The District's yearly financial report--which is expected to show a balanced budget and surplus--will be delayed up to 45 days, officials said yesterday, because of persistent problems with a new computerized financial management system.
The announcement by Chief Financial Officer Valerie Holt caught some city leaders by surprise--the report usually is released by mid-February--and raised questions about whether the problems could delay Mayor Anthony A. Williams's budget for the fiscal year that begins Oct. 1.
Williams's budget plan, which is based on figures in the annual report, is required to be sent to the D.C. Council by March 15 and then must be sent to Congress by June. Williams (D) said last night that he would have enough "working numbers" to prepare his budget until the financial report is completed.
Council member Jack Evans (D-Ward 2) said yesterday that he found it "offensive" that Holt waited until days before the usual release of the financial report to say that it would be late. He said he would hold a hearing Thursday on the new financial management system.
"This is the kind of surprise that [former mayors Marion] Barry and [Sharon Pratt] Kelly used to drop on people at the last minute," said Evans, chairman of the council's budget committee. "We were assured in November that everything was on track."
Holt said last night: "While our staff has been working around-the-clock to meet the February deadline, we have just reached the reluctant conclusion that we couldn't make it."
Alice M. Rivlin, chairman of the federally appointed D.C. financial control board, said that Evans was overreacting. The financial report often has been late, Rivlin said, although not as late as March.
"It's unfortunate it won't be on time, but it's not surprising in view of the implementation of the new financial management system," she said. "It won't have an impact in the end."
The financial report is key to preparing the mayor's budget because it provides audited spending totals from the current year that allow the mayor's staff to make projections about the coming year's expenses.
"The delay is reasonable, given the problems in implementing the new financial management system," a spokeswoman for Williams said.
Officials have been saying for weeks that they expect the financial report to say that the city has balanced its budget for a third straight year, and Evans said yesterday that the city probably would finish with a surplus of more than $100 million. If the city balances its budget for a fourth straight year, the financial control board--which has oversight over all D.C. government decisions--will be disbanded.
Holt said in a letter to council members yesterday that "the delays will not impact the financial results."
But the delay has shed light on the $32 million development of the new financial management system, which has been scrutinized by the council and the control board. Until this year, the city had prepared the report using an antiquated accounting system that wasn't equipped to overcome the year 2000 computer glitch.
"The time to implement the more up-to-date . . . system was compressed into one single year rather than the several years it normally takes," said Anthony Pompa, deputy chief financial officer. "The District had to ensure it had a Y2K-ready system."