GOOD MORNING.
1
DURING MY CAMPAIGN FOR MAYOR, I OFTEN SPOKE ABOUT THE
NEED FOR MORE TRANSPARENCY IN DISTRICT GOVERNMENT.
NOWHERE IS THIS MORE IMPORTANT THAN IN TALKING ABOUT
THE DISTRICT’S BUDGET, AND HOW WE ARE TREATING
TAXPAYER DOLLARS.
THE NEXT FEW WEEKS ARE A CRITICAL TIME FOR ALL OF US. WE
ARE ABOUT TO EMBARK ON A VERY IMPORTANT -- AND
CONDENSED -- PROCESS TO BALANCE THE CURRENT YEAR’S
BUDGET BEFORE THE END OF THE YEAR.
2
AS THE NATIONAL RECESSION WREAKED HAVOC ON THE CITY’S
FINANCES, THE COUNCIL TOOK SEVERAL LONG-TERM
STRUCTURAL MEASURES TO ENSURE THE DISTRICT CONTINUES
TO LIVE WITHIN ITS MEANS.
3
SINCE MAY 2008, WHEN THE DISTRICT OF COLUMBIA
EXPERIENCED ITS FIRST DROP IN REVENUE IN OVER 5 YEARS, OUR
LOCAL REVENUE ESTIMATES FOR THE CURRENT FISCAL YEAR
HAVE DECLINED BY $931.5 MILLION -- AN ALMOST 16% DECLINE
IN JUST TWO AND A HALF YEARS.
4
SO, TO RECAP – FOR FOUR STRAIGHT YEARS, THE DISTRICT HAS
SPENT MORE THAN ITS TAKEN IN, AND WE’VE HAD TO RAID THE
FUND BALANCE TO MAKE UP FOR IT.
5
AS EVERYONE KNOWS, THE DISTRICT OF COLUMBIA IS REQUIRED
TO MAINTAIN A BALANCED BUDGET, SO WE WILL NEED TO
COMPLETE A PLAN TO CLOSE THIS BUDGET GAP BEFORE THE END
OF DECEMBER. HAVING RECEIVED THE MAYOR’S BUDGET
PROPOSAL TODAY, THE COUNCIL HAS TWO WEEKS BEFORE IT
MUST VOTE ON A REVISED BUDGET GAP-CLOSING PLAN. THIS
REQUIRES US TO MOVE FORWARD WITH A COMPRESSED BUDGET
PROCESS THAT IS BY NO MEANS IDEAL BUT DOABLE.
7
THIS $50 MILLION RESERVE WOULD PROTECT US FROM HAVING
TO RELY UPON OUR CONGRESSIONALLY MANDATED
CONTINGENCY CASH RESERVE TO COVER UNFORESEEN
PRESSURES, BECAUSE THIS RAINY DAY FUND ACCOUNT WOULD
HAVE TO BE REPAID IN FISCAL YEARS 2012 AND 2013.
8
EVEN AFTER SOLVING THE $188 MILLION GAP IN FISCAL YEAR
2011, WE WILL STILL FACE A GAP OF AROUND $345 MILLION IN
FISCAL YEAR 2012 WHEN THE BASELINE BUDGET IS RELEASED.
AMONG THE SOURCES OF THIS GAP ARE HIGHER THAN EXPECTED
SPENDING IN AREAS LIKE DEBT SERVICE, MEDICAID, AND
DISTRICT EMPLOYEE BENEFITS (INCLUDING RETIREMENT); LESS
THAN EXPECTED FEDERAL DOLLARS; REPAYMENT OF
ADDITIONAL FUNDS FOR THE UNITED MEDICAL CENTER; AND
LOCAL OBLIGATIONS FOR CITY PROGRAMS PREVIOUSLY PAID
FOR WITH ONE-TIME FEDERAL CONTRIBUTIONS.
10
• ROUGHLY ONE-QUARTER GOES TO PAY FOR THE SALARIES
OF DISTRICT EMPLOYEES AT JUST THREE AGENCIES: D.C.
PUBLIC SCHOOLS, THE METROPOLITAN POLICE
DEPARTMENT, AND FIRE AND EMERGENCY MEDICAL
SERVICES.
• ABOUT 25% GOES TO PAY FOR THE SALARIES OF ALL OTHER
DISTRICT EMPLOYEES.
• ANOTHER 25% IS USED TO PAY FOR THE LOCAL MATCH FOR
D.C. MEDICAID AND THE D.C. PUBLIC CHARTER SCHOOL
PAYMENT.
• AND THE FINAL 25% GOES TO PAY FOR EVERYTHING ELSE.
11
AND AS WE’VE ALSO SEEN IN RECENT YEARS, FEE AND FINE
INCREASES ARE NOT AN EFFECTIVE OR LONG-TERM SOLUTION TO
INCREASING THE DISTRICT’S REVENUE.
12
CHALLENGES IN THE CAPITAL BUDGET
IF THINGS AREN’T BAD ENOUGH LOOKING AT THE OPERATING
BUDGET, THE CHALLENGES IN THE DISTRICT’S CAPITAL BUDGET
ARE PERHAPS EVEN MORE SERIOUS. SINCE 2002, THE DISTRICT’S
OUTSTANDING DEBT HAS MORE THAN DOUBLED, GOING FROM
$3.5 BILLION IN 2002 TO $7.1 BILLION IN 2010. HAD THE COUNCIL
NOT ESTABLISHED A 12% DEBT CEILING, WE WOULD LIKELY NOW
BE WELL ABOVE 12%.
14
CONCLUSION
IN CONCLUSION, THE FISCAL CHALLENGES WE FACE ARE
DAUNTING. AND THE DECISIONS WE ARE ABOUT TO MAKE ARE
TOUGH. AS YOUR NEXT MAYOR, I COMMIT TO ADDRESSING
THESE CHALLENGES HEAD ON. I WILL NOT USE SHORT-SIGHTED
BUDGET GIMMICKS TO PUSH THE PROBLEM OFF UNTIL LATER.
THE BUDGET THAT I PROPOSE NEXT SPRING WILL BE
STRAIGHTFORWARD AND WE WILL MAKE THE TOUGH CHOICES
THAT ARE NECESSARY TO SECURE THE DISTRICT’S FINANCIAL
FUTURE.
15
AND AS WE LOOK TOWARDS NEXT YEAR’S BUDGET CRISIS, I
PROMISE TO ENGAGE THE COMMUNITY EVERY STEP OF THE WAY.
BY FULLY INVOLVING THE PUBLIC AND ALL STAKEHOLDERS IN
BUDGET DEVELOPMENT, PEOPLE NOT ONLY WILL BE BETTER
ABLE TO UNDERSTAND THE TOUGH CHOICES WE ARE MAKING,
BUT THEY WILL HAVE A VOICE IN THE PROCESS. AS I’VE SAID
MANY TIMES BEFORE, THAT IS THE ONLY WAY WE CAN TRULY
COME TOGETHER AS ONE CITY, IN WHICH EVERYONE HAS TO
MAKE SACRIFICES, BUT NO ONE IS TREATED UNFAIRLY.
16
FINALLY, LET ME SAY THIS. AS WE ENTER THIS WEEK OF
THANKSGIVING, ALLOW ME TO OFFER MY THANKS TO THE
PEOPLE OF THE DISTRICT OF COLUMBIA WHO HAVE PROVEN TIME
AND AGAIN THEIR RESILIENCE AND WILLINGNESS TO SACRIFICE
TO HELP CREATE A GREAT CITY. AS WE PREPARE TO FACE A NEW
SET OF CHALLENGES, I KNOW THAT EVERYONE WILL STEP UP
AND DO THEIR SHARE ONCE AGAIN – AND FOR THAT, I AM
HUMBLED AND EXTEND MY PERSONAL THANKS.
THANK YOU.
17