DC drops revenue estimate as city mulls lean budget

By Lisa Lambert

WASHINGTON (Reuters) - Bracing for a local recession, the chief financial officer of Washington, D.C. has cut his fiscal 2009 revenue estimates by $35 million, according to a letter he sent local leaders on Wednesday.

But Natwar Gandhi, the city's CFO, raised his revenue estimate for the current fiscal year to $5.255 billion, which is $13.2 million more than he projected in February.

The city's fiscal years begin in October.

The new revenue estimate for next year of $5.37 billion could cause problems for the fiscal 2009 budget the city council is expected to pass next week. That budget includes proposed spending of $5.66 billion.

Mayor Adrian Fenty had drafted the budget to nearly freeze spending by not filling job vacancies and delaying the implementation of property tax cuts. When he unveiled his spending plan in March, Fenty emphasized that he would not raise taxes, which makes budget cuts now more likely.

In his letter, Gandhi warned that the economic stimulus package recently enacted by the U.S. government could cut an additional $35.7 million from the coming fiscal year's revenues.

The package included a "bonus depreciation" measure that gives tax breaks to businesses. Washington's tax code is modeled after the federal one, which means it will have to grant the same deduction unless the council passes a law disallowing the breaks, Gandhi said.

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