Harry Jaffe, The Examiner
2007-09-10 18:17:00.0
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Washington DC -

Money, money everywhere, and not a drop to spend on my pet projects. That's what many of D.C.'s 13 city council members are thinking after Chief Financial Officer Natwar Gandhi reported last week the District has a $99.5 million surplus. Mayor Adrian Fenty already has said he wants to spend the found money on his favorite projects: fixing schools, training the jobless, repairing roads. But does the legislative group have a say in spending the $100 million?

Before we get into the politics of new money, let's gloat. Once the red ink capital of the Washington region, the District is now a model of fiscal health. Last month Virginia Governor Tim Kaine said his state was short $641 million; Maryland's chief executive Martin O'Malley announced a $1.5 billion shortfall. Both warned of budget cuts.

Why is D.C. so flush? Our commercial real estate market is still one of the hottest in the country, pushing tax revenues up by 16 percent. Residential home values are still rising. Jobs increased, primarily in the private sector.

The result, according to Dr. Gandhi, is there's $100 million in play.

Reporting revenue estimates and actual income has become D.C.'s annual version of three-card monte: Gandhi estimates how much the city will take in from taxes and such; based on the estimates, the mayor proposes a budget; the council holds hearings and passes a budget to run the government.

Then Gandhi revises his conservative estimates to reflect actual revenues, which have always shown an increase. Surprise -- the city is $100 million richer! These funds are beyond the council's budget cycle. The funds become, essentially, the mayor's slush fund.

Not so fast, says Jack Evans. The longtime chairman of the council's finance and revenue committee, Evans has lived through Marion Barry's funny money budget cycles and the city's defacto bankruptcy that brought in the federal control board a decade ago.

"The most responsible thing to do would be to use some of the money to pay down the city's debt," Evans tells me. But that's probably not going to happen.

Evans has a more radical idea: "Use some of the funds for small business relief. It could be a grant program to help small businesses stay even with higher rents and taxes.

"That's a better use of money than putting it into schools," he says. "I know that's bad politics. Sounds like I'm against kids. But I don't want 'feel-good' spending, rather than real spending that has an impact."

As for fixing schools, what's happened to the $200 million that comes to the schools every year thanks to council's $2.3 billion school modernization act?

Says Evans: "Seems like there's plenty of money there."

There's never enough, but the last round of this three-card monte game should be played out in the open, with hearings before Evans' committee. At least then we can see where the funny money is headed.

hjaffe@washingtonian.com