The District of Columbia is in worse financial shape than any other major city that had to deal with a budget crisis in the past 20 years, auditors told Congress.
The near bankrupt condition of the District of Columbia compares in every way with the financial plight that New York, Boston, Chicago, Cleveland and Philadelphia encountered, only it's worse, congressional auditors told a House Government Reform and Oversight subcommittee.Like those five cities, Washington requires an independent financial oversight board in order to emerge from its nearly insolvent condition, John Finch, assistant comptroller general of the General Accounting Office, testified.
"I would put the district in the most severe category," Finch said.
New York, Philadelphia and Cleveland and the school systems in Boston and Chicago - just like Washington - faced a morass of debt after devoting 40 to 70 percent of their budgets to personnel and allowing pension liabilities to go unfunded in the face of a shrinking middle class, according to a GAO analysis.
"The cities often resorted to accounting and budgeting schemes," the GAO report said. "These schemes included paying for operating expenses from capital budgets, accumulating deficits from one year to the next, and understating expenses."
All of the cities also "in general did not want to disclose the severity of their conditions," the report said.
Last week House members criticized the District of Columbia's school officials for taking $300 million from the budget for school renovations to pay teacher and other salaries. They also suggested calling for a criminal investigation into other aspects of the city's finances.
The District of Columbia now projects a $722 million shortfall in its budget this year totaling $3.2 billion, one-fifth of which is revenue in the form of a direct payment from the federal government.