“This is simply unconscionable – and it’s obviously unsustainable. And, my friends, we’re running out of time” Mayor Gray’s Address on Effects of Shutdown

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“Text as Prepared for Delivery of Mayor Vincent C. Gray’s Address to Residents on Effects of Federal Shutdown
Calls on Residents to Demand Congress Release District from Crisis
Address to District Residents on Effects of Federal Shutdown
October 10, 2013

Good evening. Tonight, once again, the 632,000 residents of the District of Columbia find ourselves trapped in a terrible and unprecedented predicament.

What’s worse and, frankly, more galling, is that this predicament is one we had no hand in making, and one from which we can be rescued only by a legislature in which we have no voting voice. That legislature is, of course, the United States Congress, which right now seems hopelessly stalemated over a number of partisan issues.

Unfortunately, the District’s own money is caught in the middle of this tug-of-war.

Yesterday, I stood with our non-voting Congresswoman, Eleanor Holmes Norton, on the lawn of the U.S. Capitol building to demand that Congress and President Obama take action to free the District’s local budget from this manufactured crisis and let us spend our own locally-raised funds to provide critical services.

Services – like reimbursing Medicaid providers who care for people who are poor and disabled, or paying our public charter schools, or collecting our garbage – services that the residents of every other city and state in America take for granted, because they are services that will continue for every other city and state in our country during a federal shutdown.

Tonight, I want to talk to you about why we are in this crisis, what I have done to mitigate the harm it has caused, what the current status of the shutdown’s impact on the District of Columbia is, and what our 632,000 residents can do to help.

Now, any reasonable person might ask themselves: why on Earth would the 632,000 people who call the nation’s capital home not be able to fund our own city services with our own tax dollars during a federal shutdown? After all, our budget is just like those of any other state or big city in the country. The vast majority of our budget is supported by our own revenues from the District’s income taxes, sales taxes, property taxes, licensing fees and other funds. And this revenue goes to fund regular city services – such as paying teachers, police officers, firefighters and garbage collectors.

While the federal government provides us some funding, nearly all of it is provided to us in the same way it is to other state in the country – through payments and grants for Medicaid, or education, or transportation. These payments and grants flow through our local budget.

However, unlike those other states, we must first get permission from Congress before we can spend our own budget – even the part we raise locally ourselves. It is this lack of budget independence that has caused us to be caught in the middle of this mess.

This unfortunate situation is the result of an obscure and, frankly, unjust provision of federal law that essentially treats the District as if we were a federal agency when it comes to a federal shutdown. This provision is found in what is known as the Anti-Deficiency Act, the same law which dictates that, during a shutdown, federal employees can’t work unless their jobs are essential to protecting public safety, health or property.

The difference, of course, is that federal workers are paid with federal dollars – but the overwhelming majority of what the District government does is paid with our own local money, not federal funds.

Now, many people have asked why the District is treated this way when it comes to spending our own money. I have never gotten anything approaching a reasonable answer to that question. And that’s why, yesterday, we gathered on Capitol Hill to demand quick action – because we are facing very dire consequences if Congress and the President do not act very soon to free us to spend our own local tax dollars in the midst of this stalemate.

These are consequences that no other city or state has to face. Families in Chicago, Cincinnati, and Las Vegas are not worried that their local governments won’t be able to maintain basic services like schools, police and fire protection, or trash collection – and neither should families here in the District of Columbia.

Fortunately, for the first few weeks of the federal shutdown, I have been able to draw on the District’s reserve funds to pay city expenses. Because we have done a solid job of keeping our own fiscal house in order over the last few years, we have a good amount of money in the bank. In fact, we have more than $1.5 billion in our rainy-day fund.

Now, by law, the majority of that is not in accounts that are available for us to draw on in the midst of a crisis. For instance, several hundred million of it is set aside to secure our bonds. Several hundred million more has outside restrictions on it. If we were to touch those funds, the consequences to our credit rating and the interest rate on the money we borrow would be severely negative.

But we have several hundred million that we can – and have – been using to keep the District government functioning since the federal shutdown began on October 1st. We have our Budget Office staff, our Chief Financial Officer and his staff, and lawyers in the Office of the Attorney General working furiously to find out how we can access as many dollars as legally possible to continue the operations of the District government as long as possible during this shutdown.

But those funds won’t last forever. After all, it costs nearly $20 million a day to run our government.

We are now nearing the end of Day 10 of the federal shutdown — and this length of time for the District to be barred from using our own funds is unprecedented.

As many of you may recall, when the federal government shut down twice in 1995 and 1996, the District was exempted from the prohibition on spending our own money after just five days.

But, as I just noted, we are now 10 days into this shutdown. And we find ourselves in uncharted territory. We are encountering major problems that the District has never before had to address.

These are problems that directly compromise the health, safety, and welfare of our residents, visitors and businesses. For instance, there are literally scores of providers in the District who count on Medicaid funds that pass through our local budget so that they can serve our most vulnerable residents – people who are poor and disabled.

However, without a congressionally approved budget, we can’t pay those providers. So, for instance, even during a federal shutdown our neighbors in Virginia and Maryland can continue to pay their Medicaid providers – because the federal funds pass through their budgets, over which they have authority.

However, we can’t. And because we are doing the best we can with the limited funds we have available to us presently, we’ve already had to delay one $90 million payment to our Medicaid providers that was due last Friday.

This is causing serious problems for these providers, with the potential to cause catastrophic problems if we are forced to delay these payments much longer.

Ruth Joseph is a finance officer with Health Management, Inc., which employs personal-care aides who assist people who are blind, homebound and bedridden as well as those who need rides to doctor’s appointments. Their last payroll was today. If they don’t receive their Medicaid payments soon, they won’t be able to keep their doors open much longer.

Laura Nuss is the director of the District’s Department of Disability Services. She said her agency has about 500 homes and another 30 day programs and vocational programs that serve people with disabilities. These programs count on Medicaid funding to operate, and she is concerned about the ability of all these providers to keep appropriate amounts of food supplies on hand if we are forced to delay payments to them much longer. She’s also worried about these providers’ ability to pay their staff to maintain appropriate levels of supervision and support. And she’s concerned about their ability to continue delivering clinical therapy services on schedule, as well as the ability of clients to keep medical appointments and get tests at the proper frequency during a lapse in Medicaid funding.

But it’s not only Medicaid payments that are being held up by the District’s unjust and unique lack of authority over our own budget. For instance, we have been forced to delay a multi-million dollar payment to the Washington Metropolitan Area Transit Authority to help keep Metro running.

That inter-governmental regional agency is now operating on its own cash reserves. What happens when those funds are gone?

And, very soon, we won’t be able to make our scheduled quarterly payment of roughly $150 million to the District’s 66 public charter schools – schools that now educate over 35,000, or 43 percent, of our public-school students.

That’s why we’re here tonight at Friendship Public Charter School’s Chamberlain Campus. Most charter schools don’t have sufficient cash reserves to help them ride this out – and they will have to begin delaying paychecks to teachers and principals. Some have said they will have to close, and some schools may even take a financial hit from which they won’t be able to recover. People who work hard every day at the hugely important job of educating our children should not be the victims of our city’s ridiculous lack of budget independence.

And our entire region’s public safety is being compromised by the shutdown. Unlike any other city in the nation, the federal shutdown prohibits the District from distributing what’s called Urban Areas Security Initiative funding to neighboring states, counties, and cities. These are federal grants from the Department of Homeland Security that come to our region and are distributed by the District. But without our budget being approved by Congress, we can’t distribute them.

This makes no sense, because this funding supports the protection of high-visibility potential targets in the entire metropolitan area. At yesterday’s press conference, Fairfax County Fire Chief Richie Bowers told us how the inability to use those funds has forced him to delay implementation of projects that would help protect the people of Fairfax County from terrorist attacks. And Fairfax County is just next door to our city.

This is simply unconscionable – and it’s obviously unsustainable. And, my friends, we’re running out of time.

Moving forward, what can we do? I have done everything within my power to protect the health, safety and welfare of all of the District’s residents, businesses and visitors through this crisis. But we will reach a breaking point soon.

As I said earlier, our attorneys are exhausting every legal means at our disposal to identify as many resources as possible and to stretch them as far as we can. And, when there are unclear areas, I will continue to push the limits on behalf of our residents.

Some have suggested we flagrantly violate the Anti-Deficiency Act and simply begin spending our own funds absent congressional approval.I question this course of action, for two reasons. For starters, it undermines our moral authority as we make the case to Congress that we deserve to be permanently freed from being forced to ask permission to spend our own money. It hurts our case that we are responsible stewards, ready to control our own fiscal destiny.

We have done an outstanding job in recent years in turning our city’s finances and fortunes around, and we now are the envy of the nation when it comes to financial management, budget surpluses and reserve funds. After all, we have a record that includes 18 consecutive years of balanced budgets, a Fund Balance of $1.5 billion, and bond ratings as high as AAA. I don’t want to threaten that, or give the opponents of D.C. autonomy any excuse to point to and say, “See? These people are lawbreakers, and they can’t be trusted to uphold the oaths of office they have sworn to, much less be trusted to manage their own budget.”

Second, a decision to violate the Anti-Deficiency Act would expose many more people than just me – or Councilmembers, or the Chief Financial Officer – to criminal prosecution. Anyone who has a role in obligating the District to pay funds or disbursing those funds – people who let contracts, or accountants, or payroll officers – could potentially be at risk of conviction for a federal felony that carries a maximum of two years in federal prison and a $5,000 fine. I have no problem taking these legal risks myself. But it’s not right for me to put our employees in legal jeopardy.

So, what can we do?

Yesterday, we called on Congress to pass, and the President to sign, legislation that would immediately exempt the District from the restrictions against spending our own money.

I understand that this federal shutdown has largely been caused by the brinksmanship of extreme Republicans on the House side – and that one of the tactics of the House members has been to offer piecemeal funding bills that would open only parts and functions of the federal government that are non-controversial, such as national parks and cancer research.

I believe Democrats have been right to hold firm against this temptation. But allowing the District government to spend our own money is an entirely different matter.

The District is not a federal agency, and the House passed a bill to exempt us from the shutdown on a bipartisan vote. So, allowing us to spend our own money is not a partisan issue. In fact, the budget proposed by the President for this fiscal year already contains budget autonomy for the District!

That’s why I believe it would not weaken or damage the Senate leadership’s strategy of refusing piecemeal funding – because the District spending its own money is obviously a completely different matter than funding only parts of the federal government.

In a statement earlier today, the Federal City Council said it well: “The District of Columbia is self-evidently distinguishable from a federal agency. We are a living, breathing city with residents who work hard, pay taxes and participate in our local democratic process. Residents of the District of Columbia deserve to decide how to spend their locally raised dollars. The President and the Congress should do what is fair and exempt the city from the federal shutdown.”

So, that’s why I’m asking District residents to join me in calling and e-mailing the White House and Senator Reid to tell them to free D.C.! Tell them to remove the shackles and unbind the fetters that currently restrict the District from spending our own money!

Another thing you can do is to make your family members and friends who live in other states aware of the District’s unique and unjust plight. Tell them just how ridiculous it is that we can’t even spend our own money – and that not only basic municipal services, but that life-saving care is threatened every time Congress comes to an impasse over the budget. They can pressure their members of Congress to support full and permanent budget autonomy for the District. They can tell their voting representatives and senators that it is absolutely unjust – that it is the height of absurdity – that the District continues to be a pawn in a game of political chess.

But for us, it’s not a game. As I’ve already outlined, it has deadly-serious consequences for thousands of our most vulnerable residents.

That is simply unconscionable. And Congress and the President should make sure that the 632,000 people who call this city home are never again treated as political pawns.

Frederick Douglass said, “Power concedes nothing without a demand. It never did, and it never will.” It’s time to tell Congress in unequivocal terms: Free D.C.!

Free D.C.!

Free D.C.!

Thank you.

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