The run of good financial news over recent months — a $417 million fiscal 2012 surplus, a $190 million fiscal 2013 revenue upgrade and a $178 million fiscal 2014 revenue upgrade — has had the District’s elected officials salivating over the prospect that they might have resources for significant new spending initiatives for the first time in five years.
But city officials explained Thursday that forthcoming revenue thus far certified by Chief Financial Office Natwar M. Gandhi isn’t exactly the parting “bouquet” some observers have called it. Barring another round of upward revisions later this year, the rising costs of government threaten to quickly outstrip the new revenue projections.
Mayor budget director Eric Goulet laid out the math Thursday morning at the D.C. Fiscal Policy Institute’s annual pre-budget-season briefing: Thanks to the natural rise in the costs of governing, the city next year has to spend an additional $107 million just to maintain the same level of government services offered this year.
There are other pressures as well: A growing public school enrollment, officials estimate, will require $60 million in additional spending. The city expects to lose $30 million in federal funds from the Temporary Assistance for Needy Families program that will have to be made up with local funds. And, according to actuaries, the city will have to send an additional $40 million to public employee retirement funds to keep them fully solvent.
So even before addressing Mayor Vincent C. Gray’s stated priorities of affordable housing and public employee raises, city leaders are looking at a $40 million budget gap for fiscal 2014.
“I think we have a harder problem than a lot of people think we do,” Goulet said. “People think we have riches to dispense, and that’s not the case. … This is going to be a very, very difficult budget.”
There are silver linings, however. For one, there is room to grow. Stephen Swaim, a senior economist for the CFO’s office, acknowledged that revenue projections should rise in June if Congress is able to come to a deal to avoid the sequestration cuts. (That’s a big “if,” of course.) And then there is the $190 million in current-year additional revenue that has yet to be appropriated. Gray has already proposed to spend $100 million of that on affordable housing, plus another $15 million on nonprofit grants. Spending those funds is complicated, Goulet and council budget director Jennifer Budoff explained, because the funds do not recur in future years. Goulet hinted that the retirement funds and other anticipated 2014 spending could be paid for out of the one-time 2013 money, leaving more space for other priorities.
What other priorities? One matter that was specifically mentioned by both Goulet and Budoff was expanding library hours. Council member Jack Evans (D-Ward 2) has proposed keeping library branches open seven days a week and as late as 9 p.m. on weekdays, which comes with an $8 million-per-year price tag. The mayor opposes writing library hours into law, Goulet said, but supports efforts to expand operating hours and would “like to try to get it in the budget.” Budoff said the library issue is “one of two or three bills that comes up all the time” for funding.
Budoff said council members will also be looking to fund bills they have passed “subject to appropriations,” while Goulet said Gray is committed to funding 4,000 sworn police officers in 2014. Meanwhile, the activists at the Fiscal Policy Institute — never to be taken lightly — are advocating for increased spending on a variety of health care, affordable housing and youth programs.
The fun officially begins on March 28, when Gray submits his 2014 spending proposal to the council. Goulet said the administration is likely to outline its plans for the 2013 funds at that time as well. Before then, some further clarity is likely to come next week, when the Gray-appointed Comprehensive Housing Strategy Task Force is expected to announce its findings.