An audit of the District’s finances shows a windfall of about $240 million in savings, a financial boon that will prompt debate on how much should be stowed away to impress Wall Street or committed to tax relief and services for city residents.
The city’s fund balance climbed in a positive direction for the first time in about four years, reaching $1.1 billion at the end of fiscal year 2011 from $890 million a year prior, according to the Comprehensive Annual Financial Report by independent accounting firm KPMG.
Despite lower-than-expected sales-tax revenue, the District was buoyed by assessments on its “hot” commercial property market and income from estate- and capital-gains taxes, according to the office of D.C. Chief Financial Officer Natwar M. Gandhi.
“On those fronts, the city is doing very, very well,” he said.
D.C. officials touted the news as a testament to their oversight of city savings and a local economic boom that has out-performed the rest of the nation.
“Nobody has what we have,” council member Jack Evans, Ward 2 Democrat and chairman of the Committee on Finance and Revenue, said.
The surplus of funds prompted scrutiny of fiscal mandates by the Mayor Vincent C. Gray and the D.C. Council in the last year, such as fee increases, tax hikes on the city’s wealthiest residents and program cuts. Mr. Gray said a decision to furlough city workers was based “on the best information that we had at the time.”
Yet the mayor declined to weigh in on specific revenue initiatives going forward, including an online gambling program that has been passed into law yet stalled because of contracting issues and public controversy.
“I don’t think it leads me to any conclusions on future funding sources,” said Mr. Gray, who counts fiscal stability among his four key priorities.
Council Chairman Kwame R. Brown indicated he was open to rolling back the revenue burdens on residents, and Mr. Evans reiterated his initial opposition to the tax hikes imposed last year.
“Residents want to know what’s in it for them,” Mr. Brown said. “I believe that everything should be on the table and we should evaluate everything.”
Mr. Gray and Mr. Gandhi dismissed talk of spending the surfeit of funds and favored the restoration of the fund balance to levels before the recession. The recent uptick should work in their favor when they meet with three major bond raters in New York City on Thursday.
“We need to recognize that this is one-time money that we are talking about,” Mr. Gray said, noting downsized programs that seek funding must be sustainable for five years under the city’s financial plan.
Mr. Gandhi also warned of federal spending cuts that greatly impact the District and overall uncertainty in the global economy.
“We still have issues,” he said.
Throughout their presentation, officials referred to a large flow chart that shows steady growth in the city’s fund balance from the late 1990s to the middle of the last decade. It takes a nose dive before turning upward in the last year.
Mr. Evans, the longest-serving member of the council, recalled fiscal strides at the dawn of former Mayor Anthony A. Williams’ administration before the “alarm bells went off” and savings began to plummet in 2006 or 2007.
“I can’t tell you,” he said, “how pleased I am to be here today to see that chart head back up again.”
• Tom Howell Jr. can be reached at thowell@washingtontimes.com.
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