D.C. projects higher revenue, bets on fewer fed cuts

WASHINGTON – The projected fiscal impact on the District of federal spending cutbacks is not expected to be as nightmarish as first thought, D.C.’s chief financial officer said Wednesday.

In his latest quarterly revenue estimate, CFO Natwar Gandhi added $35.7 million to the city’s anticipated fiscal 2013 revenue, most from the “lower impact of federal sequestration.”

In the current fiscal 2012, Gandhi boosted his best revenue guess by $34.8 million, as income and sales tax revenue are both projected to be higher than previous estimates.

“The threat of federal cutbacks poses the greatest risk to the District’s economic and fiscal outlook,” the CFO stated in his projection presentation.

“The federal sequestration, if implemented in its current form, would have severe impact on the District’s economy and finances.”

That said, the CFO now projects, based on the latest report from the Congressional Budget Office, a 6.5 percent reduction in federal outlays. That’s down from the 8.5 percent December estimate. Every percent means millions of dollars, up or down, to the District’s bottom line.

Other notes from the CFO’s presentation:

• In the quarter ending December, occupied office space was up 1 percent over the prior year. The commercial office vacancy rate fell to 8.4 percent.

• D.C. is expected to see an additional 3.1 million square feet of office inventory in the next two years, raising the vacancy rate to an anticipated 8.9 percent.

• Single-family home sales for the last quarter of 2011 were down 14.3 percent from the prior year, and the average sales price was down 6.3 percent. Condominium sales, meanwhile, rose 3.5 percent, though condo sales prices were also down — by 2.5 percent.

• The average hotel room rate fell 1.2 percent in the last quarter of 2011 compared to the same period a year before. “Tourism has been mixed,” Gandhi wrote in a letter to Mayor Vincent Gray and Council Chairman Kwame Brown.

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(Copyright 2012 by WTOP. All Rights Reserved.)

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