FY 2011 and 2012 Budget Update!

June 30th, 2011 | by Jenny Reed and Kwame Boadi

Yesterday, Mayor Gray and DC Council members met to discuss how to use the unanticipated revenue for Fiscal Years 2011 and 2012. Last week, DC Chief Financial Officer Natwar Gandhi announced that the city will collect $107 million more than previously expected in the current fiscal year (FY 2011) and $77 million next year (FY 2012). While the Council created a spending roadmap for additional revenues within the just passed FY 2012 budget, $77 million of increased revenue wasn’t enough to cover a recently announced $32 million spending pressure in health care costs for next year.

At the meeting, Mayor Gray proposed to use the majority of the FY 2011 revenue increase to address spending pressures, i.e., programs that will have expenditures that exceed dollars allocated in the FY 2011 budget. Yet the mayor also proposed to use some of the additional FY 2011 revenue to cover the remaining costs of the health care contract and fund several programs on the Council’s priority restoration list for next year, including additional police officers and mental health services.

The next steps are as follows: The Mayor will send a FY 2011 supplemental budget to the Council tomorrow (Friday), a public roundtable will be held on the plan July 7th, and a DC Council vote on the supplemental budget legislation is tentatively set for July 12th.

Here is a run-down of the major points covered at yesterday’s meeting:

Increased FY 2011 Revenues

Gray proposed that $74 million of the $107 million in additional FY 2011 revenue be used to cover current spending pressures in areas like public safety and health care. The remaining $33 million will be carried over into FY 2012 and used to cover the remaining $6 million the mayor said is needed to pay for renegotiated contacts to Alliance and Medicaid health care providers, as well as for several programs from the Council priority restoration list. The allocations include $12.5 million for school nurses, $10.8 million for police, and $3.5 million for mental health services.

Where would programs on the Council’s priority list stand?

Given the mayor’s proposal and the spending map outlined in the recently passed FY 2012 Budget Support Act, the unanticipated revenue will be used to fund a number of items on the Council’s priority list including:

• $22 million to move employees from the capital budget to the operating budget
• $28 million to add to DC’s fund balance, or savings account
• $1.8 million for green teams and clean teams
• $32 million for the renegotiated health care contract
• $12.5 million for school nurses
• $10.8 million for additional police officers
• $3.5 million for mental health services

The $3.5 million for mental health care would actually bump other Council priorities such as funding for the Local Rent Supplement program and Housing Production Trust fund down the list. If the Mayor’s plan passes as proposed, these programs would now be first in line for additional revenues that may be available when CFO Gandhi issues his next revenue forecast, in September.

Mayor Gray will send his supplemental budget down to the Council tomorrow, and the Council will likely hold a roundtable on the supplemental budget on Thursday, June 7. Following this hearing, we can expect a final vote on Tuesday, June 12, which would finally close the books on the FY12 budget process — that is, until the next revenue forecast comes out.

The Mayor took an important step by prioritizing program restorations with the additional FY 2011 dollars. Many critical programs and services still remain underfunded as DC begins to climb slowly out of the recession. Moreover, the Council should continue to prioritize new revenues to restore programs and not use our limited resources for tax breaks. Twice now the Council has voted to remove the tax exemption on interest earned on out-of-state bonds. DCFPI supports that decision and urges the Council to keep that in place.

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