February 17, 2018 at 2:07 pm EDT | by Mark Lee
Maxed-out D.C. faces special-interest spending push
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D.C. Council Chair Phil Mendelson (D-At-Large) (Washington Blade file photo by Michael Key)

A battle is brewing over increasing D.C. government spending – but those on the spend-more side don’t appear to know the city’s cash register is empty.

It’s now foolishly common for apparently uninformed devotees of public-policy special-interest groups arguing for ever-more spending to use phrases like “we’re swimming in cash” without regard for such assertions not actually being true.

D.C. Council Chair Phil Mendelson is the type of politician who doesn’t much embellish what he says. It’s a straightforward approach that has served both his political career and the District well. Mendelson’s low-key, no-nonsense manner has become a signature component of his public persona and electoral success.

If nothing else, residents can usually rely on the guy not to blow hot air up our skirts.

Voters have shown widespread support for, and high confidence in, Mendelson’s even-handed analysis, long-range perspective, and circumspect style – especially in a city infamous for a history of financial impropriety and fiscal imprudence. The vast majority of voters readily recall the ignoble period when D.C. acquiesced independence to a federally imposed financial control board to govern operations and approve budgets following the crisis meltdown two decades ago.

For nearly a decade, the city was overseer-controlled until a broke-down and busted-flat government clawed its way back from a deep hole of red ink and bad management. No one knows anyone who wants that again.

That’s why Mendelson’s admonition this month is important – and should serve as both instruction and warning to those recklessly clamoring for profligate new city government expenditures.

Those pushing for more spending need to be reminded the city can’t again start writing checks that can’t be cashed. It’s as simple as that.

Mendelson advised that the Annual Financial Report issued by District CFO Jeffrey DeWitt contained both good and bad news. Due to statutory requirements the city balance its budget and function within fiscal constraints, D.C. remains on solid financial footing and within the parameters of retaining advantageous credit worthiness critical to controlling interest payments on the city’s already-accrued debt.

The District’s annual revenue surplus and reserve fund balance have made left-leaning special-interest groups giddy with a perceived chance for forcing the city to increase spending on favored programs and new projects.

The math is simple – there isn’t any extra money to spend.

The $287 million in surplus revenue is insufficient to fund future budget obligations already committed, totaling $256 million, and the $71 million required deposit to the city’s cash reserves. The District’s “rainy-day fund” will also drop below the recommended duration the city government would be able to cover expenses, potentially threatening favorable debt service costs.

One of the biggest warning signs that D.C. government spending has surpassed advisable and sustainable levels is the massive cost of borrowing against the future. Due to having borrowed heavily against future revenue, the city’s debt cost continues to grow and is projected to exceed $1 billion annually in only two fiscal years. That’s 15 percent of the District’s total yearly local revenue.

In addition, D.C. has begun playing budgeting tricks similar to those producing the previous financial mess, spending more than will be collected both now and in the future.

Big-spender types are either poorly informed about the city’s near-term fiscal realities or don’t much care about long-term financial stability.

They are also blissfully unaware or blatantly unconcerned that a myriad of new financial pressures will soon confront the city. Among them is a whopping $5 billion in unfunded immediate government infrastructure requirements. Federal assistance for existing program areas will also decline, resulting in huge new price tags.

It’s easy for special-interest propagandists to constantly wail that the city should spend more – or rescind recent local tax reforms. D.C.’s political environment is well known prey for such simplistic exhortations and hash-tag sloganeering.

Bottom line: D.C.’s cadre of spend-more evangelists should first listen to Mendelson before reflexively and irresponsibly demanding the city spend money it doesn’t have.


Mark Lee is a long-time entrepreneur and community business advocate. Follow on Twitter: @MarkLeeDC. Reach him at OurBusinessMatters@gmail.com.

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