Washington, D.C., budget gets a reprieve

DC.Gov

The continuing resolution currently in effect left out language that allows Washington, D.C., to spend its own money as dictated by the city's approved 2025 budget, but a standalone Senate bill that still needs House approval to become law aims to provide relief.

"Despite these challenges, I want to be clear about this. We will meet our financial obligations, and we will maintain the high standard of services that our residents, businesses, and visitors expect," said Mayor Muriel Bowser. 

The comments came during a press conference on Monday attended by the mayor, members of the City Council and Chief Financial Officer Glen Lee, who addressed the city's uncertain financial future caused by a potential $1.1 billion budget cut.  

"We have also initiated contingency planning to address potential fiscal shortfalls," said Bowser.  

"The District has a long-standing history of resilience and prudent financial management. That's why we came into 2025 with a triple-A bond rating, 29 consecutive balanced budgets and strong reserves."   

The House passed a CR that forces the city to adhere to a 2024 budget that's a billion dollars less than what the city has teed up for spending. 

"We're halfway through the fiscal year, so no department has over-spent even the 2024 level, or is close to spending the 2024 level," said Lee. "That gives the mayor and the council time to make these really difficult decisions."  

Washington is required by law to produce balanced four-year budget plans that are subject to Congressional oversite. 

Why the language was left out of the CR remains a mystery as the Senate came to the rescue by passing a standalone bill late on Friday that would allow the city to spend money that's already collected and earmarked. 

"These are local dollars," said City Council Chairman Phil Mendelson. "These are not federal dollars. Our spending at the fiscal year 2025 levels was authorized twice before in continuing resolutions.  If we were to have to make them (cuts) it would be very difficult, if not devastating." 

The mayor indicated last week that salaries for public safety personnel and teachers represent the lion's share of the disputed funds. The onus to rectify the situation returns to the House, who is in recess until March 24, to accept the Senate's bill and put the city back on course for 2025.

Before the current imbroglio began the city was facing a potential credit rating downgrade from Moody's, and a predicted $342 million dollar revenue drop tied to reductions in the federal workforce. Moody's currently pegs the city's issuer rating at Aaa.  

In early January the CFO reported a $169.7 million boost in revenue as compared to expectations from one-time litigation proceeds and year-end accounting adjustments.  

The city has a history of tapping public finance to support its major league sports teams which could include an effort to lure the NFL's Washington Commanders from its current home in Maryland. 

The possibility of renovating the RFK stadium site to National Football League standards while rolling in a mixed-use of housing and hospitality was made possible by a legislative Hail Mary thrown during the prior CR.  

Last November the city approved a $515 million capital improvement plan to renovate Capital One arena, home to the NBA's Wahington Wizards and the NHL's Washington Capitals.  

The mayor allayed any fears that the deal was in jeopardy.

"It is true that impact to our capital budget would affect all of our planned CIP spending," she said. "But we will meet our commitments to the Capital One arena."