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Posted at 05:44 PM ET, 02/24/2010

D.C. city revenue estimates again decline

D.C. Chief Financial officer Natwar M. Gandhi released his latest revenue estimates Wednesday, and once again, they're down. He had to adjust the fiscal 2010 budget he estimated in December by nearly $17 million and the fiscal 2011 budget by about $49 million.

He pointed to several factors, one being the hike in the cigarette tax from $2 to $2.50 per pack that was supposed to generate revenue. While Gandhi had predicted a reduction in sales, the drop has been startling as smokers take their money to Maryland.

He had to adjust the revenue estimates in fiscal 2010 and fiscal 2011 by $15 million in each year.

Council member Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue, said the drop shows that increasing the cigarette tax and other taxes and fees is shortsighted.

"When you raise these taxes above what it is in Maryland. What happens? People then buy their cigarettes in D.C.? No. They buy them iin Maryland. Cigarette smokers are crazy like that," he said. "We're at a point with our taxes, we can't raise them anymore. They can't generate money. This is a down economy. People don't have money."

But Evans said he is most worried about expenditures greatly exceeding revenue.

"Again, the revenue estimate is not bad. It's the spending pressure that's bad....It's no more than the natural growth of the city."

By  |  05:44 PM ET, 02/24/2010

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