Washington, D.C., faces a budget shortfall of $722 million this year due to the economic impact of the coronavirus, according to the city's Chief Financial Officer Jeff Dewitt. A deficit of $774 million is expected for 2021.
D.C.'s CFO, Jeff Dewitt, said the city could expect a "U-shaped recovery," which is generally indicative of a recession.
"We’re assuming this is going to be a slow recovery beginning in the summer of 2020," Dewitt said. "The stock market will recover but not until 2021 in a material way."
Dewitt says D.C.'s revenue surplus from 2019 will help the city recover and recoup losses.
Mayor Muriel Bowser said she is looking at creative solutions to cut down on costs and "achieve efficiencies" with agency heads, while also working to make the city is in a position to recover economically.
"We're looking very hard and making sure that we can maintain all the services that effect our residents," she said.
This year, 93,000 jobs have already been lost, mostly from the hospitality industry. About 40% of D.C. restaurants are closed, and those that remain open are doing takeout at 20% of the revenue, Dewitt says.
Wages in D.C. were previously predicted to grow by 4% in fiscal year 2020. In light of the pandemic, this has been modified to -1%. Wages are projected to increase by 0.6% in 2021, and by 5.5% in 2022.
The District's GDP's previous projection of 2% growth for this fiscal year has been revised to -3.8%. D.C.'s GDP is expected to recover in 2021 with a growth rate of 2.3%.
However, Dewitt explained that D.C.'s financial forecast might improved if certain conditions are met. For example, the creation of a vaccine, increased federal assistance to help offset losses and business adaptability could all help the economy recover faster than projected.
Conversely, a second wave and a second shutdown would also have a “huge impact” on the revenue forecast, according to the District’s projection model.