D.C. government is open, but payments remain in flux

October 7, 2013

Some District government creditors will go unpaid until the federal shutdown ends. (Jonathan Newton/The Washington Post)

Since the federal government shut down last Tuesday, Mayor Vincent C. Gray (D) has sought to portray a District government that has gone about business as usual, delivering the everyday city services that residents expect.

While all city employees have remained on the job and most residents have seen no change in the day-to-day operations of city government, business has not been entirely as usual: A wide variety of District government payments have been suspended to conserve the city’s available cash.

The latest payments to be affected, the Office of the Chief Financial Officer said Monday, are tax refunds. Residents and business are still required to pay any taxes due, but officials said any overpayments won’t come back to taxpayers until after Congress reaches a spending deal. (Plus interest, in case you are wondering.)

Other payments have been affected as well. Last week, the Department of Health Care Finance announced it would not be making $89 million in health care payments. And a trial lawyer who spoke on condition of anonymity so as not to jeopardize payments due to his clients said he was told by e-mail Thursday that a settlement check he’d been expecting would not be paid until after the shutdown.

Asked about the payment freeze on Friday, OCFO spokesman David Umansky said the decision to pay the city’s debts during the shutdown — payments that must come out of the finite Contingency Cash Reserve Fund — must be approved in writing by City Administrator Allen Y. Lew.

Legal settlements and judgments have not been among them. So which bills are being paid? The Contingency Cash Reserve Fund, containing roughly $140 million, is being conserved in order to cover the $98 million in city employee payroll due Oct. 15. Asked for a list of other authorized payments, Lew’s office did not provide one Friday. Spokesman Tony Robinson said there is “not an official list.”

“Agencies have been advised to submit request to OCA and each will be evaluated/prioritized,” he said in an e-mail.

A city official not authorized to comment publicly said checks have been cut for some obligations, such as rent payments, that could trigger oppressive contract default provisions. Other obligations with fewer consequences for non-payment will be delayed. (Note, however, that one group of city creditors will get paid regardless: Bondholders are paid out of city funds that are appropriated through the District charter and not subject to the shutdown.)

Umansky said Friday the city remains on track to exhaust the contingency funds early next week. Gray has not said what he will do once that milestone is reached.

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 7, 2013