D.C. Council Seeks to Cut $50 Million For Reserve

By David Nakamura
Washington Post Staff Writer
Saturday, November 8, 2008

The D.C. Council is developing a plan to slash the District's budget by $50 million more than the $131 million in cuts proposed by Mayor Adrian M. Fenty, which it would shift into a reserve fund to prepare for more bad economic times.

The proposal, details of which were still being negotiated yesterday, would delay many initiatives Fenty (D) and the council included in the fiscal 2009 budget in the spring. Some of the deepest cuts would hit transportation and affordable housing, city officials said. Housing issues potentially affected include the mayor's initiative to provide permanent housing for the homeless. The council is scheduled to vote on the budget reduction plan Monday.

Council members said the cuts are painful but necessary to protect the city from being unprepared for further revenue declines in the wake of the Wall Street meltdown and property market slowdown. The $50 million reserve would be used to make up for future revenue shortfalls. If that revenue holds steady, the council could release the funds to pay for the initiatives that will be put on hold.

"We do not want to get caught flat-footed," council member Mary M. Cheh (D-Ward 3) said. "Then we'd have to cut midyear, and that would be double the cut, because we'd have to make up for six months when we were overspending."

But the Fenty administration sent a letter to council Chairman Vincent C. Gray (D) warning that the council's proposal will significantly impact services.

An analysis from the mayor's budget staff showed that transportation would be cut by $15 million, limiting planned work on the 11th Street bridge and improvement to major thoroughfares, including Georgia Avenue, Nannie Helen Burroughs Avenue and Minnesota Avenue.

The council's plan cuts $19 million in assistance to first-time homebuyers and $5.6 million to help create permanent housing for the homeless. There is also an $11 million reduction in upgrades to the city's fleet of snow-removal vehicles, garbage trucks, firetrucks and ambulances.

"To the extent that aging vehicles require more maintenance and more fuel than newer ones do, the [city] will incur higher operating costs," Fenty said in the letter.

Linda Kaufman, chief operating officer of Pathways to Housing, said 400 residents have been moved into apartments subsidized by the city's Housing First initiative. But the budget cuts could threaten their ability to remain in their homes, and it likely would mean that another 400 residents scheduled to receive apartments next year would not get them.

"We heard they might not be able to finish out the year" in the apartments, Kaufman said.

In an interview, Gray said the council sought to halt initiatives because residents would not be affected as much as if current programs were eliminated.

"This sends an important message to Wall Street that we're being as responsible as possible," Gray said.

In September, Chief Financial Officer Natwar M. Gandhi announced the $131 million revenue shortfall. In response, Fenty proposed eliminating hundreds of vacant jobs and taking money from special funds in bank accounts controlled by city agencies.

But council members warned that the revenue projections could get worse in December, when Gandhi is scheduled to release his figures.

David A. Catania (I-At Large) has developed a plan to create a $15 million reserve fund for health care, in part by delaying implementation of Healthy D.C., which he created to provide health insurance to low-income residents.

The council's plan to find an additional $50 million appears to be in addition to Catania's proposal.

Ed Lazere, executive director of the D.C. Fiscal Policy Institute, which studies city budget issues, said he understands the council's concerns. But he added that critical services will be scaled back if the council follows through when it votes on the budget plan at a special legislative meeting Monday. Lazere sent a letter to Gray urging him to delay a vote until Nov. 18 so another public hearing can be held.

"When times are tough, you should be trying to protect services and do the least painful things as possible," Lazere said in an interview.

"You can address the problems as they come up."

Staff writer Nikita Stewart contributed to this report.

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