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GGD-80-85 1 (1980-06-23)

handle is hein.gao/gaobabarv0001 and id is 1 raw text is: ~A/VM/ IW~ - COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON. D.C. 20548 'ITto J B-199249 The Honorable Julian C. Dixon Chairman, Subcommittee on the District of Columbia 112644 Committee on Appropriations House of Representatives Dear Mr. Chairman: Subject: IObservations on Reported Deficit in District of Columbia Government Operations (GGD-80-85) . .. ... ... ...... .. . 1. .... .... ....... iiii~ : ......... As you requested in your Jihe 9, 1980, letter, we have made some inquiries into the reported and widely discussed $284.4 million cumulative deficit in the District's general fund. The deficit, shown on the accrual basis of accounting, was included in Arthur Andersen & Co.'s audit report on the District of Colum- bia's financial statements as of September 30, 1979. The deficit has been discussed at length by the Mayor and the City's financial advisor, Lazard Freres & Co. The latter's comments included criticisms of the Congress' stewardship and the District and the Federal budgeting process for the the District. As discussed later, because of certain accounting treatment, the deficit City officials face from a financial management point cf view is significantly lower than the deficit reported in the Vstatements. Mr. Philip m. Dearborn, Vice President of the Greater Washington Research Council questions whether the reported $284.4 million reported deficit represents a real deficit, and expressed the view that the deficit is more of the magnitude of $90 million. SAlso, Arthur Andersen reports that on a budget (cash) basis the fiscal year 1979 deficit is about $41.7 million, with a $79.7 million cumulative deficit since fiscal year 1970. Both Arthur Andersen and Lazard Freres attribute the cause of the general fund deficit to a fiscal year 1970 change in the District's budgeting process from an obligation basis to a cash basis. They state that the practice of carrying current liabili- ties forward to subsequent years has contributed to an accumu- lated deficit on an accrual basis of $284.4 million. Poth agree that the District has not overobligated its appropriation in any of the years since fiscal year 1970. (426570)

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