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Mayor Vincent C. Gray and CFO Jeff DeWitt Announce All-Time High for City’s Fund Balance

Friday, January 31, 2014

Mayor Vincent C. Gray and CFO Jeff DeWitt Announce All-Time High for City’s Fund Balance

Fund Balance Increases from $1.5 Billion at End of FY 2012 to $1.75 Billion at End of FY 2013

(WASHINGTON, DC) – Mayor Vincent C. Gray and DC Chief Financial Officer Jeff DeWitt today announced that the District’s financial health continued its dramatic upswing through Fiscal Year 2013, with the city’s rainy-day account reaching its highest-ever level of $1.75 billion.

The District’s Fiscal Year 2013 Comprehensive Annual Financial Report (CAFR) shows that the District took in $321 million more than it spent in FY 2013, boosting the Fund Balance by a quarter of a billion dollars in one fiscal year. This not only exceeds the Fund Balance’s record peak, it comes just three short fiscal years after the balance had been spent down dramatically. While the District posted a $321 million end-of-year surplus, the vast majority of the surplus will be placed in legally mandated reserve or escrow accounts. Only $9.6 million will be deposited in the locally mandated reserves as uncommitted funds.

“When I took office, I made restoring fiscal stability to the District of Columbia my first priority,” Mayor Gray said. “I inherited a rainy-day fund that had been spent down by the previous administration from $1.5 billion in Fiscal Year 2007 to $930 million at the end of Fiscal Year 2010, and was budgeted to plummet further to $705.1 million by the end of Fiscal Year 2011. Overspending was rampant across the government, with spending pressures averaging hundreds of millions of dollars annually. I reduced expenses through difficult cuts and by finding efficiencies within government agencies, and I made the tough call to strategically raise some taxes to balance the budget. I established a spending-pressure task force to ensure agencies did not exceed their budgets.”

Mayor Gray continued: “These measures have been extremely successful, and I am proud to announce today the complete turnaround of the District’s finances. We have fully rebuilt the District’s Fund Balance beyond its previous high during the Williams administration, and spending pressures have been eliminated.”

The record amount of cash on hand bodes well for the District’s bond ratings as Mayor Gray, CFO DeWitt and other officials visit Wall Street bond-rating agencies later this year to discuss potential upgrades in the District’s ratings for various bond categories.

Despite the fourth straight year of budget surpluses, Mayor Gray cautioned that the District did not need to become complacent in its handling of fiscal matters. “The importance of having an adequate Fund Balance was never more evident than during the recent federal government shutdown,” he said. “I declared all personnel essential and continued vital city services to District residents un-interrupted. This would not have been possible if the District had not had adequate reserves upon which to draw.”

Mayor Gray, Council Chairman Phil Mendelson and Ward 5 Councilmember Kenyan McDuffie also announced that they had worked out an agreement for how the District will apportion funds from future surpluses once the Fund Balance meets its recommended level. Of those surplus funds in the future:

  • 50 percent will go to the District’s Housing Production Trust Fund, enabling Mayor Gray to complete his pledge to create or preserve 10,000 new units of affordable housing by 2020;
  • 25 percent will go to bolstering the health-benefits fund for retirees from the District government to ensure those obligations are brought to 100 percent more quickly; and
  • The remaining 25 percent will help reduce the District’s debt by shifting from borrowing funds for capital projects to pay-as-you-go funding.

Chief Financial Officer DeWitt said, "I would like to thank the Mayor and Council and for their support and the employees of the Office of the Chief Financial Officer for all of their hard work in preparing this important annual report and achieving the 17th consecutive clean audit for the District of Columbia. I am honored to be beginning my tenure as CFO for the District when it is in such a strong financial position."

The CAFR will be available shortly on the Office of the Chief Financial Officer’s website, cfo.dc.gov.