Mayor Vincent C. Gray

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February 11, 2011

Mayor Gray and Councilmembers Report Positive Meeting with Bond-Rating Agencies  

DC leaders emphasize the need for fiscal discipline to maintain good ratings.

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Mayor Vincent C. Gray, DC Council Chairman Kwame R. Brown and Councilmember and Committee on Finance and Revenue Chair Jack Evans are back today after their annual meeting with Wall Street bond-rating agencies, held yesterday in New York. In discussions with representatives of Standard & Poor’s, Fitch Ratings and Moody’s Investors Service, the three District leaders said they are committed to ensuring that the city’s budget is structurally stable and is balanced with new revenues rather than drawing down the fragile fund balance of reserve funds.

On April 1, Mayor Gray will present a fiscal year 2012 budget to the Council that he said would include three major components: balancing the District’s budget with fiscally sound approaches instead of using gimmicks and one-time funding to cover spending; rebuilding the District’s reserve and rainy-day funds; and living within a 12 percent debt limit to reduce capital or construction spending.

Mayor Gray, Chairman Brown and Councilmember Evans also discussed the need to work toward ending city ownership of the United Medical Center (UMC). Chief Financial Officer Dr. Natwar Gandhi and bond agencies have expressed concerns about the hospital’s impact on the city’s budget. Gray, Brown and Evans believe private ownership is the best way to ensure the hospital’s long-term survival as a medical facility that is critical to the health care of residents east of the Anacostia River.

The District’s leadership pointed to legislation they will follow that upholds principles of sound fiscal management, including the “Sustainable Capital Investment and Fund Balance Restoration Act of 2010.” The measure, which won Council approval in December, requires all undesignated, end-of-year surplus monies be deposited directly into the fund balance – akin to a savings account -- as a way to rebuild reserves. The legislation also requires that one-quarter of any new local revenues be set aside for pay-as-you-go capital projects.

“As we are in the midst of considering all options for closing the deficit -- some of which may be painful -- the Wall Street meeting was a timely wake-up call that we must come up with a budget that puts the District of Columbia on long-term and firm financial footing,” Mayor Gray said.

Chairman Brown emphasized the need to start with savings rather than new taxes. “Although revenue enhancements must be considered, I will start first with requiring cuts in areas where we are overspending, and then put in place internal controls to collect the millions of dollars owed to the District in federal reimbursements to help fill the budget gap,” he said.