The future of the Washington D.C. Economic Partnership is looking cloudy these days as District leaders question whether the nonprofit that markets the city to businesses is still needed.

Some argue that many functions of the partnership, which is facing a budget shortfall of $700,000, can be absorbed by departments of the city. What’s more, a growing number of retailers are pouring into the District without any assistance, lured by the influx of young professionals.

Critics are especially adamant that the city should not rescue the partnership at a time when human services and community programs are having their budgets decimated.

“If we are unable to find funding to keep our downtown library open on Sundays, but yet we find funding for an area that is partially covered by other organizations like the Board of Trade, it would be a disservice to residents,” argued Council member Tommy Wells (D-Ward 6), at council breakfast meeting last week.

Mayor Vincent C. Gray (D) added: “The city has built a lot of capacity over the last decade and there are services that probably should be met by the city.”

But supporters of the partnership contend that it is an essential service, one that has attracted such retailers as CB2 Marshall’s H&M and Harris Teeter to a city that was once routinely overlooked. They say the organization, established by then-Mayor Anthony Williams, helped put the District on the map through its campaigning at events like the annual International Council of Shopping Centers retail convention

“There is a certain trust and confidence that business people have in this organization,” said Council member Mary Cheh (D-Ward 3), at the meeting. “If we put them in a precarious position, we’ll lose the contribution of the private companies.”

Neighborhoods such as Columbia Heights and downtown have reaped the rewards of the partnership’s efforts, but the city still has a long way to go, said Richard Lake, managing principal of Roadside Development.

“There are still parts of the city that need economic help, and that help is more important now as we talk about budget cuts and reductions in federal spending,” said Lake, who is also secretary of the partnership’s board of directors.

He is heading up a subgroup of 10 board members tasked with finding ways to keep the lights on at the partnership. Last Tuesday, the majority of the 28-member board, he said, voted against dissolving the organization and in favor of creating a brainstorming committee. That subgroup has until Oct. 6 to present a plan.

At the breakfast meeting, Council member Harry Thomas Jr. (D-Ward 5) suggested the partnership be funded with some of the revenue from projects that come online.

“As [the partnership] goes out and does all of this work, we need to figure out what percent, in a community benefits agreement, comes back to fund them, so we’re not back at this point,” he said.

If no alternative is found and the partnership shuts down, Deputy Mayor Victor Hoskins has advised a transition plan that would hand off the partnership’s duties to the tourism nonprofit Destination DC and the District’s Office of planning.

Nevertheless, the partnership, he said in an interview, is still needed because“you compete with all of the other cities and without some form of defense, you are just going to lose. All we’re trying to do is figure out what are the mission critical parts that we can bring in-house to save some costs.”

The partnership’s budget woes came to light in a letter Councilman Jack Evans (D-Ward 2) sent to Mayor Vincent C. Gray (D) on Sept. 15 asking him to float the full $1.2 million the partnership is seeking for 2012, instead of the $500,000 that has been earmarked. Were the District to provide the additional money, Evans said the private sector would match the funds.

The lion’s share of the partnership’s budget comes from the city, which has reduced its allocation from $2 million in 2007 to $750,000 in the 2011 fiscal year because of budget constraints. To bridge that budget gap last year, the partnership dipped into its reserves, an option it can no longer afford, according to Moore.

Hoskins has questioned some of the partnership’s expenses. He asked whether it was necessary for the organization to lease space across from the Treasury Department at 1495 F St. NW, which, according to the partnership’s 990 tax form, cost $242,807 in annual rent in 2010. The lease is partially subsidized by Pepco.

The disclosure form also revealed that Steve Moore, president of the partnership, made $203,538 last year. (Hoskins earns $179,096.)

Asked if he would take a pay cut, Moore said, “everything is on the table.” He stressed the subgroup would also investigate whether there are “sources of income we hadn’t considered.”

“This nonprofit needs to tighten its belt, and that’s the challenge we put before them,” Hoskins said. “Look at the services you’re providing; look at how you’re delivering them. Can you do it a different way?”