D.C. voters approved a referendum granting the city budget autonomy in April 2013, but Mayor Vincent Gray is worried about how it will affect the 2015 budget.
In a letter to D.C. Council Chairman Phil Mendelson, Mayor Vincent Gray today warned of potential legal consequences — including a D.C. government shutdown and return of the Control Board — if the Council does not approve the city's 2015 budget within the time prescribed by the Home Rule Charter.
The letter stems from an ongoing conflict over last year's referendum on budget autonomy, in which over 80 percent of D.C. residents voted to amend the charter to allow the city more control over the city's locally raised revenue.
As part of the changes to the charter, the Council would pass the budget funded by local dollars — roughly 70 percent of the whole budget — and send it directly to Congress for a 30-day review, much like all laws passed by the Council.
That would replace the four-decade-old process of submitting the city's budget to the president within 56 days, who then sends it to Congress as part of the larger federal budget.
Gray and Attorney General Irv Nathan argued last year that the referendum was illegal and unworkable, and in February the Government Accountability Office ruled that it had no legal effect.
Still, the Council is moving to approve the 2015 budget under the understanding that the budget autonomy referendum is in effect.
Under its plan, a first vote on the budget would take place within the 56 days prescribed by the charter, but a second vote would take place two weeks later. After that vote, the local budget would be sent to Congress for a 30-day passive review. Once that review ends, the budget would be considered approved.
But in his letter to Mendelson and the members of the Council, Gray warned of dire legal consequences if that budget schedule was followed.
"The Council cannot usurp the Mayor's long-established authority and responsibility to submit the full and unified budget, nor can it unilaterally restructure the role in the budget process played by federal officials and Congress," he wrote.
Gray warned that he would veto any budget passed outside of the 56-day schedule, and in a separate letter CFO Jeffrey DeWitt said he would order agencies not to spend any money as part of the Council's budget once the 2015 fiscal year starts on Oct. 1. Spending money not appropriated by Congress would violate federal law and subject him and agency heads to criminal penalties, he wrote.
That, said city officials speaking on background, would mean a local government shutdown as well as a possible return of the federal Control Board, which ran the city's finances from 1995 to 2001.
The officials warned that unless Mendelson changes the current budget schedule, Gray would submit the budget passed within the 56-day period to President Obama, raising the prospect that two different versions of the 2015 budget — one from Gray and Obama, the other from the Council — could reach Congress in the coming months.
"You don't get to be a child and just say you don't like the system," said a senior Gray official, who spoke critically of the Council's decision to pass the budget under the pretense that the budget autonomy referendum is legal.
But Walter Smith, executive director of the D.C. Appleseed Center for Law and Justice, the group that first proposed the budget autonomy referendum, said that Gray, Nathan and DeWitt don't have a choice on whether or not D.C. now has budget autonomy.
"The truth is, local budget autonomy is now the law. It was passed by the Council, it was passed by the people, it was not overturned by Congress. It's the law, and it governs the attorney general, the mayor and the CFO," he said.
"Horrible things will happen if they don't enforce that law and somehow shoot ourselves in the foot by saying 'We're not going to spend money and we'll bankrupt the city.' But there's no reason for them to threaten those things because the law is on the side of budget autonomy. And unless a court overturns it or Congress overturns it, it binds them," he added.
Council member Jack Evans (D-Ward 2) said that it might take a judge to settle the matter. "The chairman has to decide what he wants to do," he said. "I think he'll have to take it to court."
Gray officials also left open the possibility of taking the Council to court over the budget conflict. For now, though, they say that it's up to Mendelson to respond.
"Now it's their move," said the Gray official, referring to the Council.
Mendelson was not immediately available to comment, but an aide speaking on the condition of anonymity said that the Council was bound by the referendum but that Mendelson was working with Gray on a solution.
"They're currently working to see how to resolve this," said the aide.