District Government:

Information on Its Fiscal Condition

T-AIMD-96-133: Published: Jul 19, 1996. Publicly Released: Jul 19, 1996.

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Pursuant to a congressional request, GAO discussed the financial and budget trends in the District of Columbia's revenues and expenses. GAO noted that: (1) the District's revenues decreased from $2.9 billion in fiscal year (FY) 1993 to $2.7 billion in FY 1995, due to a one-time accounting change and a decrease in the assessed value of the District's commercial and residential property; (2) over 75 percent of the District's operating grants were for Medicaid reimbursements in FY 1995; (3) the District received a federal payment in FY 1995 totalling $660 million, but this payment did not adequately compensate the District for the additional responsibility it assumed or the loss of revenue due to federally imposed restrictions; (4) the District's inability to tax nonresident wages resulted in a loss of revenue; (5) the District's overall expenditures increased from $5.5 billion in FY 1993 to $6 billion in FY 1994, and decreased to $5.4 billion in FY 1995 due to shifts in Medicaid and employee benefits expenditures; (6) the District's unfunded pension liability stands at $4.7 billion and is expected to increase to $7 billion by 2004; (7) the District has delayed pension, vendor, and Medicaid payments, and borrowed short-term bonds from the Treasury to finance its operations; (8) the District Financial Responsibility and Management Assistance Authority has reviewed 1,562 contracts, developed a strategic plan, approved 10 privatization plans for FY 1996, and allocated reductions to several departments; and (9) the New York and Philadelphia financial control boards have taken numerous actions to reform their cities' accounting and budgeting practices.

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