I was pleased by the Mayor Gray’s decision to reappoint Natwar Gandhi to another term as the District’s Chief Financial Officer. I have said many times I would not trade the District’s financial position with that of any other city, county or state in the country. The District had a $1.1 billion cumulative general fund balance in fiscal 2011, an increase of $215 million over the previous year. This is $1.6 billion above the District’s lowest fund balance level, which was minus $518 million during the control board period in 1996. Our audit last year was the District’s 15th consecutive clean audit, and our recently passed fiscal 2013 budget is the District’s 16th consecutive balanced budget.
Much of our success in maintaining fiscal discipline can be attributed to Gandhi. While the mayor and members of the District Council have at times criticized Gandhi’s conservative revenue forecasts, I believe having a surplus at the end of the year is better than finding ourselves with a deficit and the potential reintroduction of a control board. Particularly during this time of instability in our government, it is critical to have an independent CFO with a demonstrated commitment to maintaining integrity in financial projections, regardless of political pressure.
I have seen firsthand how difficult it is to bring efficiency into a government bureaucracy. This makes it all the more impressive that our Office of Tax and Revenue has modernized its systems and can issue income tax refunds in three to five days for electronically filed returns, and just ten days even for paper filings.
Perhaps most important to me is the District’s bond rating. The District must issue bonds to finance important infrastructure improvements, such as schools, libraries and parks. I cannot emphasize enough how adept Gandhi and his team are at communicating with the credit-rating agencies at our annual meeting in New York. These rating agencies determine how expensive it will be for us to borrow money. Meetings such as these help us to secure our Income Tax bond rating of “AAA” by S&P and “Aa1/AA+” by Moody’s and Fitch. Our general obligation bond ratings, which were considered “junk bonds” in the control board period, are now in the A+ and double-A range. The District has been recognized for its new highly-rated Income Tax Secured Revenue Bonds that help to ensure ongoing access to the financial markets with low interest rates. The initial issuance of these bonds gained recognition as one of the Bond Buyer newspaper’s “Deals of the Year” in 2010.
The credit-rating agencies now have a very positive view of the District’s financial position, and our bond issues are routinely oversubscribed and pay among the lowest interest rates among major cities. So I’m not just talking about a general sense I have as to Gandhi’s value – Gandhi’s work has led to tangible savings for the District. For example, the use of variable rate bonds has saved us more than $100 million. Finally, Dr. Gandhi has earned the respect of Capitol Hill. Members of Congress, which in many ways control the District’s finances, have great respect for him.
I am chairing a hearing of the Finance and Revenue Committee on Gandhi’s nomination on June 28 at 10 a.m. in room 500 of the Wilson building. I welcome any of you to testify or to submit written comments for the record. ?