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Gandhi delivers grim news: Another $175 million shortfall

Sales tax revenue in the District has fallen dramatically, helping contribute to more bad budget news for the D.C. government, Chief Financial Officer Natwar M. Gandhi told officials Monday morning.

The city's revenues for fiscal year 2011, which begins Friday, are estimated to be off by $100 million, primarily because of a drop in sales and income taxes. Gandhi met with Council Chairman Vincent C. Gray (D) and Council member Jack Evans (D-Ward 2) Monday morning with his estimate.

Other contributors to the projected $175 million deficit include about $25 million in cost overruns by D.C. Public Schools and at least a $33 million shortage in Medicaid funding due to cuts by Congress.

"It's much worse than we thought," said Evans, chairman of the Committee on Finance and Revenue.

Gray, who defeated Mayor Adrian M. Fenty in the Democratic primary, is considered the presumptive mayor in the heavily Democratic city and will probably try to tackle the problem. But Fenty, who remains mayor until January, is responsible for presenting the council with a plan to address the shortfall.

By Nikita R Stewart  | September 27, 2010; 12:03 PM ET
Categories:  Budget, D.C. Council, Mayor Fenty, Nikita Stewart, Tim Craig  
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Please help Mr. Zuckerberg

Posted by: lord_dorpaldonger | September 27, 2010 1:24 PM | Report abuse

I wonder how many millions of that shortfall is due to continuing embezzlement schemes in Gandhi's office?

Posted by: Nghbrhdwatch | September 27, 2010 3:30 PM | Report abuse

I live in D.C. Most people I know regularly speak about the incredibly high Sales and other taxes in the city proper and routinely go out to the suburbs to make large purchases so Virginia and maryland wind up reaping the benefits of our too-high Tax. I am a smoker, D.C. now adds approx $3 to $4 per pack in TAX! result? Only the very Poor buy them in D.C. because anyone else can easily make the trip out of town. Just another example of throwing the baby out with the bath water. Politicians simply do not ever learn from theirs and others mistakes. Just ask Obama.

Posted by: | September 27, 2010 4:14 PM | Report abuse

Get ready for the RIF in DCPS next month!

Posted by: UrbanDweller | September 27, 2010 4:26 PM | Report abuse

The WAPO reported, “$25 million in cost overruns by D.C. Public Schools.”

Chancellor Rhee, the great reform, Warrior Woman can't balance a school budget. Last year, Allen Lew overspent the DC’s school modernization budget by $50 million.

Any school district that hires Rhee and doesn’t have oversight via a school board or third party will have a financial mess on their hands.
All you Fenty supporters who wanted dog parks and million dollar bike racks over sound fiscal management, your man child has Progressed DC into brinks of insolvency.

Posted by: GoldCoast | September 27, 2010 4:34 PM | Report abuse

the cost overrun in schools is in Special Ed, which historically has had big problems.

Posted by: jeffcoud2 | September 27, 2010 5:37 PM | Report abuse

Now we see what fenty was doing in office?nothing at all it coming out now. for all the people that want fent to win now you see what a Great Mayor.

Posted by: ruckoneword | September 27, 2010 6:46 PM | Report abuse

Now we see what fenty was doing in office?nothing at all it coming out now. for all the people that want fent to win now you see what a Great Mayor.

Posted by: ruckoneword | September 27, 2010 6:47 PM | Report abuse

I look for Adrian Fenty to take the easy route and propose another government RIFF as opposed to holding District agencies heads (Rhee/Klein)accountable for overspending their budgets. This carnival of deficit spending on luxury pet projects is now severely diminishing our bond ratings. It is as much Ghandi's fault as it is Fenty's, HE is the independent CFO.

Posted by: concernedaboutdc | September 27, 2010 6:47 PM | Report abuse

When is DC going to learn that we need to make some tough decisions? We need to figure out how to manage our budget and quit spending so much. Our neighbors in Va. and Md. both have found a surplus this year. We cannot keep going down this dangerous path. We cannot dig our ways out of this whole w/out taxes and/or spending cuts.

Posted by: DCJUSTICE | September 27, 2010 7:10 PM | Report abuse

Fenty is probably glad that he doesn't have to do the hard work of managing a city in tough fiscal times. Fenty's solution to just about any problem was throwing money at it. We are lucky we will have a grown up in charge for the next four (lean) years.

Posted by: tacard1 | September 27, 2010 7:45 PM | Report abuse

Funny thing is that the Fenty administration knew about this budget shortfall BEFORE the election but kept it hush hush thinking that it might cost them the election. And whadya know - they lost anyway! Now there will be RIFs for some poor unfortunate souls. Man, I wish we could get a refund on those dog parks and that contract with SINCLAIR SKINNER!

Posted by: LoveTheCapitol | September 27, 2010 7:50 PM | Report abuse

I am ashamed at what my government has done.

Posted by: RLRL | September 27, 2010 9:22 PM | Report abuse

Fenty rammed through many projects this past year including playgrounds, dog parks, bike stations, expanding and extending the summer jobs program, etc, all in an effort to look like he is the man who can get things done. This was all for show in an effort to win the election.

The yuppies thought that all we need is to have a young mayor who is driven to get things done. Guess what? We also need money and fiscal responsibility.

I hope all those Fenty worshipers wake up and realize now that the entire city is going to have to suffer due to Fenty's manic spending and poor planning.

Posted by: letsbereal2 | September 27, 2010 10:08 PM | Report abuse

Most of these comments are unfounded and the reality is much more complex. One reason for the shortfall is that stimulus funding is expiring and Republicans in Congress refused to continue a higher rate of Medicaid reimbursement. Almost every state is experiencing similar difficulty, so these simplistic, knee-jerk attacks on D.C. are way off the mark. One reason why Maryland's revenues are bouncing back is that they raised rates on upper-income taxpayers; D.C. has not done this. Fenty did not know about the shortfall before the election, because the revenue estimates are made by the Chief Financial Officer, who makes his estimates partly on the real property tax payments that are due on Sept. 15th every year. Let's tone down the hyperbole.

Posted by: politicsdc | September 27, 2010 10:18 PM | Report abuse

Deficit spending on luxury pet projects during a severe economic recession is not "hyperbole" it is a fact and Fenty DID know about and was warned about by Jack Evans during budget seasons.

Posted by: concernedaboutdc | September 28, 2010 7:20 AM | Report abuse

We haven't had any deficit spending; D.C. has recorded surpluses for 13 consecutive years. Jack Evans may have "warned" about excessive spending, but Fenty has made all of the cuts -- without cutting school spending and without raising income taxes or property taxes.

Posted by: politicsdc | September 28, 2010 8:41 AM | Report abuse

@politicsdc "One reason why Maryland's revenues are bouncing back is that they raised rates on upper-income taxpayers; D.C. has not done this."

Correct and wouldn't have been a tough decision that Fenty shuld have been made... raise those taxes? Those making 40K and 250k are in the same tax bracket.

Posted by: thelildiva4u | September 28, 2010 10:31 AM | Report abuse


Fenty went way over budget on the summer youth employment program for several years in a row.

Also, DCPS went over budget $25 million this year. You cannot argue with the facts. Stop trying to minimize the damage Fenty has done.

Posted by: letsbereal2 | September 28, 2010 1:13 PM | Report abuse

I'm not trying to minimize damage that Fenty has done. I'm pointing out that it is possible to criticize people while still recognizing that they MIGHT have also done some good things. I'm also pointing out that the nasty comments leveled at the District whenever something bad happens are often gratuitous, uninformed, and yes, racist. As I have stated, the District has not raised income taxes, has not raised property taxes, has not cut education spending, and has not furloughed employees. I would submit that these are good things. That doesn't mean that I love Fenty, that I despise Fenty, that I love Gray, or that I despise Gray.

Posted by: politicsdc | September 28, 2010 6:55 PM | Report abuse

Fenty didn't raise income taxes but he raised fees astronomically. To the pocketbook that feels the same. You can mince words all you like.

The District has not recorded a surplus since Anthony Williams was the Mayor of the District at which time he handed Adrian Fenty a billion dollar surplus (something most cities didn't have). Instead of paying attention to the delicate financial times we are in, he charged forward with spending on luxuries that are better suited for brighter economic times.

As I said, we could have postponed 400k dog parks, expanded bike lanes, and, yes, even street cars. These are luxuries better reserved for times when our bond rating wasn't being threatened.

We could have done without 'gratuitous' inflated contract award practices engaged in by this administration to cronies.

The summer jobs for youth was over budget by millions under the Fenty Administration. As well has been the Department of Transportation.

Not furloughing employees isn't to be prized when over 2000 employees were fired due to "budget pressures" (i.e. deficit spending). Rather, it was an alternative that the Fenty administration ignored, unlike Maryland, putting more pressures on District social services to accommodate for the increase need of unemployed families.

Fenty's cuts were necessitated as a result of his reckless spending. He should not be praised for that.

Reality dictates otherwise.

Posted by: concernedaboutdc | September 28, 2010 7:15 PM | Report abuse

concernedaboutdc...your written response is correct and appropriate.


1) Can Vincent Gray find another $50 million dollars in the budget that he used to resurrect the H Street Trolley Car project after a call he received from a U.S. Congressional member?

2)Is there any money left from the D.C. Tobacco Settlement?

3) Last December; Blue Cross/Blue Shield was allowed (by the Council) to keep a great share of profits from the D.C. Health Coverage Plan that was due to be refunded to the District.

Trusting Citizens nothing have Changed after the election but that the same incumbents were fraudulently voted on the council again.

It is very questionable that 120,000 came to the polls when poll workers reported low voters’ turn out. Secondly, it is strange that very few new and young voters from the Obama election and African Americans in Wards Six, Seven and Eight know and voted for incumbent Phil Mendelson. The other Michael Brown had a compelling lead in the At-Large race.

D.C. Board of Elections and Ethics is suspect. The BOEE is not to be trusted with your casted votes. There are no paper trail and voters are not given receipts.

Posted by: CalvinGurley | September 29, 2010 6:31 PM | Report abuse

Here we go again, RIF's across the city we have been dealing with this crap for 3 years now. First, social service workers, supervisors and monitoring at CFSA, DMH lost hundreds of workers; especially at St E's, OCTO helpdesk (contract green card workers), DHS workers at welfare offices, DPW workers except parking meters (they were hiring), DCPS social workers and teachers, DPR & Early Childhood workers, library workers the list go on....

Posted by: drfields | September 29, 2010 10:41 PM | Report abuse

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