I was disappointed to learn of Dr. Natwar Gandhi’s recent decision to retire as the District’s chief financial officer, effective June 1. Much of our success in maintaining fiscal discipline can be attributed to his leadership. I have said many times that I would not trade the District’s financial position with that of any other city, county or state in the country. The District now has a $1.5-billion cumulative general fund balance, a half-billion-dollar increase from just a few years ago. This is $2 billion above the District’s lowest fund balance level, which was minus $518 million during the Control Board period in 1996. Our audit this year was the District’s 16th consecutive clean audit and our fiscal year 2013 budget was the District’s 16th consecutive balanced budget.
While the mayor and members of the council have at times criticized Gandhi’s conservative revenue forecasts, I strongly 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 recent instability in our government, it has been 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, which makes it all the more impressive that our Office of Tax and Revenue 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 have been 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 this 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 our 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 issuances are routinely oversubscribed and pay among the lowest interest rates among major cities. Therefore, I am 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.
Since Gandhi’s resignation is not effective until June 1, I am hopeful the mayor will undertake a thoughtful search and send a well-qualified candidate that I can move swiftly through my committee’s confirmation process.
While Gandhi’s departure will mark a huge loss to the District, the opening presents an opportunity to bring in a new perspective in furthering our financial stability and future growth.