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D.C. Looking to Obama's Stimulus Package to Close Deficit

D.C. government officials said today they expect to use money from Barack Obama's economic stimulus package to help close a $456 million revenue gap next year, by pumping federal money into schools and Medicaid and freeing up local dollars for other needs.

After an hour-long meeting with Chief Financial Officer Natwar M. Gandhi, D.C Council members said they hope that Obama's plan to help boost the economy, assuming it is approved by Congress, will provide the city $1 billion over three years.

Those funds would allow the District flexibility in meeting its $5.4 billion budget for fiscal 2010, council members said.

"What needs to be recognized is that's the purpose of the stimulus package, to help mitigate" the revenue gap, Council Chairman Vincent C. Gray (D) said.

The biggest savings for the city could come through Medicaid, which would get about $288 million under the stimulus package. City officials are considering reducing local rcontributions to the program and using the money for other priorities.

However, Gray cautioned that plans could change because the Senate has not yet approved Obama's stimulus plan.

Meantime, the city has made some progress toward fixing chronic problems related to the financial management of its public schools and the Office of Tax and Revenue, according to an independent audit released today.

Both agencies were rated last year by BDO Seidman auditors as a "material weakness," the highest level of warning short of forcing an "unclean" audit, which could cause a major downgrading in the District's credit rating on Wall Street.

This year, the auditors, in their Comprehensive Annual Financial Report, have lowered the alarm by one level, rating the schools and tax office as a "significant deficiency." That rating is still considered poor, but city officials said they had made some progress.

Members from Mayor Adrian M. Fenty's office, the D.C. Council and Gandhi's office have met regularly over the past year with agency officials to work on an improvement plan.

Overall, the auditors gave the District a "clean" audit for the 12th consecutive year, Gandhi said.

At the same time, the BDO auditors found that the District's handling of Medicaid and Medicare funds is still deeply flawed, especially in the Child and Family Service Agency, and the D.C. treasurer's office continues to be plagued by bookkeeping errors.

The city's handling of Medicaid and Medicare money has been riddled with problems for years, and auditors have routinely cited problems with the District's internal controls over procurement, federal grants and services in its health agencies. The council last year created a new Office of Health Care Finances, and council members said reforms will pay off over the next few years.

The council will hold a public roundtable on the stimulus package on Feb. 11, officials said.

David Nakamura and Nikita Stewart

By Marcia Davis  |  February 2, 2009; 3:10 PM ET
Categories:  City Finances  
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