DC faces harsh financial reality if coronavirus restrictions persist

D.C.’s chief financial officer updated council members on the state of the District’s finances if the coronavirus outbreak continues into the summer.

Jeffrey DeWitt testified ahead of a vote to pass emergency legislation in D.C. that would make more resources available for unemployed workers and strained businesses hit hard by the COVID-19 restrictions.

“We’re not in financial trouble. We’re starting this in the best place we have been in the city’s history,” DeWitt told the council.

He recently briefed the council at its retreat in late February on the possibility of a recession, saying that contributions to the city’s reserves had been a smart move.

But he said if the pandemic restrictions — including closed restaurants and bars, tourism and entertainment venues — persist, it could mean massive changes for D.C.’s coffers.

D.C.’s hospitality industry makes up almost half of its $1.6 billion sales tax revenue, according to DeWitt.

“So when you take the $787 million average annual in a normal year sales tax revenue that is at risk, you take that your wage base is at risk if they are unemployed. You take the fact that we are currently at a 4.9% in an unemployment situation. If you have a large amount of layoffs in that particular sector, you could be facing between 15-20% unemployment,” he said.

At this time of year, the city would still rely on another $500 million from hospitality-generated sales tax revenue for support.

If things continue and that revenue does not materialize, DeWitt said the city has to consider it might have to cut that amount from its spending.

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Megan Cloherty

WTOP Investigative Reporter Megan Cloherty primarily covers breaking news, crime and courts.

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