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[quote=Anonymous][quote=Anonymous]From DC Line today:

A tough budget year ahead, DC officials warn

Top DC officials pointed to challenging budget deliberations ahead as they released last year's Annual Comprehensive Financial Report, which showed a surplus for fiscal year 2023 that wasn't sufficient to fully replenish two key reserve accounts.

&quot;While the District ended the last fiscal year in the black, that excess is already spoken for, so we will need to make some tough choices in the FY25 budget,&quot; DC Council Chair Phil Mendelson tweeted.

At a DC Council oversight hearing yesterday afternoon, Chief Financial Officer Glen Lee testified the District's financial health remained strong despite fiscal challenges. During FY 2023, the District experienced modest revenue growth overall — despite declining commercial property tax collections due to the weak office market — because of increases in other areas, including sales taxes fueled by a rebound in tourism and convention activities.

Lee and City Administrator Kevin Donahue noted that this was the District's 27th consecutive clean audit and the ninth straight year with no &quot;material weaknesses&quot; identified by the independent auditors. The District has 51 days of cash on hand via its reserve accounts, but that falls short of the 60-day target to ensure enough working capital and liquidity.

&quot;The FY25 budget will be the most difficult budget we’ve faced since the Great Recession of 2008,&quot; Donahue tweeted in a summary of his presentation at yesterday's hearing on the ACFR's release.

While the DC government's operating costs continue to rise due to inflation and other factors, revenue is not keeping pace. Revenue grew 21% between fiscal years 2020 and 2022, Donahue said, but it is projected to increase by just 1% between fiscal years 2022 and 2024.

Meanwhile, Lee said that $322 million will have to be allocated over the next two years to restore the District's cash flow and fiscal stabilization reserve accounts to full strength. There's also no more federal COVID-19 relief funding available.

&quot;COVID-19 stimulus period spending levels are simply financially unsustainable,&quot; declared one of Donahue's PowerPoint slides.

— 'D.C.'s commercial tax base in a multibillion-dollar free fall.' WBJ's Michael Neibauer: &quot;The taxable assessed value of commercial property in D.C. has fallen by nearly $12 billion in two years, reflecting the massive challenges facing the District’s office market and its economy overall.

&quot;For fiscal year 2023, which ended Sept. 30, the assessed value of all taxable commercial property in Washington came in at $101.18 billion, down from $102.7 billion in 2022 and $112.7 billion in 2021, according to the District’s 2023 Annual Comprehensive Financial Report, released Thursday. That two-year decline represents more than $200 million in foregone tax revenue — there are multiple tax rates depending on a property’s value, occupancy and condition.&quot; [WBJ][/quote]

Sorry, but how the hell does a drop in property valuation of ~$1.5 billion result in a tax reduction of &gt;$200mm?  The tax rate on CRE isn't freaking 13%![/quote]

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