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DeMorning DeBonis: Sept. 28, 2010

TODAY IS SEPT. 28, 2010 -- 35 DAYS UNTIL GENERAL ELECTION

How's this for a short honeymoon? Presumptive mayor-elect Vincent Gray will be faced with plugging a $175 million budget gap -- a task that stands to set the tone for his mayoralty before it even begins. Nikita Stewart and Tim Craig have a full report on the shortfall. CFO Natwar Gandhi tells the story simply: "The national economy has caught up with the District." About $100 million of the shortfall represents a drop in sales and income tax collections -- the former driven by sluggish tourism, the latter by lower-than-expected capital gains tax income. The rest are those famous "spending pressures," including as much as $30 million in special education overspending, $35 million in federal Medicaid funds that didn't come though, and $3 million in additional support for United Medical Center (though David Catania disputes that, natch). Gandhi says the city is at "rock bottom" of its savings, cuing a classic "everything is on the table" discourse from Jack Evans: "You can't even tax your way out of this thing. We are in a position to have to make substantial cuts." Now watch the council try to, in part, tax their way out of this thing. Will Gray play along?

AFTER THE JUMP -- local leaders react to Obama's critique of the city's public schools -- Fenty loyalists plan gathering to raise funds for Gray -- primary turnout highest since 1994 -- a Harvard Business School analysis of where Rhee went wrong

*** MAIN COURSE ***

MORE ON GAP -- "Gandhi briefed Gray (D) and [Evans] (D-Ward 2) Monday morning after speaking to Mayor Adrian M. Fenty (D). By Monday afternoon, City Administrator Neil Albert and the mayor's budget chief, Merav Bushlin, were meeting with Gandhi and his staff. 'The Administration is committed to producing a balanced budget just as we have over the past 3 years, and will present a gap closing plan to council in the coming days,' Mafara Hobson, a spokeswoman for the mayor, said in an e-mail. ... Although Gray defeated Fenty for the Democratic nomination for mayor, he still faces a general election, and Fenty is not leaving office until January. It will be business as usual until then, with the Fenty administration probably proposing cuts and the council weighing in. The shortfall 'is not one that I haven't tackled,' Gray said. 'I've been dealing with this in the last two years.' The difference with this year's crisis, he said, is that 'we clearly have fewer options.'" More reports from WBJ, Examiner, WAMU-FM. And this round of bad fiscal news prompts yet another paean to Gandhi from Harry Jaffe in the Examiner.

REAX TO OBAMA SCHOOL SLAM -- President Obama's comments yesterday morning -- calling D.C.'s public schools "struggling" and saying that they could not match the private education his own daughters are getting -- "reopened ... what is often a sore subject in Washington," Nick Anderson and Bill Turque write on A1 of today's Post. Michelle Rhee's reaction: "It is a fair assessment. We have indeed seen good progress over the last few years, but we still have a long way to go before we can say we're providing all children with an excellent education." Gray's reaction: "It would be wonderful to have a president who stood up and said, 'I'm going to demonstrate my commitment to public education by placing my children in public education in the city,' but again, you know, we're all parents at the end of the day, and I'm sure he feels like he and his wife are making the best decision for their children at this juncture." Bottom line: "Some D.C. public schools, including the selective citywide magnets School without Walls and Benjamin Banneker Academic High School, have received national recognition. But top private schools and suburban public schools continue to draw many families out of an urban public system long regarded as dysfunctional." The Washington Times' Deborah Simmons deemed it a "rare and blunt criticism of education in the nation's capital." Bill has a full transcript of Obama's comments. Also see the Examiner, which also offers a history of presidential schooling.

'KISS THE RING PARTY' -- Alan Suderman with a Loose Lips scoop: Key high-level Fenty supporters are gathering next month to raise funds for Gray's general election bid. "On Oct. 13, some of [Fenty]'s closest and strongest supporters, including his campaign chairman Bill Lightfoot, campaign treasurer Ben Soto, Ward 4 Councilmember Muriel Bowser, and developer Chris Donatelli, are set to host a 'congratulatory reception' (read: fundraiser) in honor of Vincent Gray, according to a flyer LL picked up at Gray's HQ this morning. Other Fenty donors on the list of co-hosts: Darryl Wiggins, a local businessman who has been a long-time Fenty supporter, former Board of Zoning Appeals head [Geoff] Griffis, and developers Elinor Bacon and Monty Hoffman. Lightfoot tells LL that Bowser ... was the 'driving force' behind the event. 'She wants to send a clear message' that she is squarely behind Gray, Lightfoot said. ... Lightfoot tells LL that the party's attendees won't be going just 'to shake [Gray's] hand,' but will have open and willing checkbooks. Not on the list: Ron Moten."

ELECTION RESULTS ARE FINAL -- The Board of Elections and Ethics voted to certify the primary election results yesterday evening. I wrote in today's paper that the more than 9,000 absentee and provisional ballots added "did not appreciably change results in any race," making Gray's final victory margin 9.8 percentage points. Notably: "Election Day reports that D.C. turnout was light were not borne out by the final numbers. Under the traditional measure of election turnout - the percentage of registered Democrats who cast ballots - turnout rose slightly from the last mayoral primary election, from 37 percent to 40 percent. But because the 2008 election cycle saw a great surge in the number of registered voters, driven by interest in the presidential race, that small percentage rise hides a great leap in the raw number of votes cast - from 106,288 in the Democratic primary to 134,342, a 26.4 percent jump. That is the most ballots cast in a D.C. mayoral primary since 1994, when Marion Barry beat D.C. Council member John Ray and incumbent Sharon Pratt to return for a fourth term. More than 143,000 city Democrats cast ballots in that election -- 52 percent of the rolls." Certification followed a post-election hand-count audit that showed "small discrepancies" that are "within the margin of differences allowed by law." Preparations now begin for the general elections, and watchdogs are already raising concerns about an Internet voting pilot set to debut next week.

FEDS CRITIQUE HEAD START MANAGEMENT -- Federal audit finds that the Head Start program administered by the District government "does not have the capacity to manage or account for the millions in federal dollars that it receives because of financial and organizational problems," Bill Turque writes, noting that city officials say the issues in the report have already been addressed and that the feds have continued sending money the city's way. "A 'limited scope' review, conducted by the department's inspector general, found that the $13 million program, which is projected this year to serve nearly 5,000 3- and 4-year-olds in the District, could not account for more than $300,000 in administrative and training expenses between 2007 and 2009. The program also was consistently late during that period in submitting required financial status reports to the federal government. ... D.C. schools spokeswoman Safiya Simmons said that stronger controls have been put in place since the period when HHS investigators were active, which was between June and August of 2009. Major staff and leadership changes, including the hiring of a new program director, have tightened the operation."

LEARNING FROM MICHELLE -- Writing at the Harvard Business Review blog, Stanford professor Jeffrey Pfeffer analyzes the failings of Rhee's management style: "Her situation drives home two lessons for anyone whose power comes to them through a single, high-placed champion. The first of these is that, regardless of whether you are a favorite of the top dog -- in fact especially if you are that -- you need to work hard to make your base of support as broad as possible. It was great that Mayor Fenty supported Rhee wholeheartedly, just as years ago it was wonderful that Rudy Giuliani supported schools chancellor Rudy Crew in New York. But no one lasts forever. ... Just as smart companies diversify their customer bases to the extent possible, it's a smart career move to diversify your base of supporters. ... The second lesson to be learned from Michelle Rhee's tenuous position is perhaps even more important than the first. It is that you need to institutionalize the changes you bring about so that your work will survive whatever changes in leadership follow. Accept that you will eventually leave, for one reason or another. If you are serious about making substantive change, and not just making newspaper headlines, you must get lots of individuals and groups to see how the new ideas you're introducing are in their own selfish interests."


*** SMALL PLATES ***

Gray politicks among gay voters at 17th Street Festival; outgoing Fenty GLBT director spotted with Gray sticker: 'He's our party's nominee and I certainly support him in the November election' (Blade)

Moten's campaign go-go doings pass muster, OCF says (Loose Lips)

People's Counsel seeks to delay Pepco's "smart meters" (Capital Business)

With Southwest Waterfront development imminent, whither the residents of the Gangplank Marina? (Post)

Nothing earth-shattering revealed in Eun Yang's Rhee sit-down (NBCWashington.com)

Rhee is a "tragic hero of reform" (Investor's Business Daily)

"Waiting for Superman or Here Comes Gentrification?" (Huffington Post)

The student editors of Indiana University's daily newspaper would prefer that Michelle Rhee stay (Indiana Daily Student)

Will whistleblower verdict have consequences for Cathy Lanier? (WTTG-TV)

What to do about P Street Beach? (All Opinions Are Local)

The city's tax amnesty program ends Thursday (NBCWashington.com)

A full list of tax-delinquent properties auctioned last week (WBJ)

EPA wants more trash plucked from Anacostia (Center for Environment, Commerce & Energy)

Government witness says Chandra Levy killing suspect sexually assaulted him in prison; trial delayed to Oct. 18 (Post)

Adios, Placido -- I'll never forget the 30 seconds we spent together in a Wilson Building hallway as you went lobbying for an earmark (Post)


*** ON THE MENU ***

Comprehensive Plan amendment hearing, 1 p.m. in the council chambers -- economic development committee tackles Old Naval Hospital disposition, 2 p.m. in JAWB 412

By Mike DeBonis  | September 28, 2010; 9:50 AM ET
Categories:  Morning Mike, The District  
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Next: Gray campaign announces town hall meetings

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