New projections show the District’s tax revenue dropping by more than $400 million in upcoming years, and the report points the finger at the continued absence of federal and other office workers from downtown, according to a dire warning from D.C.’s chief financial officer.
Chief Financial Officer Glen Lee warns of a predicted $464 million shortfall in commercial real estate revenue for 2024 to 2026. The reason is that the commercial property values of buildings that are mostly or partly empty are expected to plunge as federal and other workers continue hybrid, work-from-home schedules.
This could be the first time the D.C. government has to eye drastic budget cuts since the mid-1990s. As a result, a plan to provide free Metrobus service to District residents could be on the chopping block.
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The director of the District’s Golden Triangle Business Improvement District, home to numerous commercial office buildings, described the situation.
“We are seeing on Tuesdays, Wednesdays, Thursdays--those are our busiest days--we’re seeing about 45% to maybe 50% of the workers back,” Leona Agouridis said.
Free Metrobus service for D.C. residents, known as the Fare Free Bus Funding Emergency Amendment Act, is singled out in the CFO’s letter to city officials.
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He noted that the anticipated revenue shortfall would kill funding.
“With the downward revision of the February 2023 estimates, the funding criteria for the Act will not be met due to lack of sufficient excess recurring revenue," Lee said in his statement.
Mayor Muriel Bowser released a statement that acknowledged the projected shortfall and hinted that budget cuts might be unavoidable.
“With the ongoing impacts of telework and national political uncertainties, we face another significant test to our local economy,” she said. “Given these challenges, it would be fiscally irresponsible to try to tax our way to sustainable, long-term growth.”
The CFO’s report noted that the District’s residential tax revenue, meanwhile, is expected to slow, but remain in positive territory.