The District is considering selling United Medical Center, the formerly for-profit hospital the city bought last summer.
The news came less than 24 hours after Mayor Vincent C. Gray, D.C. Council Chairman Kwame Brown and Finance and Revenue Chairman Jack Evans returned from meeting with the nation's top credit-services agencies in in New York.
All three D.C. officials said the meetings went well and that they promised representatives of Fitch Ratings, Moody's Investors Service and Standard and Poor's that were committed to stabilizing the city's finances.
Declining sales, income and other tax collections have declined in recent years, but the city kept spending its savings.
S&P warned city officials last year that the rapid spending of the city's reserve fund and the added financial burden of taking over United Medical could threaten the District's financial picture.
On Friday, the mayor said the city should pull out of the public-hospital business.
"Gray, Brown and Evans believe private ownership is the best way to ensure the hospital's long-term survival as a medical facility that is critical to the health care of residents east of the Anacostia River," a statement from the mayor's office said.
The press release also said Messrs. Gray, Brown and Evans will continue to rebuild city's savings account by depositing "all undesignated, end-of-year surplus monies directly into the fund balance."
The fund balance has dwindled from $1.5 billion in 2007 to an estimated $940 million.
D.C. leaders, having already cut spending to close an $200 million deficit in this fiscal year's budget, are now facing a potential $500 million to $600 million deficit in fiscal 2012.
"As we are in the midst of considering all options for closing the deficit -- some of which may be painful -- the Wall Street meeting was a timely wake-up call that we must come up with a budget that puts the District of Columbia on long-term and firm financial footing," Mr. Gray said.
Mr. Brown, who repeatedly has said he wants to focus on curbing spending rather than new taxes, said, "Although revenue enhancements must be considered, I will start first with requiring cuts in areas where we are overspending, and then put in place internal controls to collect the millions of dollars owed to the District in federal reimbursements to help fill the budget gap."
The ratings from leading credit services such as Fitch, Moody's and S&P directly influence how much interest the city pays on its debt. The city has A+ credit ratings from Fitch and S&P and an A1 rating from Moody's.
"Once again, the bond rating agencies, while confirming the District's financial health, have expressed concern over using our fund balance to address the deficit," said Mr. Evans. "We have pledged not to dip into our fund balance or use similar gimmicks, but rather match our revenues with expenditures as we move forward in balancing the FY 2012 budget."
The mayor said he will present his spending plan on April 1.
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