WHAT IS the truth about the District's financial affairs? A few weeks ago, the mayor was saying that budget deficits were a thing of the past. He was blaming the city's shortage of money on the past administration and on bad federal accounting procedures. But now the mayor sees a potential $60 million deficit on the horizon for this fiscal year. Part of the trouble, he says, comes from over-budget spending by several city agencies. The lion's share he attributes to underfunded pension liabilities and questions about how the city pays its debt service to the federal Treasury.
City administrator Elijah Rogers says the $60 million figure is actually only an estimate of the worst possible trouble that could befall the city. He says about $20 million in pension debts probably will not have to be paid in this fiscal year: the amount by which the federal government corrected and raised the city's pension contributions after this fiscal year began. In addition, the city may not have to pay $10 million in debt services this year. Minus those amounts, the actual deficit is reduced to between $25 million and $30 million.
The plan for handling that $30 million will be to make cuts to compensate for overspending by Human Services ($20 million), Corrections ($7 million) and housing ($2 million to $4 million). The city knew much of that deficit would occur even before the fiscal year began last October. Mr. Rogers concedes, but no steps were taken to cut back spending because the city had been traumatized by budget cuts and hiring freezes in the previous two years.
That was a major mistake. Just about the worst part of the District's financial problem is that Mayor Barry has been so inconsistent and evasive in saying what it is. One day the city has no more budget problems, and the next day a $60 million problem. Now half of the $60 million problem is said not to be real. But the $60 million figure is real. The District will have to pay it now or later. If any part of the pension liability is not paid this year, it will return to haunt the city in the same way that the $30 million deficit -- which the city knew about last September for this fiscal year but chose to ignore -- is now haunting the city.
In February, when a $20 million debt was acknowledged, we urged the mayor to make the necessary program cuts and layoffs. Such austerity now turns out to be three times as necessary, assuming that the mayor has admitted to the full extent of the deficit this time