District of Columbia Council member David Catania called on chief financial officer Natwar Gandi to produce updated revenue estimates for fiscal 2009 so the council can consider possible further budget cuts before the new year.
Catania also warned that officials needed to consider the matter soon to avoid financial problems similar to those the city experienced in the 1990s.
Gandhi in mid-September announced a $131 million revenue shortfall for the fiscal 2009 budget. The projection was done before the turmoil on Wall Street escalated in mid-September with the bankruptcy of Lehman Brothers, which Catania says needs to be considered.
“Managing a fiscal crisis requires making tough decisions early,” he said in a release. “The district’s financial problems in the 1990s deepened because promises to address budget deficits were continually deferred and, more often than not, abandoned altogether.”
Catania pointed to the fiscal crisis of the 1990s that eventually led to the suspension of the city’s home rule as escalating budget deficits and unfunded pension liabilities prompted Congress and the president to create a financial control board for the city.
“District leaders, including myself, have a special obligation to make sure that our financial house is in order,” Catania said. “Preserving Home Rule by balancing our budget is not an academic exercise. Barely a decade ago, district residents lost their right to be governed by the people of their choosing due to the city’s dismal fiscal condition.”
Mayor Adrian M. Fenty two weeks ago announced plans to eliminate about 200 vacant jobs, cut agency spending by about $60 million, and use a $17 million fiscal 2008 surplus to close a projected $131 million budget gap for fiscal 2009.
The council, at Catania and others’ urging, canceled a vote last Tuesday to consider Fenty’s proposal, and is seeking more information about the revenue projections.
Gandhi and some of his staff have said the outlook could worsen by the time the December revenue projections are completed. The shortfall stems from an expected slowdown of income tax revenues, mostly from reductions in capital gains tax collections, which make up nearly 13% of total income tax revenues for the city. The CFO has said that “uncertainty dominates” the districts finances.