Obscure law could allow D.C. Council to spend $100 million of surplus

Gray and Gandhi want to keep the money in the bank, but some council members have other ideas. (John McDonnell/The Washington Post)

Updated 1/31

To hear it from Tuesday’s rollout of the annual District financial audit, the fate of the city’s $417 million budget surplus is a foregone conclusion: Mayor Vincent C. Gray (D), D.C. Council Chairman Phil Mendelson (D) and council Finance and Revenue Committee Chair Jack Evans (D-Ward 2) all agreed: The full surplus will be saved, not spent.

But some lawmakers have other ideas — including Marion Barry (D-Ward 8), who says he’s found a way to spend a portion of the surplus on pressing city needs.

His staff has identified an obscure law passed by Congress in 2009 allowing the council to spend up to $100 million of a prior-year budget surplus — D.C. Code §47-369.01, if you’re scoring at home.

That statute allows the council to appropriate an additional $100 million from a surplus under certain conditions. The law has never been used, and it appears to sidestep a provision in the city charter holding that the council can only take up a spending bill if the mayor proposes it first.

So Barry has plans for that $100 million. To start with: $25 million for job training; at least $30 million for affordable housing; $20 million for the University of the District of Columbia, which is currently amid downsizing; plus more for summer jobs and other social service programs.

“I’m going to fight as hard as I can to get this $100 million spent on people, and programs that affect people,” Barry said.

That’s a sentiment shared by at least one other D.C. Council member: ”At a time when we have a lot of money, we also have a great deal of unmet need,” said Jim Graham (D-Ward 1) on Tuesday. “I just can’t understand why, every last dime of this … has to be banked, must be banked.”

But to take advantage of the law, several conditions must be met. To begin with, the funds can be used only for one-time expenditures, to avoid deficit spending, to pay down debt, to avoid revenue shortfalls and for “program needs.” It’s unclear whether the sorts of things Barry and Graham are contemplating could fall under the vague definition of “program needs.”

What could be more of an obstacle is this: “The Chief Financial Officer of the District of Columbia shall certify that the use of any such amounts is not anticipated to have a negative impact on the District’s long-term financial, fiscal, and economic vitality.”

CFO Natwar M. Gandhi helped make the usual case Tuesday that keeping the surplus in reserves would improve the District’s standing with Wall Street bond raters. He could conceivably balk at spending the $100 million, citing “long-term financial, fiscal and economic vitality.”

Also, procedurally, Barry and Graham might be boxed in. Mendelson and Evans could make it difficult for the council to take up a spending bill in the regular course, meaning it would have to be proposed as emergency legislation, requiring nine votes.

It’s unlikely that Barry and Graham could muster another seven votes. And with new revenue projections expected by mid-February — projections that could add hundreds of millions of dollars of current-year revenues — a surplus-spending vote could end up being beside the point.

Tim Craig contributed to this post.

Update, 1/13, 1:45 p.m.: Worthy of note: It wasn’t Barry or his staff who identified the 2009 statute — the law was outlined in an October memo prepared by the council budget office and distributed to all council members.

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