WASHINGTON — The District of Columbia released its comprehensive annual financial report for fiscal 2010 on Monday as its chief financial officer warned against letting the surplus in the general fund slip further in fiscal 2012, which will begin on Oct. 1.
The CAFR for the fiscal year ending Sept. 30, 2010, showed the district’s general fund revenues exceeded expenses by $890 million on a cumulative basis. The figure was down from $920 million at the end of fiscal 2009.
The decline in the surplus has drawn concerns from rating agencies. In December, Standard & Poor’s noted the district’s financial position is “good” for now, but warned it could weaken if future budgets are balanced with reserves. This fiscal year, the city has already used $186 million of its reserves to offset revenue shortfalls, according to Standard & Poor’s.
In a statement accompanying the CAFR, CFO Natwar M. Gandhi said the district’s financial condition is better than many state and local governments, but that it needs to balance future budgets to ward off credit concerns.
“It is imperative that the district adopt future budgets on the principle of current-year spending not exceeding current-year revenues,” Gandhi said. “Measures must be taken to avoid practices that will compromise the district’s bond rating or present the risk of a downgrade in ratings.”
The “tenuous nature of the economy” will continue to be a challenge for the district’s budget writers, he said. In fiscal 2010, the district revised its budget to cut spending as revenues were less than had been forecasted. In the latest revenue estimate from December, Gandhi reported fiscal 2011 revenues remain in line with estimates.
In fiscal 2010, the city refunded about $828.7 million of outstanding general obligation bonds with income tax-secured revenue bonds, which carry a higher rating than the district’s GO debt. The savings achieved from these refundings will help the district continue its infrastructure investment plans while maintaining its 12% debt-to-expenditures cap, Gandhi said.
Separately, council member David Catania introduced a pension reform bill on Tuesday to stem rising pension costs. In fiscal 2011, the district will pay out $130 million into the pension system, according to Catania’s spokesperson Ben Young. That figure has risen from $46 million in fiscal 2007.
Unlike those of many states, the district’s pension system is fully funded, thanks in part to the federal government takeover of the city in the mid-1990s, in which it assumed some of the district’s pension costs.
Still, Young said it makes sense to make reforms now so that pension liabilities do not balloon out of control. He noted that the pension-reform savings will not take place immediately.
Catania’s plan would tie a pensioner’s cost-of-living adjustment to inflation, the consumer price index, and would have a 1% floor and a 3% ceiling. Additionally, the COLA would not accrue until the retiree reaches the full retirement age set by the Social Security Administration.
Catania’s plan will also reform the formula used to calculate a pensioner’s benefits so that workers can no longer load up on overtime to pad their payouts at retirement.
Also on Tuesday, District Council chairman Kwame R. Brown introduced emergency legislation to implement four furlough days for most district workers to save $19.6 million.