"No Matter What, We Will Not Go Bankrupt"

March 1, 2006

How does the Nation's Capital go from insolvency, unable to borrow a penny, to an A+ credit rating from Standard & Poors and a $1.6 billion surplus of cumulative funds?

You appoint the most disciplined, unimpeachable CFO in the history of the city. You make him independent of the local elected political leadership, get out of his way, and let him work.

The Importance of a Brand Name

It helps if the man you pick has the last name of Gandhi - a name with similar brand value in India as Roosevelt or Kennedy in the United States. Dr. Natwar Gandhi was a recent speaker for an inspiring Asia Society talk entitled: "A Decade of Rebuilding - An Asian American in the Nation's Capital."

There is nothing opaque or difficult to understand regarding what Dr. Gandhi must do, how he thinks, how the city's finances now operate, or whether we should have continued confidence in the renaissance of the Nation's Capital.

Consider the following:

• The District Government only resumed having full control over its finances in 2001, after a four year Congressionally mandated Financial Control Board became dormant, the District of Columbia's Government having hit all its required financial goals for four years in a row.
  
• The residential housing market in Washington, DC is among the top markets in the USA by virtually any measurement.
• The commercial real estate market in Washington, DC is among the top markets in the entire world.
  
• Washington, DC has $300 million in cash reserves, an unprecedented amount for any city.
• Other municipalities now send delegations to Washington, DC to find out what they should do to improve their finances.
  

These accomplishments are especially profound, considering that:

• The Tax Base in Washington is inequitable for the city, with fully 42% of real property being tax exempt.
• Washington, DC is the only city in the country with the inability to tax non-resident earnings. Tens of thousands of professionals who earn a high income in Washington pay the city not one penny in income taxes - because they live outside of the District of Columbia. The United States Congress protects and maintains this arrangement.
  
• "The City is Not Economically Viable" to quote Dr. Gandhi. This is a city with a 38% adult illiteracy rate.
  
• The office of the CFO had to litigate against a major multi-national agency headquartered in Washington to be able to collect sales taxes on food sales in the agency's upscale cafeteria.
  

Sober, Heartbreaking Decisions with A Sense of Balance

Being the CFO of a major municipal government means having to make heartbreaking decisions like closing DC General Hospital for lack of funds. So it helps to keep an optimist's sense of balance and to always be able to deliver some great one-liners to lighten up a crowd, such as:

• "From my old office at 441 Fourth Street, I could look out my window at beautiful galleries, museums, and Federal Government buildings - but I couldn't tax any of it!"
• "We [residents of the District of Columbia] subsidize two of the richest counties in the entire country: Fairfax County, Virginia, and Montgomery County, Maryland!"
  

The obstacles for the District's CFO have been enormous, but the results delivered to date have been equally potent. Because for someone like Natwar Gandhi, the journey has been the reward, and: "the great story about this country is that an immigrant with an accent can become CFO of the Nation's Capital."

Additional Information

Office of the Chief Financial Officer of the District of Columbia

Biography of Natwar M. Gandhi