Washington, D.C.‘s chief financial officer predicted a looming $1 billion budget shortfall over the next four years, which it blamed on the Trump administration’s federal workforce reductions.
A disproportionate amount of the district’s population is employed by the federal government, making it one of the most affected areas by the Department of Government Efficiency’s personnel cuts. In a letter to Mayor Muriel Bowser, CFO Glen Lee projected a dire financial situation resulting from the cuts. He estimated that the city would lose 40,000 federal jobs over the next three years.
“The revenue forecast for the rest of the financial plan period has also been revised downward by an average of $342.1 million annually, largely due to forecasted sharp declines in employment levels as the Federal government proceeds with reducing its workforce significantly. The resulting decline in income and consumption means lower revenue from the District’s individual income and sales taxes,” Lee wrote.
“Real property tax revenue in this estimate has also been lowered based on lower assessed values across almost all classes of properties. This reflects ongoing weakness in commercial property values due to expanded remote work since the pandemic and a recent decline in residential home prices,” he added.
The nation’s capital was already bracing for a budget shortfall before DOGE, but the recent cuts have aggravated the situation.
On Friday, most Department of Education employees received a buyout offer of up to $25,000 if they resign by Monday. Earlier this week, the Office of Personnel Management issued a memorandum advising agency heads to have their reorganization plans developed by March 13.
The Social Security Administration made a similar offer to its employees on Thursday as the agency said it was preparing for “significant workforce reductions.”
In a statement, Washington, D.C., Council Chairman Phil Mendelson said that the projection set up a “very difficult budget process in the spring.”
“One could say that, on the local level, it is recession-like for the District government,” he said, adding that cuts would be needed to balance the budget.
“This upcoming budget season is going to be especially difficult, and there is no way around it: the District government will need to cut programs and services in order to achieve a balanced budget. The consequences of the federal government’s decisions, unfortunately, will force the District to make some very tough choices in this budget,” Mendelson added.
Bowser gave a similarly dire statement.
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“The real-life impacts of federal job losses will be felt in many ways, here in Washington, D.C., throughout the National Capital Region, and across the country. Today’s estimates show the significant financial impact on Washington, D.C., and with this estimate, we will need to significantly reshape our upcoming budget proposal,” she said.
Bowser boasted about Washington, D.C.’s private sector opportunities, arguing that the city needed to focus on building up the local economy.
This article was originally published at www.washingtonexaminer.com
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