DC Proposes Freezing City Workers' Pay, Dipping Into Reserve Funds

To fill huge city budget gaps caused by the coronavirus crisis, D.C.’s mayor proposed using hundreds of millions in reserve funds and freezing the pay of city workers. 

The District is facing a $1.5 billion budget shortfall over the next 18 months. D.C. projects $722 million in revenue loss in financial year 2020 and $774 million in financial year 2021.  

The city is forced to make hard choices, Mayor Muriel Bowser said in a news conference Monday morning. 

“While this is not the budget that I expected to send to the Council earlier this year, it is a budget that I can be proud of and that the city can be proud of,” she said. “It is still a budget that reflects our shared priorities.” 

Bowser’s plan is to use several one-time fixes to close the gap, including cutting cost-of-living pay increases for D.C. government employees for the next four years. A document on the financial plan shows $166 million in reductions to agency budgets, including cutting all pay increases for the city's workforce of about 37,000 people.

“What we have asked our employees is to work with us as the economy comes back,” Bowser said. 

The pay freezes are an alternative to layoffs and furloughs.

D.C. plans on using hundreds of millions of dollars the District had in reserves to get through the economic crisis, including $322 million in surplus funds, $213 million in reserve funds and $80 million in refinanced debt.

Cuts of $1.2 billion are planned by “removing and/or shifting” capital improvement projects that were “not ready to move forward on previously scheduled timelines.” Specific projects to be cut or rescheduled were not listed. 

The mayor also said D.C. is potentially just six days from reaching the target needed to begin phase one reopening. For the first time since tracking began, D.C. has gone eight straight days with a reduction in community spread of the virus. City officials want 14 straight days before reopening is possible. 

Data on community spread tracks the date of symptoms, not test results, and doesn’t take into account congregant settings such as nursing homes and jails. Rather, it tracks person-to-person spread in the community at large. 

To reopen, D.C. needs to meet benchmarks on reduced community spread, hospital capacity, testing capacity and the rate of transmission. The latter three targets already have been met. 

Bowser said she would speak on Thursday about a possible phased reopening, barring “any unforeseen spike” in illnesses. 

Regarding the budget, the mayor promised continued investment in schools, housing and health care. 

Modernizing schools and recreation centers will remain a focus, the document says. The Benning Road Streetcar Extension and K Street Transitway also are listed as capital improvement priorities. 

Despite the tough climate, D.C. announced dozens of major investments, including a 3% increase to the per student funding formula, $1.4 billion for expanding or modernizing schools, $365 million for a new hospital at St. Elizabeths, $25 million for Howard Hospital and $202 million for street safety projects. 

Go here to see the city’s entire budget proposal. 

D.C. still “urgently” needs $750 million from the federal government. The mayor and local leaders said last month that District was short-changed these funds because D.C. was considered a territory, not a state. 

The costs of the COVID-19 pandemic have been staggering. Through June, D.C. estimates spending $43 million on protective gear, cleaning and cleaning supplies; $28.3 million on business assistance grants; $223 million on “public safety, frontline worker pay and overtime” and $104.4 million on contact tracing and increased testing, to name only a few categories. 

The D.C. Council will hold hearings on the budget proposal starting Tuesday. Several unions will weigh in on the proposed pay freezes as well.

Stay with NBC Washington for more details on this developing story.