WASHINGTON — The District of Columbia is lowering its revenue estimates for fiscal 2010 and 2011 amid the weak economy, but it’s making sure it will stay within its debt cap, chief financial officer Natwar Gandhi said Monday.
Total revenues for fiscal 2010, which ends Sept. 30, have been revised lower by $45.4 million from a February estimate, Gandhi said at a press briefing. Revenues for fiscal 2011 are now estimated to be $99.8 million less than that estimate. Revenues for fiscal 2012 through 2014 also have been revised lower, he added.
Gandhi said his office “is recalculating” the district’s self-imposed 12% debt-to-expenditures debt cap, but does not see a major impact from the lower revenues.
Debt needed for the district’s five-year capital plan is already within the debt cap. However, the lower revenue estimates “might limit the flexibility” of tax-increment financing projects, he said. The revised cap could be released by the end of this week, according to another district official.
“In general, I don’t see a substantial impact on our revenue cap, primarily because we have been very conservative” in estimating the cap, he told reporters yesterday.
Individual non-withholding tax collections are expected to be down 45% for fiscal 2010 based on estimates through August. Sales taxes are forecast to be down 4.9% for the year. However, real property tax revenues are expected to be higher for fiscal 2010.
Despite the lower revenue estimates, Gandhi was upbeat about the district’s financial condition.
“Show me a jurisdiction that is doing as well as we are at this stage,” he said. Credit agencies have maintained the district’s ratings throughout the recession, Gandhi noted, adding that the district enjoys a “superb” reputation on Wall Street.
The district’s income tax-secured revenue bonds, its primary vehicle for debt issuance for the past two years, are rated AAA by Standard & Poor’s, Aa2 by Moody’s Investors Service, and AA by Fitch Ratings. Analysts have said the city’s debt cap has contributed to the high ratings.
This spring, the district issued $126.8 million of refunding bonds to get debt under the cap for the fiscal year.
Gandhi said the district refunds debt “on a regular basis” to find savings and that it will continue to stay under the 12% cap. In March, he warned in a letter to District Council members that the refunding deal was a one-time solution to get under the cap.
The transaction was estimated to save about $338 million through fiscal 2014.
