District of Columbia: Financial Crisis (Testimony, 02/22/95,
GAO/T-AIMD-95-88).

The District of Columbia's financial situation continues to deteriorate.
In December 1994, the District borrowed $250 million from Wall Street
to meet its critical cash needs, months earlier than forecasts had
shown.  In February 1995, two financial investment services lowered the
District's bond ratings, one of them to below investment grade.  The
District has abandoned earlier plans to close the spending gap on its
own and now seeks substantial federal assistance.  According to the
District's own estimates, fiscal year 1995 expenditures could reach
nearly $3.9 billion, $631 million above the $3.25 billion spending cap
mandated by Congress.  Given the continued spending levels, GAO predicts
that the District will run out of money this summer.  In fact, the
District is today insolvent--it does not have enough cash to pay all its
bills.  GAO's testimony discusses (1) the evolution of the District's
crisis, (2) congressional actions related to the fiscal year 1995
budget, (3) GAO's own analysis of the District's fiscal year 1995 first
quarter financial report, (4) the District's recent actions to address
the financial crisis, and (5) the District's cash situation.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-AIMD-95-88
     TITLE:  District of Columbia: Financial Crisis
      DATE:  02/22/95
   SUBJECT:  Deficit reduction
             Intergovernmental relations
             Future budget projections
             Financial management
             Reporting requirements
             Municipal governments
             Municipal home rule
             Financial records
             Budget cuts
             Budget deficit
IDENTIFIER:  District of Columbia
             Medicaid Program
             AFDC
             Aid to Families with Dependent Children Program
             DC Water and Sewer Fund
             
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