The GAO says the District will still need final approval from Congress.
The investigative arm of Congress says a referendum passed by District of Columbia voters to give the city more control over its own budget, has "no legal effect.''
The opinion issued by the Government Accountability Office represents a setback for district residents who don't want Congress interfering with municipal matters.
District voters approved the referendum by a 4-to-1 margin last April, and it took legal effect on Jan. 1. It amended the city charter to say that local tax dollars can be spent without approval by Congress. The city brings in about $7 billion a year in local tax revenue, accounting for roughly two-thirds of the city budget.
The GAO says the city would violate the Antideficiency Act if it spent those local tax dollars without approval by Congress.