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Posted at 12:43 PM ET, 06/24/2009

Gray Warns of Tough Budget Cuts in Coming Weeks

Council Chairman Vincent C. Gray (D) will meet with City Administrator Neil O. Albert this afternoon to begin plotting a strategy for closing the District's revenue shortfall.

The meeting, which will include Mayor Adrian M. Fenty's (D) budget team, comes as Gray is sending signals he doesn't want the city to rely on its reserve fund to close a $190 million shortfall in the current year's budget. District leaders are also facing a $150 million gap in the fiscal year 2010 budget that the Council approved last month. And the revenue gap is projected to grow to $240 million in 2011.

"Do we try to deal with all of this now or do we use the contingency fund that will just push the problems out further?" Gray asked in an interview. "Do we try to solve the problem fundamentally or do we try to buy time?"

In announcing the revised the revenue numbers, Chief Financial Officer Natwar M. Gandhi suggested that Fenty remove $190 from the reserve fund to close this year's budget gap. If that money is removed, it has to be paid back in fiscal years 2010 and 2011.

Gray said he's exploring other strategies - perhaps involving major budget cuts this summer - to avoid having to take money from the reserve fund. One option involves shifting $190 million from the 2010 budget back to the current year's spending plan. The Council would then have to reduce the 2010 spending plan by $340 million before they adjourn for summer recess.

"I don't see any alternative to eventually having to substantially reduce services unless someone proposes new taxes and I don't know if there is an appetite for that," Gray said.

The Council is scheduled to go on recess July 15, but Gray said he's envisions an extended session so members have more time to address the budget.

"We cannot go on recess until this is solved," Gray said. "There are no easy choices."

--Tim Craig

By  |  12:43 PM ET, 06/24/2009

Categories:  Tim Craig

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