The District government for the first time on Friday exempted itself from a federal shutdown, charting out a legal course that would spare city workers from congressional gridlock, at least temporarily.
The move to keep the city government open came after two determinations. The first was from Attorney General Irvin B. Nathan, who issued legal guidance to Mayor Vincent C. Gray and Chief Financial Officer Natwar M. Gandhi holding that the Contingency Cash Reserve Fund — a pot of money mandated by the city charter equal to at least 4 percent of the city’s operating expenditures — could be tapped even if Congress fails to come to a spending accord.
That, Nathan found, is permissible because the charter allows the fund’s contents to “roll over from year to year and remain available until expended for statutorily authorized purposes,” which, he said, clearly include supporting government operations in case of a federal shutdown.
The last time the federal government shut down, in 1995 and 1996, the contingency fund had not yet been established by federal law, and city leaders had no legal options except to hope Congress might exempt the District from a broader shutdown. The idea of using the fund this time around had been circulated last week by the D.C. Appleseed Center, a think tank that has been front-and-center on the related issue of securing the city’s permanent budget autonomy from Congress.
With Nathan’s advice in hand, Gray sent a letter to Gandhi on Friday asking that the full $218 million in the contingency fund — the roughly $144 million that had been sitting in the fund, plus additional funds available due to upgraded revenue estimates — be placed in the city’s general operating account in preparation for a shutdown.
“These funds will be repaid in full once Congress approves our budget and financial plan,” Gray wrote.
Important note: City finance officials say there should be sufficient funds to keep business as usual through Oct. 13. But, under Nathan’s analysis, “if the budget shutdown occurs and approaches two weeks in length, the District must be mindful of and should continue to prepare to operate under the exempt/non-exempt limitations associated with the Anti-Deficiency Act.” In other words, the District would be forced into shutdown mode, with only employees crucial to the protections of life or property allowed on the job.
Another important note: All of this is separate from Gray’s bid to designate the entire 32,000-employee city workforce as essential and thus exempt from shutdown-related furloughs. The Obama administration budget office has yet to weigh in on that maneuver, which has the potential to make the use of the contingency fund unnecessary.