As D.C. leaders prepare to defend the city’s strong credit ratings on Wall Street on Thursday, council Chairman Kwame R. Brown said he wants to bring on a financial adviser to aid lawmakers as they begin work with new Mayor Vincent C. Gray on the city’s budget.
Mr. Brown said he had no timetable for the selection of an independent adviser, which would be a first for the D.C. Council. The adviser would be working on a “pro bono” basis, Mr. Brown told The Washington Times.
He made the comments after a briefing Tuesday on the city’s annual audit in which Mr. Brown insisted that “now is the time to step up” the council’s oversight of the District’s spending. City lawmakers are scheduled to be briefed on details of the budget at their Feb. 17 retreat.
The city’s Comprehensive Annual Financial Report (CAFR) contains both good and bad news as Mr. Brown heads for the first time to New York with the mayor, Ward 2 council member Jack Evans, City Administrator Allen Lew and Chief Financial Officer Natwar M. Gandhi. The delegation will sit down with credit-rating analysts, who last year raised concerns about the city depleting reserves to cover spending.
“This is our opportunity to present the city’s financial picture,” said Mr. Evans, chairman of the council’s Finance and Revenue Committee. “The financial condition of the District remains strong and I hope to convince the bond-rating agencies that our current rating should not just remain, but improve.”
On Tuesday, as officials patted themselves on the back for earning a clean audit for the 14th year in a row despite a deep recession, Mr. Brown cautioned that the tougher challenge lies ahead.
He and other lawmakers cited the potential 2012 deficit, which some estimates have put at close to $600 million, as well as recurring reporting deficiencies noted in the audit. Problematic agencies include D.C. Public Schools, the University of the District of Columbia, the Washington Convention and Sports Authority and United Medical Center (UMC). Mr. Evans characterized the problems as “sloppy bookkeeping.”
“Wall Street is carefully looking at the District’s ledgers,” said Mr. Brown, who has been vocal about the need to curb government waste. The annual report, while still positive, proves the city still needs “rigid financial discipline,” he added.
“CAFR is all about performance management,” Mr. Brown said.
The city’s looming deficit is a moving target as Mr. Gray adjusts his 2012 spending plans, but the ratings from leading credit services such as Fitch, Moody’s Investors Service and Standard & Poor’s 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.
Mr. Gray, Mr. Evans and Mr. Gandhi — along with then-Mayor Adrian M. Fenty — were all warned about the spending habits of the Fenty administration, which heavily relied on reserve funds to meet current needs. The city had $1.5 billion in reserves when Mr. Fenty was sworn in 2007, but the amount had been spent down to about $940 million soon after he took office.
Currently, all funds in the District’s reserve accounts are already dedicated or restricted to emergency use. Mr. Gray, who like Mr. Brown has been in office for a little more than a month, has vowed to replenish the money and keep spending in check.
In a separate press briefing on Tuesday, the mayor said the city’s “financial stability” is his No. 1 priority.
Much of the watchdog duty for the Gray administration falls to Ward 3 council member Mary Cheh, chairman of the Committee on Government Oversight and the Environment. On Tuesday, she said she wanted to have “everything on the table,” citing specifically operations at the financially struggling United Medical Center, which the city bought last summer.