Observations on Reported Deficit in District of Columbia Government Operations

GGD-80-85: Published: Jun 23, 1980. Publicly Released: Jun 23, 1980.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Inquiries were made into the reported and widely discussed $284.4 million cumulative deficit in the District of Columbia's general fund. The deficit, shown on the accrual basis of accounting, was included in an audit report on the District's financial statements as of September 30, 1979. The questions raised were concerned with whether the reported $284.4 million deficit represented a real deficit, and expressed the view that the deficit is more of the magnitude of $90 million.

In examining the general fund deficit, GAO found that the cause of the deficit is attributed to the change in the District's budgeting process in 1970 from an obligation basis to a cash basis. This method includes the practice of carrying current liabilities forward to subsequent years, which contributed to an accumulated deficit on an accrual basis of $284.4 million for the District. Previously, the District financed the deficit through a series of short-term expedients which are generally no longer available. Also, GAO found that the deficit in the general fund does not represent a short-term need for cash. Included in the deficit are: (1) a $39.6 million liability for leave due to employees; (2) a $67.7 million liability for taxes collected but applicable to future months; and (3) a $87.5 million interest payable on long-term debt. If the deficit is expected to show the District's need for funds in the short term, the deficit amount would be about $89.6 million. However, this amount is not definite since it is possible that some of the other items reported on the consolidated balance sheet contain amounts which would further reduce the liability.

Sep 23, 2016

Sep 21, 2016

Sep 7, 2016

Aug 30, 2016

Aug 11, 2016

Jul 22, 2016

Jul 21, 2016

Jul 6, 2016

Looking for more? Browse all our products here