The COVID-19 pandemic hasn’t been kind to municipal and state budgets, but this week D.C. lawmakers got an unexpected surprise: word of a half-billion-dollar budget surplus.

The news came from D.C. Chief Financial Officer Jeffrey DeWitt, who testified to the council on Wednesday afternoon on the city’s annual financial audit. Amidst talk of the city’s generally strong financial position, DeWitt said that D.C. closed out the 2020 fiscal year — which ended at the end of last September — with $526 million more than lawmakers had anticipated.

DeWitt said the significant surplus was driven by higher-than-expected property and income tax collection, as well as the effects of $1.9 billion worth of federal COVID-19 assistance to the city in the form of stimulus checks, additional unemployment benefits, loans to small businesses, and more.

But unlike in any normal year, news of the surplus prompted criticism from various councilmembers, who said they wished they had known about the extra money last year so they could have spent it on direct relief for residents and businesses hammered by the pandemic. Instead, by law the surplus has been split evenly between a fund to pay for the construction of affordable housing and another fund to pay for infrastructure projects.

Ward 3 Councilmember Mary Cheh said that DeWitt’s revenue projections last year — which were used to trim the 2020 budget when the economy shut down and to formulate the 2021 budget — were “overly cautious,” leading to a situation where a large surplus resulted.

“If we had better projections and we knew that there would be this largest surplus we’ve ever had, at the time it may have been flagged and then we could have put money towards the businesses and other matters where relief was needed,” she said. “How can we know going forward how we’re going to be able to account for anything that comes under this heading of surplus so we can put it to use right away?”

This isn’t the first time D.C. lawmakers have tussled with DeWitt over his revenue forecasts, much less is it unusual for them to criticize him as being cautious or conservative with the city’s finances. But DeWitt defended his projections from last year, saying his office had no idea how the pandemic — and the federal response to it — would truly impact D.C.’s bottom line.

“If we could have in April 2020 known what phase [of reopening] we would have every month of the year… if we had known how much money the federal government was going to inject in the economy, if we had known all those factors we could have gotten it more correct. But we have leaned lessons from that,” he said. “I don’t want there to be surplus revenue at the end of the year. That’s not the goal.”

Lawmakers also pushed DeWitt on the state of D.C.’s reserves, the four separate accounts that at the end of September contained $1.4 billion. D.C. officials have for years worked to build up those reserves, and celebrated a milestone last year when they reached the equivalent of 60 days worth of cash to run the government if all other sources of revenue suddenly dried up.

Those same officials have also told lawmakers repeatedly that the reserves should be used conservatively, given that they help the city pay its daily operating bills and sustain a good credit rating — which lowers borrowing costs for projects like new schools and roads.

“I’m not against being financially prudent, but hoarding cash when our residents and businesses are in economic death spiral is not responsible either,” said At-Large Councilmember Elissa Silverman to DeWitt on Wednesday. “You know, I think we should be pulling out all of the stops, spending our tax dollars to stabilize residents, workers, businesses, especially those in hospitality and entertainment where the pandemic has just crushed them.”

DeWitt said congressional rules restricts how D.C. can use some of its reserves, and how quickly it would have to pay them back. But Silverman focused in on the emergency reserve, which as of last month had $155.6 million in it for “a natural disaster or calamity.”

“Is this not considered a truly calamitous event?” she asked.

“The pandemic is calamitous, but it also is not over,” responded City Administrator Kevin Donahue. “If we had not gotten the federal aid at the levels we did, we in all likelihood would have, in fact, had to tap into that reserve, the emergency reserve that you’re referencing. And we may still have to.”

But Donahue warned that the existing response to the pandemic could quickly burn through that money. Operating the field hospital at the Washington Convention Center at 25% of its capacity, he said, would cost $20 million a month.

During the four-hour hearing, DeWitt delved into the broader impact of the pandemic on the city’s economy. He said D.C. paid out almost $1.6 billion in unemployment benefits last year (more than $900 million coming from federal aid); during the height of the Great Recession, the most the city paid out was $440 million. He also disclosed that by this week the city has completely spent down its unemployment reserves, which before the pandemic stood at $520 million. From now on, D.C. will be borrowing money from the U.S. Treasury to pay future benefits, a step other states have also been forced to take.

DeWitt told lawmakers that sales tax revenue decreased by 22% last year, and that the city’s hospitality industry has been disproportionately impacted. (There were 35,633 fewer jobs in September than in the same month in 2019, and hotel stays from June through September were down 80% from the same period the year prior.) DeWitt stressed what many residents know by experience: the pandemic has not hit everyone the same way.

“People in the stock market are doing very well,” he said. “People working at a restaurant are not.”

That reality is expected to influence the upcoming budget season, where lawmakers will be faced with a likely budget deficit but have said they are willing to consider raising taxes on the richest D.C. households to help those on the other end of the spectrum.

“There’s a theory that people who have a lot do better, it will raise the boats of all of those who are struggling,” said At-Large Councilmember Robert White. “But we’re seeing a lot of boats sinking in real time. We’re not only responsible for making sure our revenues are strong, we’re responsible for people calling our offices in tears, desperate to find a way to feed their families and living in fear of the day that the eviction moratorium is lifted.”