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Correction to This Article
A chart with this article omitted one of the sources for the data. The D.C. Council, which was not credited, provided reserve fund projections for the 2011 and 2012 fiscal years. The Office of the Chief Financial Officer, which was credited, provided the data for 1992 through 2010.

Shadow of politics hangs over D.C. budget as Fenty tangles with council members

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Chart showing D.C.s dwindling budget reserves
By Tim Craig
Washington Post Staff Writer
Wednesday, May 26, 2010

The mayor's budget lacks, some of his critics charge, imagination and grit -- ignoring tough decisions and continuing to borrow from the city's already weakened reserve funds to close a $550 million gap.

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When the D.C. Council votes on the budget Wednesday, it will make some major changes to the city's 2011 spending plan, including a sales tax on carbonated sugar sodas and on medical marijuana. But members have tabled many proposals for fear that they -- not the mayor -- would be tagged as having increased taxes or made crippling cuts to social service programs.

With Council Chairman Vincent C. Gray challenging Mayor Adrian M. Fenty's reelection bid this year, neither wants to be perceived as the bad guy, causing some to fear that District finances could collapse next year when the shadow of politics lifts from the city budget.

"We are saying it's too onerous to do this year," council member Jack Evans (D-Ward 2), the chairman of the Committee on Finance and Revenue, said recently about his colleagues' hesitance to discuss major spending reductions or tax increases. "However, next year, at the same time, at this exact place, we are going to have to do it. . . . There is no savings account left."

The city's fiscal condition is guarded at best: anemic revenue projections, concern that too many tax-assessment challenges will be successful and worry that the city's credit rating is in jeopardy because of overspending.

Faced with three years of shrinking tax revenue resulting from the recession, Fenty has laid off hundreds of city workers, cut tens of millions of dollars from programs and raised numerous taxes and fees. But Fenty, who campaigned in 2006 on a pledge not to raise sales or income taxes while increasing school funding, has leaned heavily on the city's reserve funds and money from President Obama's economic stimulus plan.

Now the bill is coming due.

Under the budget expected to be approved Wednesday, the reserve funds will dip to $607 million by the end of fiscal 2012, less than half of what they were when Fenty took office, budget documents show. The mayor is depleting reserve funds after promising the bond-rating agencies this spring that he would not let them dip below $920 million, according to Evans and council staff members at the meeting.

"The trajectory we are on is deadly," Gray said during budget deliberations. "This can't go on. We need to wake up and right-size this budget."

Fenty said Tuesday that he has "tried to strike the right balance" on taxes and spending while working to improve residents' quality of life. Instead of proposing higher income or property taxes, the mayor has sought to create or raise 680 fines and fees.

Fenty, who often pushes on projects that were conceptualized under Mayor Anthony Williams, has overseen the borrowing of hundreds of millions of dollars to refurbish parks and recreation centers and construct neighborhood amenities such as dog parks. But Chief Financial Officer Natwar M. Gandhi has warned that the city is perilously close to its debt ceiling, meaning that few, if any, capital projects can be approved in the coming years.

Observers say neither the city nor the council has made enough tough decisions to ensure the city's fiscal viability because too many officials are paralyzed by the idea of approving proposals -- no to a hospital tax and no to higher parking meter fees -- that they would perceive as votes against them in the fall. However, in an effort to stem other social service cuts, the council apparently agreed Tuesday night to extend the city's 6 percent sales tax to sodas and to scale back the city's summer jobs program.


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