Gray wants to re­think strong role for CFO

Elected lead­ers may be best ones to con­trol fi­nances, he says

The Washington Post Sunday - - METRO - BY MIKE DEBONIS

Days af­ter an­nounc­ing a bud­get sur­plus and near-record lev­els of re­serves, Mayor Vin­cent C. Gray said he wants to dis­cuss chang­ing a key el­e­ment of the District’s two-decade fis­cal turn­around: its in­de­pen­dent chief fi­nan­cial of­fi­cer.

To a de­gree un­heard of in most cities, the District’s CFO is struc­turally in­su­lated from po­lit­i­cal pres­sure. Ap­pointed by the mayor and con­firmed by the coun­cil, the chief fi­nan­cial of­fi­cer can be fired only for cause and has to­tal con­trol of the city’s fi­nan­cial op­er­a­tions.

But, in an in­ter­view, Gray (D) said re­turn­ing di­rect con­trol of city fi­nances to its elected lead­ers should be con­sid­ered.

“I think the fi­nan­cial op­er­a­tions should be an in­her­ent part of the government — that is, the ex­ec­u­tive [branch] with over­sight by the leg­isla­tive,” he told Washington Post re­porters and edi­tors Thurs­day.

Gray, who re­cently en­tered his third year as mayor, dis­cussed his thoughts on the CFO’s role as part of a dis­cus­sion on the search to re­place Nat­war M. Gandhi, who an­nounced this month that he would re­tire in June af­ter more than 13 years as chief fi­nan­cial of­fi­cer.

The mayor said he has been in talks with a per­son whom he’d like to lead a “wide search” for Gandhi’s re­place­ment. He de­clined to iden­tify the per­son.

“One of the ques­tions that should be asked is, how do the can­di­dates feel about this es­sen­tially be­ing out­side of the government?” he said. “There are some days — lots of days — when I look at it and say, it just shouldn’t be this way. And then there are other days where we go, I’m glad that’s over there with him.”

Gray is pub­licly broach­ing a dis­cus­sion of CFO in­de­pen­dence at a fis­cally op­por­tune time. The city booked a $417 mil­lion sur­plus in fis­cal 2012, push­ing its bud­get re­serves to $1.5 bil­lion. Some city bond is­sues carry top rat­ings, and of­fi­cials are ex­pect­ing a flood of rev­enue to con­tinue for some time.

“Our fi­nan­cial re­spon­si­bil­ity has been equal to or su­pe­rior to vir­tu­ally ev­ery ju­ris­dic­tion in Amer­ica,” Gray said.

He also placed the CFO dis­cus­sion in the con­text of his ad­min­is­tra­tion’s re­cent success in win­ning back con­trol of var­i­ous government func­tions that have op­er­ated un­der court over­sight. Last year, for in­stance, the city con­cluded a 37-year fed­eral law­suit con­cern­ing the District’s treat­ment of the men­tally ill. An­other long-run­ning suit, over the child wel­fare sys­tem, has seen sig­nif­i­cant progress in re­cent months.

But may­oral con­trol of fi­nan­cial op­er­a­tions was seized not by the courts but by Congress, which es­tab­lished the in­de­pen­dent fi­nan­cial of­fice in 1995. Un­der May­ors Sharon Pratt and Mar­ion Barry, the city ran up bud­get deficits that even­tu­ally swelled to $722 mil­lion and tanked the city’s bond rat­ings.

The chief fi­nan­cial of­fi­cer was given ex­tra­or­di­nary pow­ers in tan­dem with a tem­po­rary fi­nan­cial con­trol board to get the city on track. “There is more re­spon­si­bil­ity given to the chief fi­nan­cial of­fi­cer than I have now,” Barry said at the time.

Any at­tempt to soften the CFO’s in­de­pen­dence is cer­tain to be met by Capi­tol Hill and Wall Street with skep­ti­cism bor­der­ing on dis­be­lief, ob­servers said.

“Our fi­nan­cial re­spon­si­bil­ity has been equal to or su­pe­rior to vir­tu­ally ev­ery ju­ris­dic­tion in Amer­ica.”

D.C. Mayor Vin­cent C. Gray (D), in an in­ter­view with Washington Post re­porters and edi­tors

Tom Davis, who as a Repub­li­can rep­re­sen­ta­tive from North­ern Vir­ginia shep­herded the in­de­pen­dent CFO leg­is­la­tion through Congress, said the sys­tem has been a “dis­ci­plin­ing force” that has “worked in spades” and it will be a hard sell to change it.

“It’s im­por­tant for the city to have a CFO that calls the balls and strikes fairly. And you’ve been able to rely on that, Congress has been able to rely on that, the pub­lic has been able to rely on that,” Davis said. “In­de­pen­dence is a huge deal.”

Davis said it’s not in­con­ceiv­able that Congress could re­visit the CFO’s role. But right now, he said, “I just don’t see it.”

But Gray said he was keep­ing an open mind. He cited Rep. Dar­rell Issa’s sur­pris­ing en­thu­si­asm for leg­is­la­tion that could give the city more spend­ing au­ton­omy from Congress. Issa (RCalif.), chair­man of the House com­mit­tee over­see­ing District mat­ters, could not be reached Fri­day to com­ment.

If deficits or bad fi­nan­cial prac­tices were to re­cur, Gray said, Congress could reau­tho­rize an in­de­pen­dent chief fi­nan­cial of­fi­cer. Al­ter­na­tively, he said, fed­eral law­mak­ers “could grant the author­ity to us to re­take the fi­nan­cial op­er­a­tions un­der cer­tain con­di­tions. That’s the way we got out of hav­ing the con­trol board: un­der cer­tain con­di­tions.”

Gandhi, mean­while, has be­come some­thing of an evan­ge­list for the in­de­pen­dent CFO struc­ture, re­peat­edly telling in­ter­view­ers, politi­cians and fel­low government fi­nance of­fi­cials that the District is “the only place where you can dis­agree with the mayor in the morn­ing and still have a job in the af­ter­noon.”

And Gray and Gandhi have in­deed dis­agreed at times, mainly over Gandhi’s pro­jec­tions of tax rev­enue, which the mayor openly ques­tioned as “un­re­al­is­ti­cally low” last year. The abil­ity to make bind­ing es­ti­mates of rev­enue and ex­pen­di­tures is among the most sub­stan­tial of the CFO’s pow­ers, cre­at­ing a de facto limit on city spend­ing.

Of­fi­cials fa­mil­iar with con­ver­sa­tions be­tween the two said Gray asked Gandhi last year to join him in ap­proach­ing key Capi­tol Hill law­mak­ers to broach a re­assess­ment of the CFO’s in­de­pen­dence. He was re­buffed, the of­fi­cials said.

Gandhi was not avail­able Fri­day to re­spond to Gray’s com­ments.

Af­ter the Thurs­day in­ter­view, Gray spokesman Pe­dro Ribeiro stressed that the mayor’s com­ments were pre­lim­i­nary and did not re­flect a pend­ing course of ac­tion.

“It’s not some­thing he wants to do to­mor­row, the day af­ter or next week,” he said. “But as the District moves for­ward in its quest for state­hood, this is a con­ver­sa­tion we need to have.”

ASTRID RIECKEN FOR THE WASHINGTON POST

D.C. Mayor Vin­cent C. Gray (D) de­liv­ers the 2013 State of the District ad­dress last week. Gray is pub­licly broach­ing a dis­cus­sion of CFO in­de­pen­dence at time when the city booked a $417 mil­lion sur­plus in fis­cal 2012, push­ing its bud­get re­serves to $1.5 bil­lion.

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