D.C. Announces $417 Million Surplus Just Before Rating Trip

District of Columbia Chief Financial Officer Natwar Gandhi and Mayor Vincent Gray announced a $417 million 2012 surplus this week, bringing the city's fund balance to its highest level in five years.

The surplus should help the mayor and CFO when they travel to New York sometime next month to meet with representatives of the rating agencies, though no exact date has been set.

The surplus, the second since 2005, lifted the fund balance to $1.5 billion according to the district's Fiscal Year 2012 comprehensive annual financial report. The CAFR shows a $277 million increase in revenue and $50 million less than anticipated in spending, for a total of $327 million surplus. It displays a $90 million surplus in special purpose revenues. The report was conducted by independent auditing firm KPMG.

This is the second time since 2005 that the district's fund balance has increased, and it puts D.C. closer to greater financial flexibility. By law, the district cannot begin spending surplus money until the fund balance reaches $1.8 billion, or two months' cash.

"This is affirmation that our economic development strategies are working and shows that we are one of the nation's most financially sound jurisdictions," said Gray.

Gandhi was equally enthusiastic about the financial state of the district, which has seen its general obligation debt receive 13 upgrades during his more than 12-year tenure as CFO.

"The district is in perhaps the best financial condition in its history," said Gandhi. "Our fund balance is in excellent shape, we are experiencing growth in both jobs and population and we are getting the best possible interest rates on our bonds."

The district had $7.9 billion of outstanding debt at the end of fiscal 2012, the final numbers show, of which nearly $4 billion are the district's income tax revenue bonds, which are rated triple-A by Standard and Poor's, AA-plus by Fitch Ratings and Aa1 by Moody's Investors Service. Limited to 17% debt service cost as a percent of general fund revenue, the district finished 2012 at 7.1%, the report shows. That was down from 7.6% in fiscal 2011.

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Washington
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