From an email:
“Modeling District Revenue to Certify Debt Service Obligations: Methodology Update 2025.(PDF)
This report uses a model to forecast the District’s gross revenue to be $12.0 billion (comprising local fund and dedicated revenue) for FY 2025, compared to the Office of the Chief Financial Officer’s (OCFO) December 2024 estimate of $11.6 billion. The OCFO’s December 2024 estimate is within the confidence interval of the model. The model uses published economic indicators that, for the most part, were last updated in December 2024 or January 2025.
Key takeaway: To show how D.C. revenues might be affected by changes in the federal government, the model also considered an alternate scenario in which federal employment is reduced by 25%. Under this scenario, the model predicts that:
District employment could be reduced by 50,000 jobs, including 14,000 jobs held by District residents.
District resident wages could decline by 5.3%.
The District’s gross domestic product could fall by 1.1%.
Annual revenues from D.C. income and sales taxes could decline by $450 million to $550 million.
(See pages 29-30 of the report.)
It must be noted that the model does not produce official revenue estimates. OCFO’s revenue estimates are official for purposes of the District’s budget, and OCFO is expected to issue a revised revenue estimate on February 28, 2025.”
From the Mayor’s office:
“Today, the DC Government released the revised revenue estimates for the District of Columbia Budget and Financial Plan. This followed the release of our most recent 28th consecutive clean annual audit that demonstrated our strong financial standing, including our Aaa bond rating, fully funded pensions, and 52 days cash on hand in our reserves. The revenue forecast reflects the significant impacts of federal job losses. The revenue forecast is revised downward by $1.01 billion across the four-year financial plan. In response, Mayor Bowser released the following statement:
“The real-life impacts of federal job losses will be felt in many ways, here in Washington, DC, throughout the National Capital Region, and across the country. Today’s estimates show the significant financial impact on Washington, DC, and with this estimate, we will need to significantly reshape our upcoming budget proposal. In addition to building the best infrastructure for the federal workforce, we have attracted great private sector opportunities in our city – hospitality and tourism, education and health care, sports and entertainment, technology and so much more. Now, more than ever, we need to be strategically focused on investing in the growth of our local economy to bring more good-paying jobs, companies, and economic activity to DC. We will work with our colleagues on the Council to ensure we make it through this together.”
From DC Council Chairman Phil Mendelson:
“Today, DC Council Chairman Phil Mendelson released the following statement regarding the February 2025 Revenue Estimates.
“Today’s revenue forecast, predicting an average $342 million drop in revenues in each of the next three years, sets the stage for a very difficult budget process this spring,” Mendelson said. “One could say that, on the local level, it is recession-like for the District government. When the revenue decline is combined with rising costs, the amount will be substantial that the Mayor and Council will have to cut to balance next year’s budget.
“While some of the revenue drop is due to real property tax collections catching up with reality, the present downsizing of the federal government is a significant factor. Reducing the workforce coupled with cutbacks in contracts means less economic activity in the District. And that does not even include the edict that federal agencies relocate out of the region.
“There is some solace that we are not alone in this situation. Our region, as well, is impacted by the federal moves.
“This upcoming budget season is going to be especially difficult, and there is no way around it: the District government will need to cut programs and services in order to achieve a balanced budget. The consequences of the federal government’s decisions, unfortunately, will force the District to make some very tough choices in this budget.”