Unexpectedly strong revenue driven by a hot real estate market left the District with a $318 million budget surplus for fiscal 2004, the largest since the financial control board disbanded in 2001, according to an audit released yesterday.
With the extra cash, the District has amassed more than $1.2 billion in various accounts, a milestone that Chief Financial Officer Natwar M. Gandhi described as "miraculous" given the grim situation nine years ago, when the city was more than $500 million in debt and virtually bankrupt.
Council member Jim Graham said more money should be made available to meet immediate needs.
(File Photo)
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Budget Surplus: The District of Columbia had a budget surplus of $318 million in fiscal 2004 and now has more than $1.2 billion in cash in the bank.
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"I never thought we would come to a day when we would have a billion dollars in fund balance," Gandhi said at a news conference with Mayor Anthony A. Williams (D) and D.C. Council leaders. "The District has gone through a major, miraculous transformation, a metamorphosis of a rare kind."
Only a portion of the $1.2 billion is available to increase spending on city programs, Gandhi said. Of that portion, Gandhi is proposing to hold about $225 million in reserve to fund health care benefits for retired city employees, a cost that is scheduled to balloon in fiscal 2008. An additional $40 million would be dedicated to capital projects under Gandhi's plan.
About $42 million would be available for the mayor and council to spend. City Administrator Robert C. Bobb said he is working on a supplemental appropriation bill that would devote the funds mainly to juvenile justice programs, health care and the newly formed Anacostia Waterfront Corp., which is charged with redevelopment along the Anacostia River.
The rosy financial picture also means the District can move forward with $900 million in tax cuts during the next five years, Gandhi said. The reductions were approved by the mayor and council in 1999.
Unless the council moves to block the cuts, the city's top tax rate for residents earning more than $30,000 a year, for instance, will drop from 9.3 percent to 9 percent this year.
The audit marks the eighth straight year the District has balanced its budget. Council leaders praised Gandhi and Williams for their steady fiscal leadership. Williams returned the compliment, calling the council "a real partner on this."
"We have come a long way in the last 10 years, from a city on the verge of bankruptcy to the strongest, most fiscally responsible city -- or state, for that matter -- in the nation today," said council member Jack Evans (D-Ward 2), chairman of the Finance Committee.
There was grumbling from some council members, who complained that Gandhi once again had dramatically underestimated revenue, effectively cutting the council out of decisions about where to direct hundreds of millions of dollars.
Under D.C. law, the council is unable to reprogram surplus funds; that task falls to the mayor, subject to congressional approval.
"I understand their desire to be conservative. But the council is boxed in and limited in what it can do," said council member Vincent C. Gray (D-Ward 7), who represents some of the city's poorest neighborhoods.
Gandhi acknowledged that he underestimated tax revenue by nearly $200 million. But he defended his performance, noting that District budgets must be approved by Congress, forcing him to prepare revenue estimates a year to 18 months in advance.
For the fiscal 2004 budget, Gandhi prepared his estimate in February 2003. At that time, Gandhi said, a sniper was on the loose, the war in Iraq was about to begin and the stock market was in miserable condition.
