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Gandhi: D.C. Unemployment Rate to Reach Highest Level Since 1983

The District's unemployment rate is projected to reach nearly 10 percent by 2010, the highest level in almost three decades, D.C. officials said today.

In a briefing of reporters about the city's financial outlook, D.C Chief Financial Officer Natwar M. Gandhi said the city faces a new $127 million budget shortfall this year because of declines in the commercial property market related to the credit crisis on Wall Street. That represents 2.5 percent of the city's $5.3 billion budget in local funds.

Gandhi also said unemployment will rise from 6.2 percent last year to 9.8 percent in 2010, the highest percentage of District residents out of a job since the early 1980s.

Robert Ebel, the District's chief economist, said the unemployment rate hovered between 10- and 11-percent in 1982 and 1983. In the 1990s, the highest it reached was 8.8 percent. Usually, crime increases as unemployment grows, though Gandhi declined to comment on that phenomenon.

According to the U.S. Department of Labor, D.C.'s unemployment was at 8 percent in November, up from 7.3 in Octobert and 5.7 a year earlier.

Gandhi called the new budget shortfall, which comes one month after city leaders closed a $131 million budget gap, "manageable." The D.C. Council created a $47 million reserve last month.

The reserve -- created by freezing planned spending on affordable housing, health care and transportation--is now looking like a major save by the council, Chairman Vincent C. Gray (D) said.

"Our actions foreshadowed this," he said. "We did absolutely the right thing."

Gandhi said he believes the rest of the shortfall could be made up through a budget surplus from fiscal 2008, which ended Sept. 30. The surplus is the result of government agencies not spending all of their budget. The exact amount of the surplus will not be known until Feb. 1, after an annual financial review by outside auditors is completed, he said.

However, the revenue problems grow worse in 2010. In his revised projections today, Gandhi said the city will collect $455 million less than what he had anticipated last May. D.C. Mayor Adrian M. Fenty (D) and his aides are in the process of developing the 2010 budget.

By David A Nakamura  |  December 19, 2008; 1:03 PM ET
Categories:  City Finances  
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Dear DC Government, one way to curb unemployment in DC is to stop hiring people from other jurisdictions. Think about it!

Posted by: knjon353 | December 19, 2008 3:34 PM | Report abuse

Let's be honest here. Even during the best economic years there were people in DC that simply refused to work for a living.

That hasn't changed.

For the chronically unemployed there are plenty of menial labor jobs. But they won't do that type of work. It's beneath them.

Ever wonder why all our janitorial crews and restaurant workers all speak Spanish now? It's because DC residents wouldn't take these jobs.

Posted by: HillMan | December 19, 2008 3:52 PM | Report abuse

You're kidding right? The talent pool in DC is like Night of the Living Dead. Plus, throwing government jobs at zombies will not cure unemployment.

Posted by: mixingbowl | December 19, 2008 3:57 PM | Report abuse

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