Nuts and Bolts of D.C. Government
Jack Evans Report
Every now and then, I like to share some of the nuts and bolts of what our government does behind the scenes. We can all think of a situation where we wished our government would function more efficiently on our behalf, and I make it my job to ensure that areas that need improvement are addressed. In many instances, however, our government is actually making positive changes and doing a great job in ways our residents might never realize.
One of those instances relates to our bond issuances, and not just our rating upgrades that I talk so much about! On June 24, I will chair a hearing of the Committee on Finance & Revenue regarding Bill 20-295, the Fiscal Year 2014 Tax Revenue Anticipation Notes Act of 2013. This bill authorizes our government’s short-term borrowing that permits the government to function day by day. The primary reason we do this is to bridge the gap between when funds are needed (somewhat evenly throughout the year) and when they are received; approximately a third of our tax revenues come from property taxes, for example, and those funds are paid to the government only twice a year.
In years past, as the government unwisely spent down our fund balance (the money in our “savings accounts”) in multiple budgets that I voted against, we found ourselves needing to borrow more and more money in this way. For example, in October 2011, we borrowed $820 million for this purpose. By 2013, however, our prudent budgeting decisions allowed the District to reduce its borrowing to $675 million. This year, we are only authorizing $600 million, so we know we will improve even over our 2013 needs. Our chief financial officer will determine the exact amount needed as we get closer to the time of issuance, but it is smart to allow a bit of a cushion in our legislative authorization, just in case.
At this point, I should also say that we get amazing interest rates on this debt, which is a real testament to the quality of the District’s reputation on Wall Street and the work of our Chief Financial Officer. Last year, for example, our bonds garnered a rate of 0.19% Many savings accounts pay higher rates than that, even now! Even at such low rates, borrowing less means we save money on interest payments that can be used toward paying for things like keeping our libraries open on Sundays, which I am so pleased will begin in just a few months. Thanks for your support and ideas, and I’m looking forward to a great summer!