New revenue estimate figures for the District of Columbia released today paint an ever more bleak financial picture for the city. In a letter to the mayor and D.C. Council, District CFO Natwar Gandhi estimated FY2010 revenues are now down an additional $17.7 million, while 2011 looks worse still, with $49.4 million less than originally expected coming into District coffers.
This is by no means the first time revenue estimates have been revised downward in the last year. These latest figures mean the 2010 budget gap now stands at $240 million, and in 2011, a whopping $605 million.
So what are the factors that contributed to this latest problem? Well, the real estate market is still a mess, Gandhi says. Plus, the city has pushed back implementation of one of its newer plans for generating revenue, installing automated traffic enforcement technology. And another notable development: turns out the recent increase in cigarette taxes, from $2 to $2.50 per pack, implemented by the D.C. Council didn’t end up generating nearly as much revenue as had been expected. D.C. smokers have just switched to buying their cigarettes in Virginia or Maryland, it seems, to the tune of $15 million less than expected for the District. Gandhi makes sure to note that as long as D.C.’s cigarette taxes remain higher than what its neighbors charge, any further increases will only add to the revenue problem. So sounds like D.C.’s cigarette taxes will likely stay put for the time being.
Full letter below:
