Mayor Anthony A. Williams
Letter to city council on FY 2005 budget amendments
April 27, 2004

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April 27, 2004

The Honorable Linda W. Cropp
Chairman
Council of the District of Columbia
1350 Pennsylvania Avenue, N.W.
Washington, D.C. 20004

Dear Chairman Cropp:

The purpose of this letter is to amend the Proposed FY 2005 Budget and Financial Plan, submitted to the Council on March 29, 2004. These amendments include both technical corrections and changes in policy. In some instances these amendments can be made within the available financing of the budget as submitted. In other instances these amendments show a net fiscal impact that can be offset by additional certified revenue. As you know, the Chief Financial Officer is in the process of certifying an additional $50 million in revenue based on new economic data that shows higher-than-expected economic growth.

Given the timing of this new revenue certification, I recognize several committees have already identified potential budget cuts to offset some of the changes proposed below. I value the role of the Council as an equal partner in defining the District’s priorities, and welcome an open dialogue about the appropriate level of spending in all areas of the budget. On behalf of the District’s residents, however, I cannot support any budget cuts that adversely affect education, public safety, or other critical priority areas. To the extent that any such cuts are included in Committee Markups conducted this week, I sincerely hope that our consensus process will resolve any such issues. Based on that assumption I propose the specific amendments presented below.

The following changes have a net fiscal impact on the proposed budget, and this impact will be offset by new revenue to be certified by the Chief Financial Officer.

 

1.Restore tax exemption on out-of-state bonds. New revenue will allow for this tax benefit to be restored for District residents.	$6,178,000
2.Eliminate provider tax on hospitals and restructure tax for ICF/MRs. The original provider tax proposal assessed a tax on Hospitals, Nursing Homes and ICF/MRs . The revised provider tax proposal assesses a tax on Nursing Homes and ICF/MRs only.	4,300,000
3.Transitional space for offices vacating unsafe or inadequate facilities. The Office of Property Management has renewed the process for identifying unsafe and inadequate government buildings and has developed an aggressive timeline for relocating District employees to appropriate space. Funding for this relocation was not included in the original proposed budget, and is necessary to finance lease and moving costs.	8,897,000
4.Restructuring of charter school facilities allotment. To allow for additional consideration of charter school facility needs, the facilities allotment may be funded according to current law for FY 2005. Further consultation with the Council and community can define an appropriate option for rationalizing this funding stream thereafter.	7,063,000
5.Microsoft licensing agreement. In the FY 2004 mid-year budget reallocation approved by Council, $4.6 million was included to fund annual licensing costs for software as part of a legal settlement; but despite being an annual cost, this amount was not included in the FY 2005 proposed budget. Of the total amount, $1,380,000 can be funded through new technology efficiencies identified in agencies. New funding is required for the remainder in order to ensure legal compliance. Funding should be allocated to the Office of Finance and Resource Management to administer this agreement for agencies across the District.	3,220,000
6.Continued funding for Anti-Gang Initiative. Also approved in FY 2004 was the commitment of funds from the Office of Latino Affairs for programming targeted at at-risk youth. These programs have begun, but funding was not included in the FY 2005 budget so they may continue.	400,000
7.Pay-go capital for street repair. This funding will provide a one-time investment to repair streets and sidewalks in the District. It will be allocated as pay-as-you-go capital funding, and therefore will have no impact on the District’s borrowing limits. This funding will be allocated to the Department of Transportation.	2,000,000
8.Restore weekend litter can service. As a cost-reduction measure the original proposed budget reduced litter can service on weekends. This funding will allow the Department of Public Works to restore services to previous funding levels.	785,000
9.Restructuring of Housing Production Trust Fund securitization. To support additional community input, the Housing Production Trust Fund may be funded according to current law for FY 2005, and changes may be made in concert with the community to allow for a more rational funding stream thereafter. To support this restructuring, implementation of three tax abatements in the Housing Act (Titles III, VI, and VII) would be postponed for one year, generating $4,250,000 in additional revenue.	20,480,000
10.Additional cash reserve contribution. As required by federal law, the fiscal impact of the changes presented must be matched by a reserve contribution equal to 4% of this amount.	895,000
Total	$54,218,000

In addition to the FY 2005 impacts listed above, Attachment A to this letter also presents the impact of these changes on the Financial Plan.

1. Department of Consumer and Regulatory Affairs (DCRA) transfer to Office of Administrative Hearings (OAH)

This amendment increases the DCRA Local funds budget by $333,592 and 4 FTEs to correct the amounts transferred to OAH as part of the transfer of certain adjudicative functions from DCRA to OAH in FY 2005. The original amounts and FTEs transferred from DCRA to OAH included non-adjudication functions and therefore exceeded the amounts required to be transferred. This increase is completely offset by an OAH Local funds budget decrease of $333,592 and 4 FTEs.

This amendment increases OUC's proposed Special Purpose Revenue funds budget by $4,926,485. OUC’s proposed budget should increase by $4,926,485 to reflect the increased E-911 revenue from the federal government. This also includes the addition of 14 FTEs.

This amendment increases MPD's proposed intra-District budget by $4,926,485. The intra-District budget will be supported by the increased E-911 revenue from the collection of E-911 fees related to federal government telecommunication lines that is reflected in the Office of Unified Communications.

Three projects previously approved by the Mayor and Council were inadvertently omitted from the Capital Budget, and should be restored. These projects were accounted for within the available financing limits, and therefore have no adverse fiscal impact on the capital budget.

1. Department of Motor Vehicles (DMV)

This amendment restores DMV's capital budget for project WA5 40 (IT Infrastructure Systems) for $1,500,000 in FY 04 and $3,000,000 in FY 05 for a total Budget of $4,500,000.

2. Office on Aging

This amendment increases the Office on Aging's FY 05 proposed capital budget by a net of $130,000. The Office on Aging's proposed capital budget for project A05 03 (Multipurpose wellness center in Ward 4) will eliminate an inadvertent reduction of $300,000 in FY05. This amount was an enhancement request not moved forward in FY 2005 and therefore, should not have been counted as a reduction to the agencies capital budget. In addition, FY 04 Target reduction of $130,653 for project AA1 01 (General Improvements - Group Homes) is restored.

3. Office of Property Management (OPM)

This amendment restores Office of Property Management's (OPM) FY 05 capital Budget by a net of $1,300,000. OPM's proposed capital budget for project N14 01 (Renovation of Government Centers) should increase by $1,300,000 in FY05.

 

CIP Adjustments		Amount
Department of Motor Vehicles		$4,500,000
Office of Property Management Office on Aging		$1,300,000 $300,000
Net CIP Increase		$6,100,000

Thank you for your consideration of these changes. I look forward to working with the Council during the FY 2005 consensus process.

Sincerely,

Anthony A. Williams
Mayor

cc: District of Columbia Council Members

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"These additional revenues allow us to avoid doing some things we didn’t really want to do in the first place. I look forward to working with the Council to finalize our budget for FY ’05. No one likes surprises, but it’s a lot nicer to get a revision that shows we will have more money to work with as opposed to having less. Practically speaking, this additional revenue will help us bring the budget process to a conclusion with less discord and argumentation," said Williams.