On June 22, DC CFO Natwar Gandhi announced $190 million less in revenue than was estimated in February 2009. This means that to keep the FY 2009 budget as approved one year ago, the city has to find at least $190 million. In FY 2010, to keep the budget whole, the city will need to find $150 million – and that is before any further revenue estimates are made.
According to the CFO, the city can use money in the Contingency Reserve Fund to fill the $190 million hole. If this happens, at least half of the drawn down $190 million must be repaid to the Fund by the end of FY 2010. This means that the FY 2010 gap would grow from $150 million to $245 million.
But there are other options. This year, for example, as was discussed here, funding is being cut in a number of, but not all, DC government agencies. Funding cuts are an option for FY 2010. Another option is doing work better so that Federal funds, and not Local funds, pay for services. The leading example of this is Medicaid billing in mental health, child welfare and schools. This can only happen when expertise is brought to bear on agencies and agencies take responsibility for improving their operations. If improving billing and documenting services does not improve, services will definitely be impacted.