Washington, D.C., Chief Financial Officer Glen Lee earlier this week certified a revenue estimate for the city which began with some good news.
"Fiscal year 2026 local source revenue has been revised upward by $205.5 million, driven primarily by higher-than-expected collections for income and sales taxes as well as non-tax revenue sources," he said in a letter supplied to the mayor's office and the chairman of the council of the District of Columbia.
A dose of bad news quickly followed.
"The forecast for fiscal year 2027 through 2030 is revised downward, primarily due to sharply slower growth in corporate franchise tax revenue and weakening local economic conditions, particularly lower employment and wage growth," Lee wrote in the letter.
The District of Columbia employs an independent finance officer and is required by law to maintain a balanced budget.
Congress maintains power of budgetary oversight, which is a frequent friction point between the federal government and the city.
The CFO's report points to the Trump administration's efforts to downsize the federal workforce as a major cause for future pessimism.
"The district's unemployment rate has fallen slightly, but this improvement stems largely from a shrinking labor force rather than from gains in job opportunities," per the CFO.
The job loss is now estimated at 28,000 federal workers and a total net loss of 45,600.
"Deed tax revenue is also revised downward due to a persistently weak commercial real estate market and a weakening housing market," said Lee.
The uptick in local source revenue is attributed to "stronger-than-expected year-to-date revenue collections," mostly derived from income and sales tax.
The city's Democratic Mayor Muriel Bowser has tangled with the Trump administration during both of his terms and had been advocating for the city to step away from its dependence on federal jobs.
"These estimates underscore what we already know: we must act urgently to create jobs and diversify our economy so we can address the impacts of a changing federal footprint in the nation's capital," said Bowser.
"My administration has consistently said the district cannot sustain spending levels that far outpace revenue growth and we cannot tax and spend our way back to a thriving economy."
Bowser has been the city's mayor since 2015 and announced plans earlier this year not to seek reelection.
She will be replaced by Janeese Lewis George who won the primary election in June and faces no major challengers next month.
George identifies as democratic socialist and has represented the city's 4th ward on the D.C. Council since 2021. The mostly residential ward is on the most northern border of the city.
The city is also replacing its non-voting delegate in Congress as Eleanor Holmes Norton, who has held the position since 1991 is also stepping down.
Norton's seat will be taken by Robert White who has been serving as an at-large councilman since 2016.
In addition to the financial challenges facing the city, new leadership will need to reckon with the ongoing presence of National Guard troops, a squabble over control of the Kennedy Arts Center, ongoing construction on the East Wing of the White House and a proposed renovation of East Potomac Park on the Hains Point peninsula.
