | (11.0) | 9% | |
| Other | Police Overtime ($7.3m); Corrections Overtime ($5.1m); CFSA out-of-state tuition payments ($3.8m); CFSA Medicaid audit ($2.4m); and Summer Youth Program ($2.4m) | (21.0) | 16% | |
| Total, Net Budget Pressures | $(128.0) | 100% | ||
Government of the District of Columbia
Office of the Chief Financial Officer
| Emergency Cash Reserves (To Be Replenished in FY 2004) |
$3.1 |
| FY2001 and FY2002 Budgeted Reserve Carryover (Of the $45m available, $17m is earmaked for specific programs, leaving $7m. In addition, $21m is earmarked to address revenue shortfalls.) |
28.0 |
| Use of Fund Balance Equivalent to Revenue Recovery (FY03 revenue loss $52.5m minus FY04 revenue loss $23.9m) |
28.6 |
| Subtotal | $59.7 |
| Recurring Program Cuts Needed | 68.3 |
| Total | $128.0 |
Government of the District of Columbia
Office of the Chief Financial Officer
| Amount | Percentage | |
| Economy | 63% | |
|
$52.5 | |
|
$27.4 | |
| Court Order-Related | $13.0 | 10% |
| Emergencies - Snow Removal | $3.1 | 2% |
| Management Issues | $11.0 | 9% |
| Other | $21.0 | 16% |
| TOTAL NET BUDGET PRESSURES | $128.0 million |
| Emergency Cash Reserves (To be replenished in FY 2004) |
$3.1 |
| FY2001 and FY2002 Budgeted Reserve
Carryover (Of the $45 million available, $17 million is earmarked for specific programs and $21 million is earmarked to address revenue shortfalls, leaving $7 million.) |
$28.0 |
| Use of Fund Balance Equivalent to
Revenue Recovery (FY03 revenue loss $52.5 mil. minus FY04 revenue loss $23.9 mil.) |
$28.6 |
|
Subtotal |
$59.7 |
| Recurring Program Cuts Needed | $68.3 |
|
TOTAL |
$128.0 million |
Government of the District of Columbia
Executive Office of the Mayor
| OFFICE OF COMMUNICATIONS FOR IMMEDIATE RELEASE THURSDAY, FEBRUARY 20, 2003 |
CONTACT: TONY BULLOCK 202-727-6846 |
(Washington, DC) In a press conference today, Mayor Anthony A. Williams, Council Chairman Linda Cropp, and the District’s Chief Financial Officer, Natwar M. Gandhi, announced that budget pressures in the District total $128 million for FY ’03. They outlined a plan for closing that gap. As with the majority of states, the sluggish national economy has created significant budget pressures for the District government.
“States across the nation are facing very tough financial times due to the economy,” said Mayor Williams, “and the District is no exception. What sets us apart, however, is that we will face this challenge without gimmicks and without games.
“We plan to use a combination of reserve funds and reductions in agency spending to address the problem, and my staff is working with the CFO to identify specific areas of reduction. We will provide a more detailed briefing in the coming weeks,” Mayor Williams said. “We are fully prepared to make the tough choices to solve this problem.”
“As always, we will keep this budget balanced. We’ve done it every year for the past six years, and we’ll do it again. But we won’t just balance this year’s budget. We have to look into the future to make sure recurring budget pressures are fixed once and for all,” Mayor Williams said.
“Part of the problem for the District is that the federal government requires us to deliver services (and therefore spend) like a state. But Congress prohibits us from collecting revenue like a state. This mismatch creates a structural imbalance between our revenues and expenditures and keeps driving the District into imbalance. We can keep that from happening by reducing services and delaying capital repairs, but that cannot happen much longer,” he said.
”We need Congress and the President to realize they need to either allow us to collect revenue like a state, or assume part of the responsibility for supporting the city that supports them.”
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