Mayor marion barry said last night that the city's budget deficit this year could reach $92 million and said he would propose new or increased taxes to make up part of what he described as a "very serious" fund gap.
The $92 millon is more than three times the previously anticipated deficit that had forced the mayor three weeks ago to order preparations for cuts in city payrolls and programs.
Meanwhile, top city officials who joined Barry in an impromptu news conference said the actual deficit might vary from the $92 million figure, depending on the city's response to a recent court decision striking down a tax on professional income.
Most of the deficit increase cited last night by Barry in the District Building pressroom stems from that decision, which deprives the city of a total of at least $56 million in refunds and in collections that can no longer be made.
The mayor also said collections of other types of taxes have slowed, and the forecast of revenue collections for the rest of the fiscal year has been cut by $8 million.
Barry said the $8 million downward revision of revenue estimates stemmed from declines in collections of the alcohol, gasoline, sales and income taxes. The revision was made this week and resulted from an analysis of trends that is routinely done each three months by the city's Finance and Revenue Department.
Barry did not detail what new or increased taxes he would propose, but he said the city is looking to a source that would provide more income than the professional tax.
Barry released the $92 million deficit projection after a two-hour closed meeting with City Council members. Some emerged talking about a possible $175 million gap between city income and expenditures. But the mayor said it would be irresponsible to call that figure a deficit. He said every budget projection and management decision would have to go wrong to make the total climb that high.
The projected deficit is more than 6 percent of the city's $1.5 billion operating budget.
By law, the city cannot actually run a cash deficit, and it must bring its spending into line with revenue before the fiscal year ends Sept. 30. Much of how this would be done depends on a final court order, expected several weeks from now, telling the city how and when it must refund the professional tax.
Barry said he has no immediate plans to order cutbacks beyond the Jan. 23 directive that told city department heads to find ways for cutting as much as $28 million from their spending. An aide said the mayor's proposals for absorbing the $28 million should be presented to the City Council late next week.
City Council finance committee chairman John Wilson (D-Ward 2) has consistently predicted the city's fund shortage would be much greater than Barry's original estimate of $28 million, sometimes mentioning figures as high as $166 million. Recently he declared at a council meeting that the council was being "snowed" on the budget.
The timing and manner of paying the professional tax refunds will largely determine the ultimate amount of the budget gap officials said.
Until Tuesday's D.C. Court of Appeals decision, an estimated $58 million had been collected from lawyers, architects, accountants, doctors and other professionals who conduct business in the District of Columbia. About two-thirds of the money came from suburban residents and the rest from Washingtonians.
Barry talked last night about the possibility of repaying only the suburbanites in cash, while keeping the money owed D.C. residents as credit against their personal income taxes.
In arriving at his $92 million deficit projection, Barry anticipated that the city will be permitted to make cash refunds only to suburbanites. If the court demands full refunds to all professionals, then the deficit would be correspondingly higher.
On the other hand, if repayment can be deferred to a subsequent fiscal year, then the mayor's projected $92 million deficit for this year would be too high, although the cash loss would have to be faced later.
In any case, the city is sure to be told by the court to stop collecting the tax immediately. In his $92 million deficit projection, Barry included $7.5 million to reflect a future loss of revenue from suburbanites only, rather than a total of $12 million from city and suburban professional tax revenues.
This is a direct loss of funds the city was counting on to pay its current expenses.
The $175 million revenue gap figure mentioned by council members who emerged from the meeting with the mayor is a mixed bag of items, some of which clearly could push Barry's $92 million deficit figure even higher.
For example, the $175 million total includes $62 million the city expects to seek from Congress as a supplemental federal payment to help pay the federal share of city expenses.
Some of the payment, for such things as higher-than-expected wage increases granted city employes and the cost of pensions, seems assured. But Sen. Patrick J. Leahy (D-Vt.), chairman of the D.C. Appropriations subcommittee, has said Barry is probably too optimistic in expecting the full $62 million.
City Administrator Elijah B. Rogers said the city already has taken management steps to absorb $43 million of congressional cuts in the budget -- another item that was included in the $175 million. So, too, was a $20 million loan that the city fully expects to repay to the U.S. Treasury.
Council member Wilson said he was depressed that no firm decisions were made at yesterday's meeting.
In an interview following the mayor's news conference, Wilson said he would not support any proposed tax increase until the city government eliminates what he called "frivolous wasteful spending," citing all city-paid out-of-town travel ($2 million), the hiring of consultants and commissioning of studies ($20 million) and the publication of the mayor's monthly newspaper, The City Hall New Times ($35,000). Wilson also urged that no vacancies on the city payroll be filled, providing a saving of $4 million.