DC Should Spend Some of BIG Surplus on Urgent Safety Net Needs

January 28, 2013

Tomorrow, the District’s Chief Financial Officer reportedly plans to release the results of the Fiscal Year 2012 audit. As the DC Fiscal Policy Institute reports, it will show a surplus of at least $140 million — maybe as much as $400 million.

Under current law, the entire surplus, no matter how large, must go into the fund balance — essentially, a savings account.

The DC Council passed the law in 2010, after several years of tapping reserves to make up for revenue drops during the recession.

The law might have made sense then, though I personally feel that such hand-tying measures are a poor substitute for responsible policymaking.

Sweeping the whole surplus into savings certainly doesn’t make sense now, when the Council has identified priorities to fund if the CFO projected higher revenues within the first three quarters of the year.

That he didn’t reflects his very conservative approach to ensuring budgets remain balanced — clearly seen in his accounts of potential impacts on the national economy.

He did nevertheless project a surplus close to $140 million at the end of the fiscal year.

As I said at the time, the Mayor could have asked the Council to pass a bill that would have freed up some of the surplus for items on the contingency revenue “wish list.”

The Fair Budget Coalition and grassroots supporters urged him to do this — and the Council to approve the request.

Nada. So as things stand now:

  • Families who’ve participated in the District’s Temporary Assistance for Needy Families program for a lifetime total of more than 60 months will lose a portion of their meager cash benefits. For about 6,100, this will be a second cut.
  • At the same time, the TANF program won’t have as much as it needs for job training, counseling and other services that could help some of these families “graduate” from welfare to work.
  • The Department of Human Services could face a shortfall of at least $7 million for homeless services. And even if it got that, it will again start denying shelter to homeless families when the winter season officially ends — unless it gets more than is needed to plug the identified budget gap.
  • Meanwhile, the Housing Production Trust Fund — the main source of local budget support for affordable housing construction and preservation — will remain shy $20 million. So there’ll be minimal new funding for long-term housing solutions to homelessness.
  • And as if this weren’t enough, I’m told that homeless youth could have an even harder time getting shelter and services when they need them, due to recent agency contract changes.

The Mayor and Council could meet all these needs and still have a stash to add to the burgeoning fund balance — already $1.1 billion by the end of 2011.

All that’s needed is a reset of what seem to be some skewed priorities — or perhaps a thoughtless adherence to a commitment made when the District’s financial affairs were quite different.

Or perhaps only a preoccupation with other things, e.g., how Councilmembers would be accommodated during the inauguration.

Whatever explains the inaction thus far, another surge of grassroots pressure could persuade our decision-makers to do the right thing.

The Fair Budget Coalition has an editable letter we can send them.

UPDATE: The CFO reported a surplus of $417 million. The Mayor intends to bank it all, increasing reserves to $1.5 billion. He’s indicated that he might see his way clear to making some investments in social programs (unnamed) if revenue projections for the current fiscal year are revised upward.


DC Council Overreacts To Lower Fund Balance

June 11, 2010

A new posting on the DC Fiscal Policy Institute blog shows that I didn’t altogether understand how the DC Council would handle concerns about the fund balance when I ranted about its real or contrived control board fears.

I assumed it would wait to start rebuilding the “savings account” until the economy improved. Turns out it won’t do anything so sensible. Instead, it’s put highly-restrictive proposals for two reserve funds into the Fiscal Year 2011 budget legislation.

One would get all uncommitted end-of-year funds until it reached 9% of the budget. These funds couldn’t be tapped for fiscal emergencies. That, says DCFPI, would put about $530 million off the table–three times as much as the District’s ever had in cash reserves.

The second reserve fund could be used for fiscal emergencies or other unexpected spending pressures. But it wouldn’t start getting funds until the other reserve had reached the required level. The maximum in this account would be about $120 million.

In short, the Council has decided to tie its own hands. Come any shortfall, no matter how temporary, it will, for the indefinite future, have no choice but to engage in another round of program cuts and/or enact new revenue raisers. If past is prologue, we know which option it will prefer.

DCFPI has issued a report that explains all this in more detail and offers recommendations for a more rational approach.



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