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Posted at 4:55 PM ET, 01/ 6/2011

Gandhi warns D.C. bond rating might fall

By Nikita R Stewart

Chief Financial Officer Natwar M. Gandhi welcomed Mayor Vincent C. Gray and Council Chairman Kwame R. Brown to their new posts with a letter warning that District's hard-earned bond rating is in danger of falling with the depletion of reserves and any subsidy of United Medical Center.

Gray (D) repeatedly criticized the administration of former Mayor Adrian M. Fenty for proposing budgets that drew down on the rainy day fund.

In a letter to Gray and Brown, Gandhi points to a December credit report by Standard & Poor's with concerns about the reserves, the hospital and a decrease in the collection of property taxes.

Collections dropped to 83.7 percent in fiscal 2009 from 89.4 percent the previous fiscal year, according to Gandhi's letter. He said some taxpayers refused to pay their bills in full because of an increase in rates, but changes that are going into effect could encourage them to pay in the future.

After delivering his inaugural speech Sunday, Gray said an increase in taxes to help to close an estimated $440 million budget gap in fiscal 2012 is "on the table." Gray's stance differed from Fenty's pledge to propose no new taxes.

On the campaign trail and as a council chairman, Gray pushed legislation to replenish the reserves, on which the Fenty administration depended to help overcome budget gaps.

Meanwhile, Brown (D) said he preferred to find other alternatives to raising taxes.

By Nikita R Stewart  | January 6, 2011; 4:55 PM ET
Categories:  Budget, City Finances, Kwame Brown, Nikita Stewart, Vincent C. Gray, vincent gray  
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I agree with Brown: please find other alternatives to raising taxes. We pay enough taxes in DC as it is and even though city services are far better than they used to be (thanks to Williams NOT Fenty) we still aren't up to par with surrounding counties (PG County excluded).

Here's a novel idea for the Council: ONLY SPEND WHAT YOU TAKE IN!! Live on a real budget like the rest of us working folks do. Decrease social welfare services. I'm sick of busting my hump every day going to work while others lay around at home and collect welfare and food stamps. Tired of people using food stamps in front of me at the grocery store and they are twice the size of me.

Maybe the mayor and council should start by cutting their own salaries.

Posted by: UrbanDweller | January 6, 2011 6:46 PM | Report abuse

Who cares about the DC budget as long as the republican congressmen, their constituents, the business travelers and tourists are saving money on our super low taxicab fares.

Posted by: starclimber9 | January 6, 2011 9:26 PM | Report abuse

Nikita, I am SHOCKED! Do you feel guilty revealing this information, when for the last few years your entire newspaper wasted so much time blowing smoke....that all was well under Fenty? Now all of the chickens come home to roost when Gray gets in office. This is nothing more than what happened to President Obama. Take office just in time to be stuck with the Bush debacle.

Posted by: topryder1 | January 7, 2011 4:35 AM | Report abuse

i think the fault for this lies with ghandi. He and his people have been playing politics with financial information for years. that isn't what the cfo should be doing. He needs to go.

Posted by: alwayswonderswhy | January 7, 2011 6:02 AM | Report abuse

DC rakes in millions, possibly billions, with moving, parking, and sanitation violations, and with every conceivable type of personal and business tax known to mankind, (2 million bucks in one year in grocery bag taxes alone), and they have no money? DC needs only to crack down on its own employees' embezzling to fix the budget.

Posted by: Nghbrhdwatch | January 7, 2011 7:23 AM | Report abuse

Here is the beginning and end of it. Mayor Anthony Williams left Adrian Fenty a billion dollar surplus when leaving office. This, at a time when cities across the nation were experiencing deficits. Adrian Fenty, instead of being fiscally responaible and prudent based on the dire economic crisis that the nation faced, went about spending lavishly on luxury pet projects that the city really couldn't afford. When he experienced financial shortfalls during budget time, he raided the cities reserves to balance it, landing us in the fiscal situation we sit in today. He left office, in the same manner that Pratt-Kelly left the city. BROKE and in debt. It is not a "tough decision" to spend recklessly, a "tough decision" would have been to manage consituent expectations and protect our financial standing.

That said, this city is eventually going to have to raise taxes. Much like every other city facing monster deficits. This is not the kind of deficit that we are going to be able to cut our way out of. If we don't increase revenue, taxes are inevitable. The question is what, or who, to tax. I believe that you start with luxuries and end at income. There is alot to consider between the two. An increase to income taxes should be the very last alternative.

Add a penny tax to grocery products with a sunshine provision. It spreads the pain and will generate a sizable revenue stream.

Posted by: concernedaboutdc | January 7, 2011 9:42 AM | Report abuse

they city needs to look at way to cut spending before raising taxes but i do think that cuts to spending isnt going to do it alone. i just dont want raising taxes to be the first thing on the table

Posted by: JeroRobson1 | January 7, 2011 11:37 AM | Report abuse

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