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April 27, 2004
The Honorable Linda W. Cropp
Council of the District of Columbia
1350 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Dear Chairman Cropp:
The purpose of this letter is to amend the Proposed FY 2005 Budget and
Financial Plan, submitted to the Council on March 29, 2004. These
amendments include both technical corrections and changes in policy. In
some instances these amendments can be made within the available financing
of the budget as submitted. In other instances these amendments show a net
fiscal impact that can be offset by additional certified revenue. As you
know, the Chief Financial Officer is in the process of certifying an
additional $50 million in revenue based on new economic data that shows
higher-than-expected economic growth.
Given the timing of this new revenue certification, I recognize several
committees have already identified potential budget cuts to offset some of
the changes proposed below. I value the role of the Council as an equal
partner in defining the District’s priorities, and welcome an open
dialogue about the appropriate level of spending in all areas of the
budget. On behalf of the District’s residents, however, I cannot support
any budget cuts that adversely affect education, public safety, or other
critical priority areas. To the extent that any such cuts are included in
Committee Markups conducted this week, I sincerely hope that our consensus
process will resolve any such issues. Based on that assumption I propose
the specific amendments presented below.
A. Changes Offset by New Revenue
The following changes have a net fiscal impact on the proposed budget,
and this impact will be offset by new revenue to be certified by the Chief
1.Restore tax exemption on out-of-state bonds. New revenue
will allow for this tax benefit to be restored for District
2.Eliminate provider tax on hospitals and restructure tax for
ICF/MRs. The original provider tax proposal assessed a tax on
Hospitals, Nursing Homes and ICF/MRs . The revised provider tax
proposal assesses a tax on Nursing Homes and ICF/MRs only.
3.Transitional space for offices vacating unsafe or inadequate
facilities. The Office of Property Management has renewed the
process for identifying unsafe and inadequate government buildings
and has developed an aggressive timeline for relocating District
employees to appropriate space. Funding for this relocation was
not included in the original proposed budget, and is necessary to
finance lease and moving costs.
4.Restructuring of charter school facilities allotment. To
allow for additional consideration of charter school facility
needs, the facilities allotment may be funded according to current
law for FY 2005. Further consultation with the Council and
community can define an appropriate option for rationalizing this
funding stream thereafter.
5.Microsoft licensing agreement. In the FY 2004 mid-year
budget reallocation approved by Council, $4.6 million was included
to fund annual licensing costs for software as part of a legal
settlement; but despite being an annual cost, this amount was not
included in the FY 2005 proposed budget. Of the total amount,
$1,380,000 can be funded through new technology efficiencies
identified in agencies. New funding is required for the remainder
in order to ensure legal compliance. Funding should be allocated
to the Office of Finance and Resource Management to administer
this agreement for agencies across the District.
6.Continued funding for Anti-Gang Initiative. Also approved
in FY 2004 was the commitment of funds from the Office of Latino
Affairs for programming targeted at at-risk youth. These programs
have begun, but funding was not included in the FY 2005 budget so
they may continue.
7.Pay-go capital for street repair. This funding will
provide a one-time investment to repair streets and sidewalks in
the District. It will be allocated as pay-as-you-go capital
funding, and therefore will have no impact on the District’s
borrowing limits. This funding will be allocated to the Department
8.Restore weekend litter can service. As a cost-reduction
measure the original proposed budget reduced litter can service on
weekends. This funding will allow the Department of Public Works
to restore services to previous funding levels.
9.Restructuring of Housing Production Trust Fund
securitization. To support additional community input, the
Housing Production Trust Fund may be funded according to current
law for FY 2005, and changes may be made in concert with the
community to allow for a more rational funding stream thereafter.
To support this restructuring, implementation of three tax
abatements in the Housing Act (Titles III, VI, and VII) would be
postponed for one year, generating $4,250,000 in additional
10.Additional cash reserve contribution. As required by
federal law, the fiscal impact of the changes presented must be
matched by a reserve contribution equal to 4% of this amount.
In addition to the FY 2005 impacts listed above, Attachment A to this
letter also presents the impact of these changes on the Financial Plan.
B. Changes With No Net Fiscal Impact
1. Department of Consumer and Regulatory Affairs (DCRA) transfer to
Office of Administrative Hearings (OAH)
This amendment increases the DCRA Local funds budget by $333,592 and 4
FTEs to correct the amounts transferred to OAH as part of the transfer of
certain adjudicative functions from DCRA to OAH in FY 2005. The original
amounts and FTEs transferred from DCRA to OAH included non-adjudication
functions and therefore exceeded the amounts required to be transferred.
This increase is completely offset by an OAH Local funds budget decrease
of $333,592 and 4 FTEs.
C. Additional O-Type Revenues and Transfer Between Fund Types
Office of Unified Communications (UC0)
This amendment increases OUC's proposed Special Purpose Revenue funds
budget by $4,926,485. OUC’s proposed budget should increase by
$4,926,485 to reflect the increased E-911 revenue from the federal
government. This also includes the addition of 14 FTEs.
Metropolitan Police Department (FA0)
This amendment increases MPD's proposed intra-District budget by
$4,926,485. The intra-District budget will be supported by the increased
E-911 revenue from the collection of E-911 fees related to federal
government telecommunication lines that is reflected in the Office of
D. Capital Outlay
Three projects previously approved by the Mayor and Council were
inadvertently omitted from the Capital Budget, and should be restored.
These projects were accounted for within the available financing limits,
and therefore have no adverse fiscal impact on the capital budget.
1. Department of Motor Vehicles (DMV)
This amendment restores DMV's capital budget for project WA5 40 (IT
Infrastructure Systems) for $1,500,000 in FY 04 and $3,000,000 in FY 05
for a total Budget of $4,500,000.
2. Office on Aging
This amendment increases the Office on Aging's FY 05 proposed capital
budget by a net of $130,000. The Office on Aging's proposed capital
budget for project A05 03 (Multipurpose wellness center in Ward 4) will
eliminate an inadvertent reduction of $300,000 in FY05. This amount was
an enhancement request not moved forward in FY 2005 and therefore,
should not have been counted as a reduction to the agencies capital
budget. In addition, FY 04 Target reduction of $130,653 for project AA1
01 (General Improvements - Group Homes) is restored.
3. Office of Property Management (OPM)
This amendment restores Office of Property Management's (OPM) FY 05
capital Budget by a net of $1,300,000. OPM's proposed capital budget for
project N14 01 (Renovation of Government Centers) should increase by
$1,300,000 in FY05.
Department of Motor Vehicles
Office of Property Management
Office on Aging
Net CIP Increase
Thank you for your consideration of these changes. I look forward to
working with the Council during the FY 2005 consensus process.
Anthony A. Williams
cc: District of Columbia Council Members
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of the District of Columbia
Executive Office of the Mayor
Office of Communications
|FOR IMMEDIATE RELEASE:
Wednesday, May 26, 2004
|CONTACT: Tony Bullock
Mayor Williams Submits Amendments to Proposed FY’05
BudgetRevised CFO Revenue Projections Show More
(Washington, DC) In a letter to Council Chairman Linda W. Cropp,
Mayor Anthony A. Williams has submitted amendments and technical changes
to his FY ’05 budget proposal. The proposed revisions have been made
following new revenue projections from the District’s Chief Financial
Officer Natwar Gandhi. CFO Gandhi has announced his intention to certify
slightly more than $50 million in additional revenue for FY ’05 based
on new economic data that shows higher-than-expected economic growth.
"Obviously this is good news for the District," said
Williams. "It shows that the economic policies of this
administration are working and that we have succeeded in restoring
tourism and encouraging investment and development in our city. A
growing tax base, more wage earners and increased property values have
brought more revenue to the table. This will allow the elected leaders
of the District to withdraw some controversial tax proposals and restore
some spending cuts in the FY’05 budget," he added.
In his letter to Chairman Cropp, Mayor Williams outlines 16 major
revisions and technical changes to his original budget proposal. The
most significant changes include:
- An additional $20.4 million to be directed to the Housing
Production Trust Fund
- The continuation of the exemption on state-level taxes on
- The elimination of the proposed provider tax on DC hospitals
- The deferral of the proposed cap on charter school facilities
- The inclusion of funding needed to provide transition costs for
- Additional funding for street paving and sidewalk repairs
When the budget process began, the Mayor and the Council faced a
budget gap of roughly $250 million. Through a process of negotiation and
months of work by the budget review team, the mayor’s proposed FY’05
budget called for a balanced spending plan. Some of the provisions in
the original proposal were not popular but, in consideration of the
revenue projections available at that time, they were necessary.
"These additional revenues allow us to avoid doing some things
we didn’t really want to do in the first place. I look forward to
working with the Council to finalize our budget for FY ’05. No one
likes surprises, but it’s a lot nicer to get a revision that shows we
will have more money to work with as opposed to having less. Practically
speaking, this additional revenue will help us bring the budget process
to a conclusion with less discord and argumentation," said