Looking out for D.C. finances

Sunday, June 13, 2010

THANKS TO a healthy economy and the strong foundation laid by the mayor who preceded him, Adrian M. Fenty (D) took office able to undertake a wealth of projects across the city, invest resources in his big priority of improving the schools and still largely adhere to his promise not to raise taxes. The D.C. Council, under the leadership of Chairman Vincent C. Gray (D), went along with much of the mayor's agenda while insisting on its own priorities. The District now faces tougher fiscal times, and the two candidates for mayor each say that they offer the surest hand to guide the city's finances. As the campaign unfolds over the summer, Mr. Fenty and Mr. Gray will be pressed for fuller explanations on how they would face these challenges. Their records over the past four years will offer some useful clues in assessing their promises.

Within days of winning the 2006 Democratic primary, Mr. Fenty moved to reassure a jittery financial community that a somewhat inexperienced council member could be trusted with the city's finances by asking Natwar M. Gandhi to stay on as chief financial officer for another five-year term. When Amtrak tried to hire Mr. Gandhi, Mr. Fenty engineered an inducement, endorsed by Mr. Gray, for him to stay, and when a tax scandal broke, the mayor never wavered in his support of Mr. Gandhi. That D.C finances are in relatively sound shape -- its bond ratings have stayed steady with one new offering even winning a coveted AAA grade -- is attributable, in part, to the stability of Mr. Gandhi's tenure, and that is testament to the strength shown by Mr. Fenty in making key appointments.

Mr. Fenty has been clear about his spending priorities -- schools, police and rebuilding the district's worn infrastructure. His efforts have produced results, as evidenced by The Post's recent analysis of tens of millions of dollars in new libraries, schools and recreational centers in every city ward. But the mayor hasn't always been forthright about the costs. Consider, for example, his promise to improve schools without additional monies, even as he directed more resources their way. And there are questions of whether in his haste to show results -- cynically timed to this year's election, some say -- the city always has gotten the best deal for its money. The first year of his summer jobs program can only be described as a debacle.

Perhaps his most impressive accomplishment was in controlling the costs of government. He consolidated agencies and streamlined functions, reducing the workforce by nearly 2,500 positions. After years of record increases, Mr. Fenty managed to keep recurring government spending modest, with expenditures from local funds staying almost flat over the past years. With the recession causing dramatic shortfalls in revenue, Mr. Fenty drew on the city's reserves and restructured debt to come up with one-time savings to balance the budget. Both moves made sense in hard times, but there's a worrisome lack of concern for building back the balance.

Mr. Fenty has been true to his no-tax promise, although he has come under criticism for increased fees on a raft of government functions. It's understandable that those paying more for parking or a building permit feel nickeled-and-dimed, but there are benefits to some of the increases, such as making those who break speeding laws pay more. Mr. Fenty wasn't timid in proposing unpopular cuts, such as doing away with the Emancipation Day holiday, and he has demonstrated determination to get the most out of the government workforce, which has earned him the enmity of labor unions, which are lining up to support his opponent.

Mr. Gray, by his role and his style, is more cautious about city finances. He must deal with 12 other council members, often with competing interests, to develop consensus in reaction to what the mayor has proposed and in the face of passionate demands for resources from myriad interest groups. By and large, Mr. Gray has ably balanced the mayor's priorities, council interests and the District's fiscal well-being. One of the chairman's finest hours was in the fall of 2008, when it became clear that the city was headed for financial hard times and Mr. Gray forcefully argued for spending cuts. The council chambers were packed with human services advocates clamoring for more resources, but Mr. Gray persuaded his colleagues to make $131 million in cuts to better prepare the city for harder days ahead. He played a similar role last year. Likewise, the chairman is credited with winning approval of legislation recommended by Mr. Gandhi to limit city debt service to 12 percent of the city's overall expenditures. And even Mr. Fenty credits Mr. Gray with setting up an office that would do a better job of winning the city's rightful share of federal reimbursements.

High on the chairman's personal spending priorities are early childhood education and adult job training, and he has used his position to direct resources to those programs. Overall, the council has tended to second-guess the mayor when it comes to reductions in human services; in order to come up with needed funds to restore projects, the council initiated increases in the cigarette, sales and gasoline taxes. It also enacted tax cuts for small businesses and the working poor.

Mr. Gray's tenure has not been without controversy. The use of earmarks, non-competitive government grants to specific groups, rose dramatically. Adverse publicity prompted Mr. Gray to impose new controls, but it was the scandal over council member Marion Barry's earmarks and shrinking resources that led to their elimination. There also have been questions over Mr. Gray's handling of this year's budget deliberations. His flip-flop on funding for trolley cars, made in the middle of the night along with reshuffling of spending priorities, stands at odds with the image he likes to project of open and transparent governing. Moreover, his decision to restore the trolley-car funding but still preserve pet projects by borrowing more money, even as the reserves dwindle, has opened him up to criticism that winning this election matters more to him than the city's fiscal health.

Overall, the District's current financial health is a result of the work of both men. Mr. Fenty got the big issues right in choosing Mr. Gandhi and controlling government spending; he also laid down the right spending priorities and then stuck with them. Mr. Gray's careful probing provided an important backstop, and at critical times he insisted on fiscal discipline. Looking ahead, Mr. Fenty has renewed his promise not to raise taxes; a spokesman for Mr. Gray said that tax hikes are not in his plans but it would be irresponsible to make an ironclad promise. The Democratic primary is Sept. 14.

This is the second in a series of editorials on the records and positions of the candidates for District mayor.

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