D.C. revenues modestly upgraded in new estimates

October 2, 2013

Natwar Gandhi, who announced his retirement in January, will probably issue one more set of revenue estimates in December. (Sarah L. Voisin/The Washington Post)

Chief Financial Officer Natwar M. Gandhi released what are likely to be his penultimate set of revenue estimates this week, modestly upgrading his projections even as a federal shutdown cuts into sales and income tax revenue.

For the recently concluded 2013 fiscal year, the soon-to-retire Gandhi projects an additional $36 million in general fund revenues above previous estimates — funds that will make up part of a budget surplus likely to be announced next February after the annual financial audit.

As for the current fiscal year, which started Tuesday, Gandhi upgraded revenues by $49 million, to $6.3 billion in general fund revenue. And for the 2015 budget year, which city leaders are now beginning plan for, there will be just over $6.5 billion in local funds to spend — $64.1 million more than previously thought.

The revenue ticked up in spite of the fact that, as Gandhi put it in his letter announcing the estimates, “Uncertainty still clouds the future course of both the national and local economies.” That includes the impacts of federal sequestration, the current shutdown and even a possible federal default. But the economic risks are outweighed, Gandhi said, by the District’s population growth, which means more income taxes and higher property values.

Still, he said, the projected growth for the next two fiscal years (3.4 and 2.4 percent, respectively) is much less than the 10.6 percent growth seen in fiscal 2012.

The bulk of the increase in the coming years is seen in individual income taxes, representing $42 million of the $49 million current-year upgrade. Sales tax revenue for fiscal 2013 was downgraded by $25 million due to softening collections and only modestly upgrades for future years. Property taxes have been upgraded for the current year by $10 million due to rising assessments.

One revenue source that has significantly faltered: automated traffic enforcement — read: speed cameras — which accounts for the bulk of a $16.5 million downgrade for last year and a $11.5 million downgrade for this year. The decrease, Gandhi says, is “because the implementation of some of the automatic traffic enforcement initiatives is behind schedule.”

Expect the impact of the federal shutdown to show up on the next batch of revenue estimates, due in December. The consequences of an extended shutdown, to say nothing of a federal default, could be drastic. In another report issued by Gandhi’s office Tuesday, city economists cited 2011 figures showing that one-quarter of all income taxes paid are paid by federal employees.

The December estimates are likely to be Gandhi’s last. Mayor Vincent C. Gray nominated Jeffrey S. DeWitt as his replacement last week, and the D.C. Council could act to confirm him as soon as early November. But lawyers in the CFO’s office believe that DeWitt would have to wait until his confirmation passed a 30-business-day congressional review period, meaning it could be January until he takes office and assumes the politically sensitive duty of estimating city revenue.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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Mike DeBonis · October 2, 2013