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2009 Gap-Closing Narrative Summary

2009 Gap-Closing Narrative Summary

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Published by Susie Cambria
Summary of gap closing proposed by Mayor Fenty.
Summary of gap closing proposed by Mayor Fenty.

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Published by: Susie Cambria on Jul 16, 2009
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05/11/2014

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FY
 
2009
 
and
 
FY
 
2010
 
Government
 
of 
 
the
 
District
 
of 
 
Columbia
 
Office
 
of 
 
the
 
City
 
Administrator
 
GAP
CLOSING
 
PLAN
 
OVERVIEW
 
July
 
16,
 
2009
 
FY
 
2009
 
and
 
FY
 
2010
 
GAP
CLOSING
 
PLAN
 
OVERVIEW
 
2
 
Overview
The FY 2009 BudgetThe FY 2009 budget approved by the Council and signed by the Mayor one year ago was a $9.5 billionspending plan, including $5.7 billion in Local funds. After the Chief Financial Officer issued revisedrevenue estimates, certifying a $130.7 million shortfall in unrestricted Local Fund revenues for FY 2009on September 24, 2008, the Mayor and the Council proposed gap closing plans to address the shortfall.On November 10, 2008, the Council approved a revised FY 2009 spending plan including $5.6 billion inLocal funds, and the Mayor signed the amended, balanced budget.Since the November approved budget, revenue projections for FY 2009 have declined in each of theChief Financial Officer’s quarterly estimates. In total, Local fund revenue estimates dropped by $452.8million over the past eight months.In order to reduce the budget to the level of estimated revenue, the Mayor has proposed a second FY 2009gap-closing plan that includes $138 million in fund balance use, $152 million in stimulus funding forbudget stabilization, $125 million from the Contingency Reserve Fund, and $15 million from agencyspending reductions. The following table summarizes the major elements of the Mayor’s FY 2009 gap-closing proposal:
FY
 
2009
 
Revenue
 
Shortfall
 
(453)
 
Gap
 
Closing
 
Plan
 
(in
 
millions)
 
ARRA
 
Stimulus
 
funding
 
152
 
Fund
 
Balance,
 
including
 
dedicated
 
taxes
 
and
 
special
 
purpose
 
revenue
 
138
 
Contingency
 
Reserve
 
Fund
 
(Rainy
 
Day
 
Fund)
 
125
 
Convert
 
dedicated
 
taxes
 
to
 
Local
 
funds
 
14
 
Agency
 
savings
 
from
 
spending
 
control
 
15
 
Settlements
 
income
 
and
 
additional
 
parking
 
meter
 
revenue
 
10
 
Net
 
effect
 
on
 
operating
 
margin
 
1
 
This gap-closing proposal also shifts $76 million from accounts with available funding, including the cashreserve and surpluses in debt service agencies, to agencies with spending pressures. For example, the DCHealthCare Alliance has higher than anticipated costs from enrollment growth related to highunemployment rates. In past years, the effect of some spending pressures projected early in the fiscalyear was fully absorbed by slower-than-projected spending in the affected agency. In light of the revenueshortfalls this year, it is not likely that many agencies will end the year with excess resources, and thisplan allocates funding to reduce known spending pressures as far as possible now.
 
FY
 
2009
 
and
 
FY
 
2010
 
GAP
CLOSING
 
PLAN
 
OVERVIEW
 
3
 
FY 2010 BudgetOn March 20, 2009, the Mayor proposed a balanced budget for Fiscal Year 2010 with a reduction inLocal Funds expenditures of 3.9 percent. That proposal included the elimination of approximately 1,631positions across the government, including about 458 vacant positions and 1176 filled positions. TheCouncil approved the budget with amendments on May 12, 2009, maintaining a balanced budget andincreasing revenues through enhanced parking enforcement. The approved FY 2010 budget is a $10.4billion spending plan, including $5.4 billion in Local funds.One month later, on June 22, 2009, the Office of the Chief Financial Officer released revised quarterlyrevenue estimates that projected a decline of $150 million in FY 2010. Under the District Charter, thebudget must be balanced before submission to Congress.The use of the Contingency Reserve Fund (or Rainy Day Fund) to address the revenue shortfall in FY2009 exacerbates the shortfall in FY 2010 due to the fund replenishment requirements. Unlike any otherstate, the District must repay 50 percent of the Contingency Reserve Fund in the fiscal year after awithdrawal from the fund, and the remaining 50 percent by the end of the next year. In FY 2010, theDistrict has to repay $62.5 million to the Contingency Reserve Fund even though the District economy isexpected to continue to experience recession conditions throughout the year.To submit a balanced budget, and repay the Contingency Reserve Fund, the Mayor has proposed anamended FY 2010 budget that includes $110 million in agency gap closing initiatives, including theelimination about 250 positions, and an additional $35.8 million of stimulus funding. The following tablesummarizes the major elements of the Mayor’s FY 2010 gap-closing proposal:
FY
 
2010
 
Revenue
 
Shortfall
 
(150)
 
Contingency
 
Reserve
 
Fund
 
required
 
replenishment
 
(63)
 
Gap
 
Closing
 
Plan
 
(in
 
millions)
 
Agency
 
gap
 
closing
 
initiatives
 
110
 
Convert
 
dedicated
 
taxes
 
and
 
special
 
purpose
 
revenue
 
to
 
Local
 
funds
 
57
 
ARRA
 
Stimulus
 
funding
 
36
 
Fund
 
Balance
 
Use
 
4
 
Sale
 
of 
 
assets
 
6
 
Net
 
effect
 
on
 
operating
 
margin
 
1
 
FY 2011 and long term outlook 
. Although the District presently has a detailed budget only for FY 2010,the District develops a multiyear financial plan to estimate resources and projected expenditures atinflationary growth rates over a 4-year period. The FY 2011 budget development process will begin inthe fall, with submission to Council anticipated in late March 2010. However, agencies will begin toidentify additional savings this summer to prepare for the FY 2011 budget.

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