D.C. lawyers approve use of $144 million reserve fund if federal government shuts down

President Obama scolded House Republicans on Friday as a the possibility of a government shutdown continues to loom.
September 27, 2013

District officials said Friday that because city lawyers approved the use of a special reserve fund, they are confident the city government can continue to operate even if a federal shutdown takes effect next week.

Tapping the $144 million Contingency Cash Reserve Fund gives city leaders a legally palatable alternative to the acts of outright defiance they discussed earlier in the week, which the District’s attorney general warned could put them at risk of prosecution or congressional retaliation.

“It would give us flexibility,” Mayor Vincent C. Gray said of the fund.

But Friday, it remained unclear how exactly the city’s unprecedented effort to avoid shutting down might play out. Because the District budget is ultimately appropriated by Congress, it has historically been included in federal shutdowns.

Gray (D) told President Obama’s budget office Wednesday that he intends to keep the entire District workforce — roughly 32,000 employees — on the job should a shutdown proceed.

That is a major departure from past practice, when the District assumed the posture of a federal agency, designating only employees essential to the “safety of human life or the protection of property” to keep working.

But the Office of Management and Budget has yet to indicate how it will treat the District’s declaration designating all workers as exempt from furlough, which could be interpreted as flouting the federal law preventing government spending in the absence of a congressional appropriation.

Gray said Friday that he had spoken to Sylvia Mathews Burwell, the director of the budget office, but said the conversation “didn’t come to any conclusions.”

“They’ve been, I would say, cooperative at this stage,” he said. “We certainly don’t have any indication as to where they will come down. . . . I think they’re leaving it up to us.”

The budget office has not responded to numerous requests for comment made since Tuesday. Pedro Ribeiro, a spokesman for Gray, said administration officials are scheduled to have additional discussions with the office Monday.

Use of the reserve fund has the backing of D.C. Attorney General Irvin B. Nathan, as well as lawyers for Chief Financial Officer Natwar M. Gandhi, according to two officials familiar with the matter who were not authorized to speak publicly.

Nathan earlier in the week had warned city officials that defying the shutdown could expose them to criminal prosecution under the federal Anti-Deficiency Act or retaliation from Congress, which retains ultimate control of the city under the Constitution. But he has agreed that the contingency reserve has been properly appropriated by Congress and is available for the city’s use, the officials said.

 

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Ted Gest, a spokesman for Nathan, declined to comment. David Umansky, a spokesman for Gandhi, declined to comment on any legal conclusions but confirmed that the use of the fund is under discussion.

City workers can expect no issues receiving their paychecks, which are due Tuesday, Umansky said. And there are sufficient funds in the contingency reserve to cover the $98 million in payroll due Oct. 15. Beyond that, officials said, the city’s options are less clear-cut.

If the shutdown lasts long enough to deplete the reserve, city officials would risk federal intervention by keeping the government open. But the risk of intervention, despite Nathan’s warnings, appears remote.

Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, was quoted Thursday by Roll Call saying the District was at little risk should it defy a shutdown. “I rather doubt that Congress would take punitive actions against the District of Columbia for keeping their personnel on,” he said, according to the paper.

And while federal officials are regularly reprimanded administratively for spending violations, there is no record of any criminal prosecutions for Anti-Deficiency Act violations. A Justice Department spokeswoman declined to address the matter earlier in the week.

Should the Obama budget office accept Gray’s request to designate all workers as exempt from furlough, the use of the reserve fund would not be necessary and other legal concerns could be rendered moot.

Alice M. Rivlin — who helmed the presidential budget office during the last shutdowns, in 1995 and 1996 — declined to say Friday how she would treat the mayor’s request were she still the budget director.

“I think the mayor’s decision is perfectly understandable,” said Rivlin, who has advised Gray on various issues, including his nomination this week of a new chief financial officer. “Whether it’s legal or not, I haven’t a clue.”

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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