D.C. Mayor Gray tells Wall Street he won’t try to dismantle CFO agency

Mayor Vincent C. Gray has told Wall Street ratings agencies that he will not seek to dismantle the District’s independent financial agency, a recognition that a trial balloon floated this year may have swiftly popped.

In a February meeting with Washington Post reporters and editors, Gray (D) suggested that the city’s powerful chief financial officer ought to be directly accountable to the mayor. Currently, the chief financial officer is appointed by the mayor and confirmed by the D.C. Council to a five-year term and cannot be fired except for good cause.

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“I think the financial operations should be an inherent part of the government — that is, the executive [branch] with oversight by the legislative,” Gray said.

But in Manhattan meetings with the bond raters last week, Gray said he would not pursue the matter while mayor, according to several people present.

“The mayor’s definitely interested in continuing to examine this, but he did commit to the rating agencies on Wall Street that he intends to keep the CFO as an independent branch for now,” Eric Goulet, Gray’s budget director, said during a public briefing hosted Thursday by the D.C. Fiscal Policy Institute.

Council member Jack Evans (D-Ward 2), the finance and revenue committee chairman, confirmed the conversations. “Everybody was on the record saying we support the independent CFO, period, and that was that,” he said. “Even if we wanted to change it, we can’t change it. It is my view that hell would freeze over before Congress took away the independent CFO.”

Evans and D.C. Council Chairman Phil Mendelson (D), who also attended the meetings, support keeping the current setup. CFO Natwar M. Gandhi has publicly praised the structure on several occasions, crediting it for the city’s fiscal successes of the past 15 years.

Goulet acknowledged the benefits of independence Thursday.

“If it did move back into the District government, we would want to make sure that there were firewalls to prevent manipulation of the revenue estimates,” he said. “You start to have a budget gap, and you want to try to close that, and the easiest way to do it is to say, ‘Well, hey, maybe that income tax revenue will be a little rosier than you projected there.’ And that’s how cities get in trouble.”

In his earlier comments, Gray said he thought the independence question should be part of the search to replace Gandhi, who will leave the post as soon as a successor is found: “One of the questions that should be asked is: How do the candidates feel about this essentially being outside of the government?”

Gray has appointed Brookings Institution scholar Alice M. Rivlin and former mayor Anthony A. Williams (D) — himself a former District CFO — to lead the search. This week, Gray appointed additional members of a search committee, including affordable housing advocate Jim Dickerson, former deputy mayor Eric W. Price and BET Networks chief executive Debra L. Lee.

 
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