WASHINGTON -- The District of Columbia's top finance official plans to recommend that the next administration move up its short-term borrowing to January from February to meet pressing cash needs.
In testimony Tuesday before the district council, Ellen O'Connor, the district's chief financial officer and deputy mayor for finance, also said that new financial tests set by Congress in the fiscal 1995 budget package could pose "serious problems" for the district's water and sewer fund and D.C. General Hospital.
Her testimony came as the council met to consider legislation authorizing the district to borrow up to $250 million in fiscal 1995 from the short-term market. The council will continue the hearing on Monday so that council member Marion Barry can question O'Connor.
Barry beat Mayor Sharon Pratt Kelly in the Democratic mayoral primary in September and is expected to win the general election.
Kelly plans to submit a supplemental fiscal 1995 budget to the council by Monday that would incorporate $140 million of congressionally mandated cuts.
But the new mayor, who is expected to make any final decisions on short-term borrowing, will submit a new supplemental budget early next year that would replace the Kelly package.
O'Connor said the district may have to market $125 million of tax revenue anticipation notes earlier than February because she and the district's treasurer "don't like those end-of-January balances" in current cash flow projections. "They look a little slim," she said.
The Kelly Administration originally planned a $100 million note sale in Febmary and a $150 million sale in May, but last month proposed instead marketing $125 million early in the year and $125 million in June.
However, O'Connor said, "we do not and will not run out of cash" under the forthcoming supplemental budget plan. O'Connor also said she is sticking by her projections of an operating deficit of between $20 million and $40 million for fiscal 1994.
O'Connor said the district is reviewing new congressional mandates aimed at tightening control over the district's troubled finances. One requirement, that receipts not exceed disbursements, "will be a serious problem at D.C. General Hospital," which needs a five-year plan with financial flexibility to straighten out its finances, O'Connor said.
The test could also pose a legal problem for the district's water and sewer fund, which the council previously authorized to spend down accumulated cash. If the utility cannot spend more than it takes in, it may have a problem meeting regulatory requirements and capital spending needs, O'Connor said,
The district also is "trying to piece together" what Congress meant when it prohibited the district from using its rainy-day fund to cover operating expenses. The district believes it can use money from the fund to help cover predevelopment costs for a proposed sports arena and convention center, because it can eventually repay the funds out of dedicated tax receipts, O'Connor said.
Members of Congress "are talking out of both sides of theft mouth" with regard to the two projects, O'Connor said. Congress did not enact legislation authorizing the district to spend the tax revenue that would back municipal bonds issued to finance the projects. But at the same time, Congress "encouraged us to take whatever action available" to cover predevelopment costs, she said.