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Shortfall Expected to Force D.C. to Cut Services, Jobs

Reductions Possible in All Agencies and Programs, Mayor Says

By Lena H. Sun and Craig Timberg
Washington Post Staff Writers
Sunday, September 8, 2002; Page C12

D.C. Mayor Anthony A. Williams said yesterday that tough fiscal times in the coming year could force cuts in services and personnel as the District grapples with a projected revenue shortfall of $325 million, the largest such gap in nearly a decade.

"Everything is on the table," Williams (D) said in an interview, referring to spending cuts and layoffs. "You can't say otherwise."

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The new fiscal year will begin Oct. 1, and that means some cuts will need to be made this month to offset the projected drop in income. City officials have said since earlier this year that the District faced a budget shortfall for fiscal 2003. Williams said the main cause was the continuing drop in tax revenue, and he gave no indication of what spending cuts he might suggest.

Williams's comments yesterday and during a debate Friday come at a sensitive time in his reelection bid. The Democratic primary is Tuesday. Williams, who forged a reputation as the financial savior of an ailing city, had been considered a virtual shoo-in until last month, when he bungled getting his name on the ballot after workers submitted forged petition signatures. He is seeking reelection as a write-in candidate.

Williams acknowledged that the city had to make some hard spending decisions. "We're looking at a tough situation, and that's why you need experienced leadership," he said. Williams served as the city's chief financial officer from 1995 to 1998 before his election as mayor that November.

Williams's strongest challenger in Tuesday's race, Willie F. Wilson, said the mayor's latest fiscal reckoning raises questions about his much-touted financial acumen and the transparency of his administration.

"I think there's a feeling by many that he's not been truthful in putting out what's going on," said Wilson, pastor of Union Temple Baptist Church in Anacostia and also a write-in candidate.

As recently as July, city financial officials projected a shortfall of about $200 million for next year, according to D.C. Council member Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue. Last week, Chief Financial Officer Natwar M. Gandhi told Evans that the figure was closer to $325 million.

Tax revenue had fallen sharply, so officials revised their forecast. The economic slump after Sept. 11, combined with the stock market roller coaster, sent tax collections plunging throughout the the country. Problems in the District have been most acute with income taxes and capital gains taxes, which are paid on profits from selling assets, such as stocks.

Still, the District is in better shape than Maryland and Virginia, Evans said, which face revenue shortfalls in the billions.

The $5.8 billion District budget for fiscal 2003, which needs congressional approval before taking effect Oct. 1, is pending in Congress. It was passed by the D.C. Council in May on a 12 to 1 vote, after minor revisions, and would increase spending by 7 percent and put off a planned personal income tax cut until 2004 at the earliest. The major areas of the budget, including public safety, schools, public works and social services, would get nearly what Williams had proposed. At the time, some council members warned of the dangers of overspending.

In light of what he called the "significantly bigger" anticipated shortfall, Evans said he agreed with the mayor that the city must consider reducing services and furloughing personnel. Any spending cuts, he said, should begin with the city agencies that make up the biggest parts of the budget -- schools, human services and public safety.

Evans as well as several other Democratic council members have endorsed Williams for mayor. Evans said he does not fault city officials.

"I think this helps the mayor," Evans said. "We need experienced people at the helm. . . . You can't assign blame for the stock market going down. There's no mismanagement here."

All city officials were at fault, in a way, he said, because "we should have saved more money" in writing the budget. "But it's an election year."

© 2002 The Washington Post Company