Summary: The District of Columbia, faced with unresolved long-term financial issues and short-term financial crises, will run short of cash by the end of fiscal year 1995 unless steps are taken to compensate for revenue shortfalls, forcing the city to borrow from the U.S. Treasury. Although the District received $331 million from general obligation bonds in 1991 to help relieve its cash shortfall, the city's cash position has declined by nearly $200 million since then, and the District projects continuing declines in its cash balance. The pension payment the District agreed to make in fiscal year 1995 exceeds the cash projected to be available on September 30, 1995, by more than $9 million, not counting any additional costs and interest foregone. As of June 1994, the District had no plan to produce the cash necessary to implement its agreement with the D.C. Retirement Board. Furthermore, supplemental budgets to address insufficient funding of District services and programs have not included shortfalls of the D.C. General Hospital, which the District subsidizes. As of September 1993, the Hospital had a cumulative deficit of $109 million. In addition, the fiscal year 1994 supplemental and fiscal year 1995 budgeted expenditures do not reflect historical and projected trends. Specifically, the budgets for many programs are lower than past actual expenses as well as future projections. Although District officials maintain that short-term actions will reduce the fiscal year 1994 and 1995 expenditures, such actions may not be achievable and these budgets may be optimistic. The District's authority to issue short-term bonds spanning the year-end is limited, and financial markets may not favorably receive such obligations.
