WASHINGTON The District of Columbia's financial problems show no signs of easing as the district faces a potential fiscal 1995 budget shortfall of $431 million and cash shortfall of $91 million, district officials said yesterday.
City administrator Robert Mallett told the district council at a heating yesterday that a new assessment of the district's fiscal 1995 finances shows potential overspending of $25 1 million and a projected $40 million revenue shortfall.
In addition to the projected over- spending and revenue gap, the $431 million figure includes $140 million of congressionally mandated spending cuts, Mallett said. The district council is slated to take action on Dec. 16 on a proposal submitted last month by outgoing Mayor Sharon Pratt Kelly to comply with the legislative cuts.
In a credit report on Monday, Standard & Poor's Corp. said the district's A-minus rating could be downgraded if "strong management actions" are not taken to balance the district's budget over the next one to three years.
Standard & Poor' s revised the district' s credit outlook last June from stable to negative because of "acute budget stress."
The rating agency said the district's "ability to gain fiscal control over its cost structuring, including pension obligations, personnel costs, and funding requirements for District of Columbia Genend Hospital, are key to the district maintaining its rating at the current level."
Mallett yesterday said Mayor-elect Marion Barry agrees with the new budget and cash assessments and is working with the Kelly administration on ways to close the projected gaps.
Council chairman David Clarke said the projected budget shortfall could be as high as $464 million if numbers he is using are accurate. Mallett said the mayor will provide a report on the new assessment in a few days.
At yesterday's hearing, attorney Jacques DePuy, on behalf of the Greater Washington Board of Trade's D.C. Public Affairs Council, urged the district to keep property tax rates at current levels.
New "calculated" rates are projected to bring in an additional $40 million, but DePuy called this estimate "optimistic," because he said that over the long term, businesses and citizens will continue to leave the district if the levies are increased.
