Barras: D.C.'s dangerous debt noose

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Local,DC,Jonetta Rose Barras

"We have spent ourselves into a hole," at-large D.C. Councilman David Catania declared last week, citing the city's total debt and urging legislators to resist Mayor Vincent C. Gray's request to reprogram $23 million left over from fiscal 2012. Instead of saving those funds, the executive proposed moving them from the operating to the capital budget.

By law, money left from the operating budget at the end of a fiscal year cannot be retained. But the money can be shifted to the capital budget and then used to finance construction, renovations and maintenance needs. Capital funds can be carried from one year to the next.

David Umansky, spokesman for Chief Financial Officer Natwar Gandhi, confirmed the District's total debt is $8.9 billion. To make payment in 2013, the city will use $690 million in tax revenues.

The debt service is "more than the entire cost of running the Department of Human Services and the Child and Family Service Administration combined," said Catania. "We spend less than $500 million for our police department."

It's all breathtaking. Consider this fact: The local 2013 budget is $6 billion. That's nearly $3 billion less than the city owes.

Council Chairman Phil Mendelson told me he has been complaining about the debt since 2006. He has advocated paying for capital projects out of existing revenues rather than borrowing.

Gandhi pushed the council to set a 12 percent cap -- down from 17 percent -- on borrowing against the local budget. He also has used projected income tax revenues to back District bonds. Both have helped lower interest rates, said Umansky.

Catania, no fan of using projected income tax revenue as collateral, said he's "not advocating zero debt. The debt should be proportional to the size of the government and the city."

Other jurisdictions suffered dramatically during the Great Recession. The District fared better. But if significant cuts in the federal government are implemented next year, they could greatly affect the city's economic stability and viability.

That possibility should encourage elected officials to devise an aggressive debt-reduction plan while holding the line on spending. At the very least, they might consider saving what isn't spent.

That is not what the council did last week.

Sure, members complained vociferously about Gray's $23 million spending proposals, decrying the absence of supporting documentation. "It's like we're being flimflammed," said Ward 3's Mary Cheh.

And, Mendelson may have been concerned about the city's long-term debt. But the chairman persuaded the majority of legislators to support the mayor's requests. (Ward 4's Muriel Bowser and Catania voted against them.)

"On balance, I thought it was better to spend the money," said Mendelson, noting at least the mayor was using existing revenues for capital projects.

Truth be told, saying no could have created fallout for a few council members, including Mendelson, who are on the ballot in Tuesday's general election. The mayor's requests included money for charter and traditional public schools. Education is a major issue for voters.

"There are no political points to be scored by being responsible," said Catania.

Jonetta Rose Barras can be reached at jonetta@jonettarosbarras.com.

Jonetta Rose Barras' column appears on Tuesday and Friday. She can be reached at jonetta@jonettarosebarras.com.

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