The $7 MILLION budget surplus for the financially troubled District government can only be described as good news. When a city has a budget surplus, tax increases are less likely and so are the traumas that come when city services have to be cut back for lack of funds. But beneath this budget surplus lurks a monstrous deficit of some $184 million, accumulated over the past decade. That monster has not been slain by the announcement of this year's budget surplus. In fact, this year the city had forecast that it might have to let the deficit grow by as much as $60 million. It can now avoid doing so. It would not have been able to if it were not for a spot of luck in the city's receiving a rush of unanticipated tax revenues: $29 million. It is this break that accounts for the District's having $7 million more than it needs for this fiscal year.

The city's expenses continue to outpace its income, and despite this year's windfall the need for continued cutbacks in city spending, as well as in the number of city employees, goes on. Without such steps, tax increases for this already heavily taxed city are lurking around the corner. But if this year's budget-cutting by the city government is any indication of what is to come, then the only hope of avoiding future tax increases is another sudden jump in tax revenues.

This year's one-time jump in revenues does offer a hint of how to handle the city's larger problem with its accumulated deficit. City officials say some of the $7 million budget surplus will be used to reduce the size of the accumulated deficit. Future budget surpluses or set-asides over the years could do the same thing and gradually remove the need for the city to sell bonds to retire its debt. That would also eliminate the need for the city to risk damaging its bond rating on deficit financing as well as possibly raising the price of future bonds issued by the city for capital projects that must soon be started.