District of Columbia chief financial officer Natwar Gandhi on Friday warned the District Council that “uncertainty” is the “dominant characteristic” of the city’s economic outlook.
The statement came a day after Mayor Adrian M. Fenty announced plans to eliminate about 200 vacant jobs, cut agency spending by about $60 million, and use a $17 million fiscal 2008 surplus to close a projected $131 million budget gap for fiscal 2009.
Revenue shortfalls Gandhi predicted last month could worsen by the time the December revenue projections are completed. The shortfall stems from an expected slowdown of income tax revenue, mostly from reductions in capital gains tax collections, which make up nearly 13% of total income tax revenue for the city.
Because officials revised the projections prior to Sept. 15 — excluding the past month of turmoil that has wreaked havoc on Wall Street — finance officials said the figures could be worse in December when they will release updated numbers.
“Uncertainty dominates,” Gandhi said in prepared text to the council. “By the time of the December estimates we will: 1.) have a clearer sense of where the stock market is likely to end up for the year; 2.) have new data and forecasts for the U.S. and D.C. economies, and know better how much the effects of the financial turmoil are spreading to the real economy; and 3.) know how the district revenues fared for FY 2008, the base year from which forecasts for fiscal years 2009 to 2012 are made.”
The CFO said that it will take the next two or three months of looking at actual expenditures to provide the accurate numbers for a “precise analysis.” The district’s fiscal year began Oct. 1.
“It is imperative that the district government monitor the spending pressure situation very closely and take necessary action shortly after the December revenue estimates are released,” Gandhi said.
