The District of Columbia’s estimated revenues for fiscal 2009 are $35.4 million less than predicted in February, as sales and income tax collections fall, chief financial officer Natwar Gandhi said last week.
“The current revenue estimate takes into account the national economic slowdown and its probable slide into a mild recession,” Gandhi told district officials in a letter on Wednesday.
Gandhi in February predicted revenues for fiscal 2009 to be $65.2 million less than estimates made in December.
Mayor Adrian M. Fenty in mid-March proposed a $5.66 billion budget for fiscal 2009, including $721.4 million of bond proposals, $449.2 million of which would be general obligation debt. The District Council will be considering it this week and the revenue shortfall may play a role in deciding budget items.
“By a number of indicators, the district’s economy has been faring better than the national one, but the job market is beginning to show signs of slowing and some aspects of the tax base are weakening,” the letter said.
General sales taxes weakened by 5.7% in the first quarter compared to 2007.
The city’s unemployment rate of 6.3% is the highest it has been in almost three years, and hotel receipts were down 2.2% from last year, according to the letter. The district relies heavily on tourism for almost half of its sales tax collections, Gandhi said.
Single-family housing sales were down 26.6% from the same time in 2007.
Gandhi said in the letter he expects a “mild recession” for the district followed by a recovery that begins in fiscal 2009.
“Despite the negative national economic outlook, the estimate is not based on a worst-case scenario,” the letter said. “The uncertainty surrounding the national and district economic outlook is worrisome and requires careful monitoring.”
Gandhi also warned that revenues could fall further if economic conditions worsen nationally and in the district.