D.C. officials will face a daunting fiscal picture over the coming years as the financial fallout from the COVID-19 pandemic continues to hit city coffers.

Starting tomorrow, the D.C. Council and Mayor Muriel Bowser will have to figure out how to dig out of a $211 million hole for the new fiscal year — a hole that will only grow to almost $600 million over the next four years.

D.C. Chief Financial Officer Jeffrey DeWitt presented the revised financial estimates on Wednesday, updating numbers that were last presented in April.

“Back on April 24th, we had just started to shut down and thought we’d be back by Fourth of July,” DeWitt said. “A lot of things we made assumptions about back in April. Now we know a lot more about the virus… how businesses are responding to the COVID recession.”

There was one bit of good news, though. According to the new revenue estimate, D.C. is finishing the current fiscal year — which ends on Wednesday — $222 million better off than previously expected, when revenue losses were expected to approach $600 million.

That’s largely because of federal funding that gave people an additional $600 in unemployment benefits, the Paycheck Protection Program and the one-time $1,200 payment to most Americans, DeWitt said. The stock market has also recovered after a 30% loss.

DeWitt said about three-quarters of the District’s economy is performing well, and that telecommuting has aided the region’s large white-collar job sector. He described the current situation as a “hospitality recession,” meaning that hotels, restaurants, bars and tourism are the hardest hit sectors. He also mentioned colleges and sectors like office support and janitorial services taking a hit.

“Scars are less than they would be otherwise,” he said. “But what does it look like going forward?”

The answer? Not great.

DeWitt said the recovery is occurring much more slowly than predicted in April. While Bowser’s Reopen D.C. plan gave the city a framework towards a return to normalcy, D.C. hasn’t yet progressed past Phase 2.

Going forward, DeWitt said he predicts that indoor dining and bar restrictions would continue through at least the end of the year, large events would not return until a vaccine is widely available next fall, and most conventions would remain canceled through 2021.

All of that, he said, would continue to hurt the hospitality industry — and the city at large. Sales tax revenue will remain lower than expected, property tax collection will decline because of increased vacancies, and deed taxes will stay down because of fewer office and apartment building sales.

“There is considerable uncertainty in the forecast and we cannot assume, given the extensive disruptions to the economy, that things will quickly return to pre-pandemic levels,” DeWitt wrote in a letter to Bowser and city lawmakers. “There could be lingering effects on shopping, work and travel patterns, along with changes in the interest in moving to and working in the District of Columbia and other cities.”

DeWitt said additional federal assistance will be key to preventing the recession from spreading, but he’s not expecting as widespread of relief as the CARES Act initially provided. (Even then, the CARES Act gave D.C. less aid than each of the 50 states received.)

The expectations could improve if a vaccine arrives more quickly, federal relief is larger, health metrics improve, and tourists return. It could get worse with a delayed vaccine, no federal support, a second COVID wave, and the recession spreading to other industries.

“We’re very financially strong, used reserves responsibility, made adjustments responsibly, but do have reduced revenue that requires actions by government to bring (the budget) back into balance,” DeWitt said.

Bowser And Mendelson Begin To Plan

Speaking Wednesday, neither Bowser nor Council Chairman Phil Mendelson would discuss how to address the financial hole the city faces in the coming years.

“We have work to do and look forward to working with the council about how to approach it,” Bowser said.

Mendelson said he suspects D.C. is better off than other jurisdictions, but said it’s still not a pretty picture. Bowser said they likely won’t be able to go back to the same well they did to bridge this year’s gap: hiring freezes and spending freezes, belt-tightening from almost every department, and drawing on the city’s rainy-day fund.

That could mean layoffs in the city and conversations around tax increases, though Bowser would not comment on the specific possibility of an increase on high-income earners.

“We will find the money,” Bowser said. “I’m confident we will reach a balanced budget that continues to invest in the District’s priorities.”