Government of the District of Columbia Office of the Chief Financial Officer Natwar M. Gandhi, Chief Financial Officer FY 2010 CAFR 1 Washington, DC Economic Partnership February 2, Pennsylvania Avenue, NW Suite 203 Washington, DC (202)

Government of the District of Columbia Office of the Chief Financial Officer Natwar M. Gandhi, Chief Financial Officer FY 2010 CAFR Control Period Revitalization Act -$518 million District of Columbia Surplus and Bond Rating History $890 million General Obligation Bond Ratings S&P:A- BBB-BBBBBBB BBB+ A-AA+ Moody's:Baa Ba Ba2Ba1 Baa3 Baa1 A2 A1 Aa2 Fitch:A-BBB+BB BB+ BBB BBB+A- AAA+ AA- Income Tax Secured Revenue Bonds: S&P: AAA Moody's: Aa1 Fitch: AA+ 2

Government of the District of Columbia Office of the Chief Financial Officer Natwar M. Gandhi, Chief Financial Officer FY 2010 CAFR 3 Composition of General Fund Balance FY 2007 – FY 2010 ($ in millions)

Government of the District of Columbia Office of the Chief Financial Officer Natwar M. Gandhi, Chief Financial Officer FY 2010 CAFR 4 Congressionally Mandated Emergency (2%)/Contingency (4%) Cash Reserves Rainy Day Funds ($ in millions) Reserve requirement reduced

Government of the District of Columbia Office of the Chief Financial Officer Natwar M. Gandhi, Chief Financial Officer FY 2010 CAFR 5 8-1/3% = one month’s expenditures Unreserved/Undesignated Fund Balance Plus Congressionally Mandated Emergency/Contingency Reserves as a Percent of Next Year’s Budgetary Expenditures Total Working Capital ($ in millions) $364.1$338.0$339.2$428.9$431.6$ % 8.3% 7.5% 8.6% 8.1% 6.5% FY 2010 represents 20 days Operating Expenditures. $415.7$ % 5.0% 5.5% $337.9

Government of the District of Columbia Office of the Chief Financial Officer Natwar M. Gandhi, Chief Financial Officer FY 2010 CAFR High Needs and Restricted Tax Base = Structural Imbalance  The District has a large share of very poor and needy citizens  Overall poverty rate is 17%  Child poverty rate is 26%  Costs of service delivery in the District are 123 percent of national levels; capital costs (buildings) are 1.5 times national average  Unlike other jurisdictions, the District cannot divert resources from wealthier suburban areas to serve the poor  District is prohibited from taxing income earned by non-residents – 66% of total income is earned by non-residents, mostly daily commuters to the city  District has especially high concentration of non-taxable real property; value of property held by the federal government is 30% of non-residential property values  Because of the inability to tap these resources, residents must shoulder a disproportionate share of the costs of public services, while the benefits are shared by a much larger community  Danger is that, should revenues continue to decline, District services could be severely impaired 6