Washington, DC Economic Partnership February 2, 2011

Washington, DC Economic Partnership February 2, 2011 1350 Pennsylvania Avenue, NW Suite 203 Washington, DC 20004 (202) 727-2476 www.cfo.dc.gov

District of Columbia Surplus and Bond Rating History $890 million Revitalization Act Control Period -$518 million

Composition of General Fund BalanceFY 2007 – FY 2010($ in millions)

Rainy Day Funds ($ in millions) Congressionally Mandated Emergency (2%)/Contingency (4%) Cash Reserves ($ in millions) Reserve requirement reduced

Total Working Capital Unreserved/Undesignated Fund Balance Plus Congressionally Mandated Emergency/Contingency Reserves as a Percent of Next Year’s Budgetary Expenditures ($ in millions) 8-1/3% = one month’s expenditures 9.6% 8.6% 8.1% 6.7% 8.3% 6.5% 7.5% 5.5% 5.0% FY 2010 represents 20 days Operating Expenditures. $364.1 $338.0 $339.2 $428.9 $431.6 $390.8 $415.7 $284.3 $337.9

High Needs and Restricted Tax Base = Structural Imbalance • The District has a large share of very poor and needy citizens • Overall poverty rate is 17% • Child poverty rate is 26% • Costs of service delivery in the District are 123 percent of national levels; capital costs (buildings) are 1.5 times national average • Unlike other jurisdictions, the District cannot divert resources from wealthier suburban areas to serve the poor • District is prohibited from taxing income earned by non-residents – 66% of total income is earned by non-residents, mostly daily commuters to the city • District has especially high concentration of non-taxable real property; value of property held by the federal government is 30% of non-residential property values • Because of the inability to tap these resources, residents must shoulder a disproportionate share of the costs of public services, while the benefits are shared by a much larger community • Danger is that, should revenues continue to decline, District services could be severely impaired

Washington, DC Economic Partnership February 2, 2011