Wilson Building Bulletin: Over overspending

Just as you get better the more you do something, you can also easily fall out of practice if you don’t do something for a long time. And for D.C., that something might be frugality.

The slowing local economy has ended a decade-plus run of growing budgets, which afforded elected officials the enviable opportunity of arguing more about how to spend rather than what to cut. (The city’s local budget grew 34% between 2019 and 2024, according to the D.C. Policy Center.)

“We have had a very healthy economy and policymakers who have spent every penny we take in. When we take in more, they spend more,” D.C. Auditor Kathy Patterson tells The 51st. “We’re seeing that growth come to a halt. It’s just going to get tougher.” 

Earlier this year we got a hint of how much tougher: D.C. is estimated to lose $1 billion in revenue over the next three years. Much of that comes from reductions in the federal workforce; D.C. CFO Glen Lee estimated that federal employment in D.C. could decline by 21% over four years, leading to decreased spending on “restaurants, retail, transportation, and other taxable goods and services.”

Patterson has become the city’s spending scold in part because of her own experience: She was elected to the D.C. Council in the midst of the city’s financial crisis in the mid-1990s, when lawmakers were charged with rebuilding the city’s finances after a brush with insolvency. She says that part of the challenge D.C.’s elected leaders will face moving forward is that most of them have only ever experienced the good years. 

“It’s a lack of practice at discipline,” she says.

And the talk of impending discipline is getting louder in the Wilson Building — not only at the council, but also among city leaders like Mayor Muriel Bowser and Lee. It’s been most evident in recent months in the rising concerns over city agencies overspending their budgets — in some cases by more than a hundred million dollars.

In the 2024 fiscal year (October 2023 to September 2024), six of the city’s agencies combined spent $325 million more than what the council initially appropriated. The biggest offenders were the Department of Human Services, which went $139 million over budget, and the Metropolitan Police Department, which was $121 million over. 

And the pattern is expected to repeat: When lawmakers were drawing up the 2026 budget earlier in the summer, they were told that a significant portion of an unexpected, one-time $243 million surplus had to be used to cover agency overspending. In MPD alone, overtime pay for police officers cost $61 million through July, but the department only budgeted $17 million for the entire year.

Such overspending has usually been dealt with by using surplus revenue, moving unspent dollars from one agency to another, or drawing on the city’s rainy day funds — all of which is done with council approval. But with less revenue coming in, those options are going to be much more limited in the future. 

“Where it has been coming from is increased revenue, and that pot is going away,” Patterson told lawmakers last week.

These dim fiscal realities are provoking a round of finger-pointing. In July, Council Chairman Phil Mendelson called the overspending “completely intolerable,” saying Bowser has to do more to rein in her agencies and Lee needs to more aggressively refuse to approve unbudgeted expenses. 

Patterson doesn’t disagree; she says the CFO, who is independent, has the legal power to throttle agency spending, essentially serving as an irate parent who sparingly doles out the kids’ allowance. But she also says the council itself could better use its oversight powers to hold agencies to account.

“I wouldn’t discount the wagging finger at a public hearing,” she told lawmakers. “That can have impact.”

Lawmakers say they’ve been caught in a bind: By the time agencies say they need overspending to be accounted for, it’s hard for the council to say no. “When MPD has an [overtime] issue, this body isn’t going to say, ‘No, let’s have fewer officers,’” said At-Large Councilmember Robert White last week.

But in emailed responses to questions from The 51st, City Administrator Kevin Donahue says that some swings in spending are to be expected. 

“Agency budgets can change throughout the year for a number of reasons. First, agencies budgets are developed well in advance of the fiscal year and circumstances can change after the D.C. Council passes the budget. For example, an increased demand for services can lead to agencies having to spend more than anticipated,” he wrote. “That is why the District has the ability to reprogram funds throughout the year and submits a supplemental budget each year to ensure that its budget stays balanced.”

And in its own emailed responses, the CFO’s office says it regularly tracks what agencies are spending to identify “pressures” — moments when spending could exceed what’s actually appropriated.

“For agencies that have spending pressures occurring on a regular basis, the CFO’s office works with agency management to see if there are ways to manage the issue,” writes a spokesman. “If it’s a case where the agency’s budget does not match the level of services that are needed, then the appropriate resource level should be incorporated into future budgets.”

Moving forward, Donahue writes that his office will be “doing a deep dive into each agency that had pressures in [fiscal year] 2025 to drill down on the root causes to limit future cost overruns.”

Meanwhile, lawmakers are already trying to come to terms with a more frugal future.

“We really have to ask the questions: Is it nice to have, or is it a necessity?” said At-Large Councilmember Christina Henderson during a general budget debate over the summer. (Of course, what’s merely nice to one person could be a necessity to someone else.) 

They are also pushing for the federal government to fully reimburse costs associated with public security necessary for federal events, such as First Amendment protests and visiting dignitaries.     

And Ward 5 Councilmember Zachary Parker tried to push for the council to create a permanent revenue and expenditure commission to “ramp up the District’s efforts to control spending and rationalize our tax policy debate.” (The D.C. Tax Revision Commission, which meets once a decade to provide recommendations on changes to the city’s tax code, disbanded amid policy disagreements last year.)  

But the effort failed.  

“When will we get serious about spending? I have not seen a real effort by any branch of our government,” Parker said. “We did not see a significant effort to reduce the size of government. It speaks to the fact that we aren’t really serious about getting our spending under control.”

Patterson says the council not only needs to sharpen its spending discipline, but also improve its ability to assess what value the city is getting from the dollars it already spends. In the headier days, she says, lawmakers could simply spend more money on new initiatives, rather than assessing existing programs’ efficacy.

So what will any of this mean for residents? Budget debates often seem far removed from what people experience in their daily lives. But as they get leaner and city officials are forced to make tough choices, the impact may be felt more directly. 

Take schools: While the per-pupil funding for DCPS and charters just went up, it’s set to decrease by 3.7% next year. That could lead to even tougher fights over how much money schools get, what programs they can offer, and how many staff they can have. Or public libraries? There was a time during this summer’s budget season when it looked like libraries would have to cut operating hours. That harkened back to the period after the Great Recession, when budget shortfalls led to the library system scaling back weekend hours and closing fully on Sundays. Or how about the fund the council created to increase pay for child care workers? Bowser kept the $70 million expenditure for the fiscal year to come — but zeroed it out the year after that.

The current council only has one member — Mendelson — who served as a lawmaker during the much leaner times coming out of the city’s financial crunch in the mid-1990s. Everyone else, though, may soon get ample opportunities to practice fiscal discipline.