Update: The District will end the fiscal year with at least an extra $89 million in cash, according to revised revenue projections released Friday.
In a letter to city leaders, Chief Financial Officer Natwar Gandhi wrote about the unexpected windfall: “Fiscal Year 2011 is on track to finish ahead of the June estimate by $89 million,” Gandhi said. “There is no significant change to the revenue estimate for FY 2012 because stronger than expected real property tax revenue offsets estimated shortfalls in sales and income tax revenue.”
Mayor Vincent B. Gray (D) and the D.C. Council will decide how to spend the extra money, but a significant portion of it will probably be placed in the city’s reserve funds. Those funds have been badly depleted over the years as the city sought to avoid drastic budget cuts during the recession.
But at least some of the revenue will probably go toward modifying the city’s controversial new tax on out-of-state municipal bonds. Without changes, the tax would be assessed on residents who purchased bonds that they thought were tax free.
The additional money could also hurt efforts by progressives to raise taxes on the city’s wealthiest residents.
This post has been updated since it was first published.