WASHINGTON (Map, News) - Mayor Adrian Fenty’s budget chief suggested Tuesday that the answer to a growing 2009 budget deficit may be raising a tax on corporate property and delaying tax relief on local businesses.

William Singer, in a memo to City Administrator Dan Tangherlini, summed up the $130 million gap matter-of-factly: “Since the 2009 budget was released, the national economic picture has not improved.” Chief Financial Officer Natwar Gandhi’s latest forecast paints an unpleasant picture — $35 million less revenue in 2009 than his February estimates.

Gandhi briefed the D.C. Council on the new numbers Wednesday. Council members then spent more than six hours in meetings, discussing among other items how to fill the new gap. Sources close to those deliberations said the council would likely use a combination of reserve funds, excess 2008 revenues and revenues derived from a doubling of the cigarette tax to make up the difference.

Council Chairman Vincent Gray declined comment and ordered his colleagues not to divulge any details, city hall sources said.

“We did not reduce services,” said Ward 6 Councilman Tommy Wells.

The economic news from Gandhi was bad across the board. The sales of single-family homes and condominiums in the first quarter of 2008 fell by 26.6 percent and 42.6 percent, respectively. The commercial vacancy rate climbed slightly from 6.4 percent to 6.5 percent. And the value of property sold declined by 47.6 percent.

For 2009, Gandhi projected a $57.7 million decline in sales tax revenues, a $45.1 million drop in individual income tax revenues and a $12.9 million dip in the business income tax haul.

In his memo, Singer suggested the District could collect $5 million next year if it raises the economic interest tax — a tax calculated on the value of property owned by corporations in the city — from 2.2 percent to 2.9 percent.

Another $15 million could be saved by eliminating a set aside in the budget for small-business tax relief. “We may reach a point where suspending implementation … is a prudent option,” Singer said.

And D.C. could save millions if it cuts back on discretionary grants to community groups totaling more than $25 million, Singer wrote. It may be necessary, he said, “to re-evaluate whether discretionary grants are the kind of expense we can afford.”

mneibauer@dcexaminer.com