The DC government’s finances are in better shape than almost any other U.S. city, thanks to large reserves, relatively small debt, and rising home prices. That great news is likely to get even better next week, when we’ll learn how the city’s finances fared in 2016. All signs suggest that the District ran a healthy budget surplus. DC’s solid financial position is a testament to the work of DC’s elected officials and our Chief Financial Officer.
The good news means that the District is better suited than many cities to weather a recession—or federal budget cuts that seem likely to come soon. It also means that the District can safely modify policies that have limited our ability to use improving finances to meet the needs of residents and businesses, especially the policy to put all year-end surpluses into savings.
DC’s financial health ranks 9th out of 116 U.S. cities, according to a recent analysis by Fiscal Times. That top-notch credit score stems primarily from DC’s large reserves and relatively low debt, but also its well-funded pension system and rising home prices. For example, DC has assets (“fund balance”) equal to 30 percent of its revenues, close to the 32-percent level needed to earn the highest ranking. The only large city that scored better overall than DC was Boston.
As DCFPI has pointed out, DC’s savings are at a record high. Our general fund balance stood at $2.2 billion at the end of 2015. And that number is likely to get even bigger next week, when DC’s audit of 2016 finances is announced; it’s likely to show that the District had a surplus
With such strong reserves, it is time for the District to consider spending some of the surplus this year rather than continuing to put 100 percent in savings. The surplus could build more affordable housing under the Housing Production Trust Fund, for example, or preserve low-cost housing in developing neighborhoods. It also could be used to pay for the start-up costs needed for DC’s paid family and medical leave, approved last year by the DC Council. These are just a few ideas.
As Mayor Bowser and the DC Council gear up to develop a budget for 2018, it’s good to know that our finances are strong, and a good time to think about the best ways to use DC’s growing prosperity to invest in our community.
