If DC's CFO disagrees with the Council's decision not to fully replenish the Fiscal Stabilization Reserve in the FY 2025 budget, can he refuse to certify the budget or refuse to release funds from a duly enacted budget?
Plain-English summary
In 2024 the District faced a budget standoff. CFO Glen Lee insisted that the FY 2025 budget had to fully replenish the Fiscal Stabilization Reserve (FSR), which had been drawn down for FY 2023 operating expenses. He warned that without a $217 million replenishment, the District faced cash-flow shortfalls in FY 2027 and FY 2028. He also implied that he might decline to "certify" a budget that did not include the replenishment, and might decline to release funds under such a budget. Mayor Bowser had submitted a budget that did include the replenishment; Council Chairman Mendelson disagreed about whether the replenishment was legally required. Both asked the AG to opine.
AG Schwalb concluded:
On certification. Neither the Home Rule Act nor any DC statute requires the CFO to certify the District's budget. The Home Rule Act enumerates 28 specific CFO duties in § 424(d), several of which require certification of contracts, leases, payrolls, claims, and collective bargaining agreements. Budget certification is conspicuously not on the list. By contrast, the Financial Assistance Act of 1995 expressly required the federal Authority (the "control board") to certify the budget during control years; that certification authority did not transfer to the CFO when the Authority sunset. Under Russello v. United States and DHS v. MacLean, when a statute includes a requirement in one place and omits it elsewhere in the same Act, courts presume the omission is intentional. The CFO's practice of attaching a balanced-budget certification letter to his transmittal is just practice, not legal requirement. Refusing to attach the letter has no legal effect.
On dictating line items. The Home Rule Act gives the CFO authority to estimate revenues (binding on the Mayor and Council for budget purposes), to prepare the budget under Mayoral direction, and to issue fiscal impact statements on legislation. The Mayor and the Council have policy discretion over how to allocate revenues among competing programs (DC Bd. of Elections & Ethics v. District of Columbia, 866 A.2d 788 (D.C. 2005)). The "balanced budget" requirement under § 603(c)-(d) means expenditures cannot exceed estimated resources for the fiscal year. The unit of reference is the fiscal year as a whole, not month-to-month cash flow. The CFO's reading (that a balanced budget requires full FSR replenishment) confused fiscal-year balance with cash-flow stability.
On withholding funds. Once a balanced budget is enacted, the CFO has no authority to refuse to release lawfully appropriated funds. As a creature of statute under NFIB v. Department of Labor, 595 U.S. 109 (2022), the CFO has only the powers Congress gave him. None of the 28 § 424(d) duties authorizes withholding properly appropriated funds. Withholding all funds would default the District; cherry-picking which funds to release would let the CFO carry out a policy-making function he was not given.
The Mayor and Council retained policy authority to decide how to balance cash-flow risk against current-year spending. The CFO retained authority over revenue estimates, budget preparation, fiscal impact statements, and certification of contracts and other instruments. The roles do not overlap on FSR replenishment.
What this means for you
If you are a DC Council budget staffer
Council policy choices about reserve fund balances cannot be vetoed by the CFO refusing to certify the budget. Continue to draft based on the Mayor's revenue estimates, ensure expenditures do not exceed estimated resources for the fiscal year, and decide reserve-fund policy on its own merits.
If you are a CFO office staffer
Your office's role on the budget is limited to revenue estimation, budget preparation under Mayoral direction, fiscal impact statements, and certification of specific instruments listed in § 424(d). Reserve-fund policy is outside that scope. If the Mayor and Council enact a balanced budget that does not replenish FSR, your office must release the appropriated funds.
If you are an investor or bond analyst
Reserve fund balance is a matter of DC Council policy, not CFO veto. The District's bond rating analysis should account for that political reality. The District's reserve fund regime is set by Council statute (D.C. Code § 47-392.02(j)) and can be repealed or modified by the Council.
If you are a DC resident
The Mayor and Council, not the CFO, decide how DC's tax dollars are spent. The CFO ensures the books balance and that estimates are accurate, but does not have a policy veto over reserve fund policy.
Common questions
Q: Did the CFO ever follow through on a refusal?
A: As of this opinion, no. The CFO had raised concerns but had not actually refused to certify or release funds. The opinion is preventive: it tells the parties what the law would require if the standoff escalated.
Q: What is the FSR?
A: The Fiscal Stabilization Reserve, established by D.C. Law 18-233 (2010) and codified at D.C. Code § 47-392.02(j-1). It can be used for cash-flow needs and certain operating expenses, must be replenished in the same fiscal year for cash-flow uses, and at full funding equals 2.34% of the District's General Fund operating expenditures.
Q: How is "balanced budget" defined under DC law?
A: Section 603(c)-(d) of the Home Rule Act says a budget is balanced when expenditures during a fiscal year do not exceed all available resources estimated to be available for that fiscal year. The unit of reference is the fiscal year, not multi-year cash flow. The CFO's broader reading (that balance requires full FSR replenishment to protect future cash flow) does not match the statutory text.
Q: What if the District's bond rating drops because of low reserves?
A: That is a real consequence the Mayor and Council should weigh, but it is a policy consequence, not a legal one. The CFO can advise; the Mayor and Council decide.
Q: Did the Council's 2023 amendment authorizing FSR use for operating expenses change anything?
A: D.C. Law 25-50 § 7032(c) authorized the Mayor to use FSR for FY 2023 operating expenses without a replenishment requirement unless there was a surplus. The 2024 budget standoff was about whether to discretionarily replenish the funds drawn down under that 2023 authority. The AG read the 2023 statute as giving the Mayor and Council that policy choice.
Citations
Statutes
- DC Home Rule Act §§ 424(d), 442, 446, 450, 450a, 603(c)-(d)
- Financial Assistance Act of 1995, Pub. L. 104-8
- 2005 DC Omnibus Authorization Act, Pub. L. 109-356
- D.C. Code § 47-392.02(j)(1)-(2) (Cash Flow Reserve and FSR)
- DC Law 25-50 § 7032(c) (FSR Amendment Act of 2023)
Cases
- DC Bd. of Elections & Ethics v. District of Columbia, 866 A.2d 788 (D.C. 2005) (Mayor and Council retain budget allocation discretion)
- NFIB v. Department of Labor, 595 U.S. 109 (2022) (statutory officers possess only authority Congress provided)
- Russello v. United States, 464 U.S. 16 (1983); DHS v. MacLean, 574 U.S. 383 (2015) (Congress's selective inclusion is presumed intentional)
Source
- Index page: https://oag.dc.gov/about-oag/our-structure-divisions/legal-counsel-division/opinions-attorney-general
- Original PDF: https://oag.dc.gov/sites/default/files/2024-04/4-18-2024-Opinion-Letter-re-CFO-OCR-.pdf
Source
- Index page: https://oag.dc.gov/about-oag/our-structure-divisions/legal-counsel-division/opinions-attorney-general
- Original PDF: https://oag.dc.gov/sites/default/files/2024-04/4-18-2024-Opinion-Letter-re-CFO-OCR-.pdf
License
This opinion is published by the Office of the Attorney General for the
District of Columbia. Per the DC.gov terms of use, content is licensed
under Creative Commons Attribution 3.0,
which permits commercial use, redistribution, and modification with
attribution.
Original opinion text
GOVERNMENT OF THE DISTRICT OF COLUMBIA
OFFICE OF THE ATTORNEY GENERAL
BRIAN L. ScowALB
ATTORNEY GENERAL
April 18, 2024
OPINION OF THE ATTORNEY GENERAL
SUBJECT:
The Legal Effect of the Chief Financial Officer's Refusal to Certify the District's
Budget and the Chief Financial Officer's Authority to Refuse to Release Funds
The Honorable Phil Mendelson
Chairman, Council of the District of Columbia
John A. Wilson Building
1350 Pennsylvania Ave, N.W.
Washington, DC 20004
The Honorable Muriel Bowser
Mayor
John A. Wilson Building
1350 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Dear Chairman Mendelson and Mayor Bowser:
This letter responds to your April 9, 2024 request for a formal opinion under D.C. Official Code § l301.8l(a)(2) concerning the legal implications of the District's Chief Financial Officer's ("CFO's")
potential decision to refuse to certify or to otherwise call into question a duly enacted District of Columbia
Fiscal Year 2025 to Fiscal Year 2028 Budget and Financial Plan ("FY 25 Budget") that does not allocate
funds to replenish the District's Fiscal Stabilization Reserve fund ("FSR"). You have also asked whether
the CFO may refuse to release funds to satisfy District Fiscal Year 2025 obligations incurred pursuant to
such a budget.
It is the opinion of the Office of Attorney General that, although the CFO is an integral part of budget
process, the CFO's failure to certify an otherwise valid budget would have no legal effect and,
correspondingly, he has no authority to require that an otherwise valid budget replenish the FSR. The CFO
would also exceed his authority if he refused to release funds that have been appropriated pursuant to a
balanced budget.
400 6th Street, N.W., Washington, D.C. 20001, (202) 727-3400
I.
Background
A. Factual Background
On Wednesday, April 3, 2024, the Mayor presented her proposed FY 25 Budget to the Council, in which
$217 million is allocated to replenish the FSR. 1 Included in the FY 25 Budget submission was a letter from
the CFO "certify[ying]" it as "balanced."2 At the public briefing, Chairman Mendelson and the CFO
engaged in a colloquy regarding the CFO' s insistence that the FY 25 Budget fully replenish the FSR. 3
Chairman Mendelson queried whether the Council could eliminate any issues regarding the FSR by
eliminating or repealing the authorizing statute. The CFO responded that it would not resolve the issue
because the District needs the $217 million for cash flow needs in fiscal years 2027 and 2028. According
to the CFO, replenishing the FSR is a "certification issue," and District and federal law authorize the CFO
to ensure the District's financial stability, including cash flow needs. The CFO further noted his belief that
the Council would not have authority to spend funds without a budget certified by the CFO.
B. Legal Background
- The District's Budgeting Process Prior to 1995
Congress set out the roles of the Mayor and the Council in enacting the District's budget in several
provisions of the District of Columbia Home Rule Act of 1975 ("Home Rule Act"). 4 Although Congress
later made certain changes to the budgeting process, many Home Rule Act provisions have remained the
same. The Home Rule Act requires the Mayor to "prepare and submit to the Council each year, and make
available to the public, an annual budget for the District of Columbia government." 5 This budget must
include the Mayor's multi-year plan6 and multi-year capital improvement plan. 7 After the Council receives
the Mayor's budget proposal, it must enact a final version of the budget within 70 days 8 subject to the
Mayor's review and her signature or veto. 9 Prior to 2012, the Mayor was responsible for submitting the
entire budget to the President for transmission to Congress for its inclusion in the annual federal
appropriations act.
The Home Rule Act also includes several provisions that require the District's budget to be balanced. For
example, the Mayor's proposed budget "shall be prepared on the assumption that proposed expenditures
resulting from financial transactions undertaken on either an obligation or cash outlay basis, for such fiscal
year shall not exceed estimated resources from existing sources and proposed resources." 1 Further, the
°
1
FY 2025 Proposed Budget and Financial Plan, at 82 (FY 25 Budget Book),
https://app.box.com/s/i1<96hmpm6bcjnp Ifdd629x24s2d l 6g5f.
2
Id. at 31.
3
Public Briefing on the Mayor's Fiscal Year 2025 Proposed Budget and Financial Plan Before the Comm. ofthe Whole,
Council Period 25 (2024), 3:51-4:01, httos://dc.granicus.com/MediaPlaver.php?view id=2&clip id=8794.
4 Approved December 24, 1973, Pub. L. No. 93-198, 87 Stat. 777 (codified as amended at D.C. Official Code§ 1-204.01 et
seq.).
5
D.C. Official Code § 1-204.42.
6
D.C. Official Code§ 1-204.43.
7
D.C. Official Code § 1-204.44.
8
D.C. Official Code § 1-204.46.
9
D.C. Official Code§ l-204.04(e) and (f).
10
D.C. Official Code§ 1-204.42.
2
Council is prohibited from "approv[ing] any budget which would result in expenditures being made by the
District government, during any fiscal year, in excess of all resources which the Mayor estimates will be
available from all funds available to the District for such fiscal year." 11 And, once a budget is enacted, the
Mayor cannot "forward to the President for submission to Congress a budget which is not balanced." 12
Accordingly, the Home Rule Act requires the District to submit to Congress a balanced budget each fiscal
year, defined as expenditures that do not exceed all available resources estimated to be available for that
fiscal year.
2. The District of Columbia Financial Responsibility and Management Assistance Act of
1995 and 2005 District of Columbia Omnibus Authorization Act
Congress enacted the District of Columbia Financial Responsibility and Management Assistance Act of
1995 ("Financial Assistance Act") 13 when the District was in a severe financial crisis and had experienced
several years of budget deficits and cash shortages. Congress's goal in enacting the Financial Assistance
Act was to both deal with this fiscal emergency and to put certain controls in place to ensure the "long-term
financial, fiscal, and economic" health of the District. 14
To address the then-existing fiscal crisis, the Financial Assistance Act established the District of Columbia
Financial Responsibility and Management Assistance Authority ("Authority") and placed the District under
its control. 15 The Authority's purposes were to bring the District out of insolvency; address and cure the
fiscal, financial, management, and economic problems of the District government; and enhance the
District's standing and access to credit in the credit and capital markets. 16 While under the Authority's
control, the traditional budget functions performed by the Mayor and the Council were subject to significant
oversight. For example, for each fiscal year that the District government was under the Authority's control,
the Mayor was required to "develop and submit to the Authority," and the Council, "a financial plan and
budget." 17 Before the Mayor could send the financial plan and budget to the Council, the Authority had to
"approve the financial plan and budget" and provide the Mayor, the Council, the President of the United
States, and Congress "with a notice certifying its approval." 18 The Council then had to adopt a financial
plan and budget within 30 days and submit it to the Mayor and the Authority. 19
Once the Authority reviewed and approved the Council-adopted financial plan and budget, the Authority
again was required to provide the Mayor, the Council, the President, and Congress "with a notice certifying
its approval," only after which could the Mayor transmit it to the President and Congress. 20 The Authority
could disapprove of the Mayor's proposed budget or the Council-adopted budget ifit did not meet statutory
11
D.C. Official Code§ l-206.03(c). Congress subsequently transferred the authority to estimate revenues to the CFO. See
infra section I.B.2.
12
D.C. Official Code § l-206.03(d).
13 District of Columbia Financial Responsibility and Management Assistance Act of 1995, Pub. L. No. 104-8, 109 Stat. 97
("Financial Assistance Act").
14
Financial Assistance Act, 109 Stat. 99.
15 See D.C. Official Code§ 47-392.09(c).
16
See H.R. Rep. 104-96, at 33 (1995); Financial Assistance Act, § 2.
17
D.C. Official Code§ 47-392.0l(a).
18
D.C. Official Code§ 47-392.02(c). If the Authority did not approve the Mayor's proposed budget within 30 days, it was
deemed approved and certified. Id.
19 Id.
20 Id.
3
requirements in the Financial Assistance Act, including that the District "fully restore[d]" funds that had
been withdrawn from "accounts of the District government which are dedicated for specific purposes," and
that the "financial plan and budget ... assure[d] the continuing long-term financial stability of the District
government, as indicated by factors including access to short-term and long-term capital markets, the
efficient management of the District government's workforce, and the effective provision of services by the
District government."21
Congress did not expect or intend the District to be subject to the Authority's control indefinitely. 22 The
Financial Assistance Act also made structural changes to the District's budget process to promote long-term
financial stability, one of which was amending the Home Rule Act to establish the Office of the Chief
Financial Officer ("OCFO") within the executive branch. The Financial Assistance Act's Home Rule
amendments assigned specific functions to the CFO related to the District's finances, including, among
other things, property assessments, taxation, cash management, accounting, financial reporting,
apportionment of funds, investment of public resources, payment of obligations, debt management, payroll
and retirement administration, and the preparation of fiscal impact statements for legislation, regulations,
and contracts. 23 In 2006, Congress further amended the Home Rule Act in Title II of the 2005 District of
Columbia Omnibus Authorization Act ("2005 Omnibus Act") to add additional CFO responsibilities and
further establish the CFO's independence by making him removable only for cause. 24 As currently
constituted, the Home Rule Act specifies 28 duties of the CFO in section 424(d).
Several provisions in section 424(d) are relevant to the budgeting process. Many of these CFO duties
specifically relate to the annual budgeting process in non-control years, like at present, when the Authority
is not in operation. Prior to any proposed budget, the CFO must prepare "annual estimates of all revenues
of the District of Columbia (without regard to the source of such revenues), including proposed revenues,
which shall be binding on the Mayor and the Council for purposes of preparing and submitting the budget"
as well as quarterly re-estimates throughout the fiscal year. 25 The CFO is also responsible for "[p]reparing
the" annual budget "for the use of the Mayor ... , and preparing the 5-year financial plan based upon the
adopted budget for submission with the District of Columbia budget by the Mayor to Congress. " 26 In doing
so, the CFO is directed to prepare, "under the direction of the Mayor, who has the specific responsibility
for formulating budget policy using Chief Financial Officer technical and human resources, the budget for
submission by the Mayor to the Council and to the public and upon final adoption to Congress and to the
public."27
Unlike the power given to the Authority in control years, none of the CFO's duties expressly require him
to certify the budget. By contrast, the CFO must "certify" certain District obligations, including "all
contracts and leases" and "all bills, invoices, payrolls, and other evidences of claims, demands, or charges
against the District government."28 For the budget, however, the Mayor and the Council are responsible
21
D.C. Official Code§ 47-392.0l(c)(l)(D), (E).
H.R. Rep. 104-96, at 22 (1995); ("A [federal control board] is intended to be temporary.").
23
See Financial Assistance Act,§ 302 (codified as amended D.C. Official Code§ 1-204.24d.).
24
Title II of the 2005 District of Columbia Omnibus Authorization Act, Pub. L. No. 109-356, 120 Stat. 2029 ("2005 Omnibus
Act").
25
D.C. Official Code§ 1-204.24d(5).
26
D.C. Official Code § 1-204.24d(2).
27
D.C. Official Code§ 1-204.24d(26).
22
4
for sending a balanced budget to the federal government. Although the Mayor initially was required to
transmit both the federal and local budget requests to the federal government, in 2012, the Council passed
the Local Budget Autonomy Act of 2012. 29 Now, the law authorizes the Mayor to submit the Federal
Portion Budget Request Act requesting federal appropriations to the President for transmission to Congress,
and the Council Chair to send the District's Local Budget Act to Congress for passive review. 30
One other CFO responsibility, which relates to all legislation including the budget, warrants mention.
Section 424(d)(25) of the Home Rule Act, along with section 4(a) of the General Legislative Procedures
Act of 197 5, 31 requires the CFO to prepare fiscal impact statements on all permanent legislation. A fiscal
impact statement must include "the estimate of the costs which will be incurred by the District as a result
of the enactment of the measure in the current and each of the first four fiscal years for which the act or
resolution is in effect, together with a statement of the basis for such estimate."32 Further, "acts which are
accompanied by fiscal impact statements which reflect unbudgeted costs, shall be subject to appropriations
prior to becoming effective. " 33
3.
District Reserve Funds
The Home Rule Act mandates a general fund for District revenues and authorizes the Council to "establish
such additional special funds as may be necessary for the efficient operation of the government of the
District."34 Congress additionally created an emergency reserve fund for "unanticipated and extraordinary"
emergency needs and a contingency reserve fund for "nomecurring or unforeseen needs" during a fiscal
year_3s
In 2010, the Council enacted the Sustainable Capital Investment and Fund Balance Restoration Act of
2010. 36 That law created two additional reserve funds: a Cash Flow Reserve fund and the FSR. 37 The CFO
can use the Cash Flow Reserve fund to cover cash flow needs, which must be replenished in the same fiscal
year, and operating expenses during a lapse in regular appropriations, which must be replenished at the end
of the lapse.
The Council has amended the authorized uses for the FSR several times. As originally enacted, the FSR
could only be used for the same purposes as the contingency reserve fund, except it could not be used for
cash flow needs. In 2016, the Council amended the law to authorize the CFO to use the FSR "to cover cash
flow needs," provided that any funds used for this purpose "shall be replenished ... in the same fiscal
year." 38 In 2023, the Council further amended the law to authorize the Mayor to use the FSR for Fiscal
Year 2023 operating expenses, but the FSR did not need to be replenished unless there was a surplus. 39
Other changes authorize the Mayor to use the FSR for operating expenditures during a lapse in
29
Effective July 25, 2013 (O.C. Law 19-321; 60 OCR 1724).
O.C. Official Code§ l-204.46(a).
31
Pub. L. No. 109-356, 120 Stat. 2038 (codified at O.C. Official Code§ l-301.47a).
n Id.
33 Id.
34
O.C. Official Code § 1-204.50.
35 O.C. Official Code§ l-204.50a.
36 Sec. 7162, effective Sept. 24, 2010 (O.C. Law 18-233, 57 OCR 6242).
37
O.C. Official Code§ 47-392.020-1), G-2).
38 Fiscal Stabilization Reserve Amendment Act of 2016, § 7142, effective Oct. 8, 2016 (O.C. Law 21-160, 63 DCR 10775).
39 Fiscal Stabilization Reserve Amendment Act of 2023, § 7032(c), effective June 27, 2023 (O.C. Law 25-50; 70 OCR 10366).
30
5
appropriations or to advance funds to public and charter schools while waiting for an approved budget,
which must be "replenished immediately" at the conclusion of the lapse or the approval of a budget,
respectively. It is our understanding that the Mayor used the FSR for FY23 operating expenses, but not
because of any lapse in appropriations. This is what caused the current shortfall. At full funding the FSR
must equal 2.34% of the District's General Fund operating expenditures.
II. Analysis
A. The CFO Does Not Have the Authority to Certify the Budget or to Require that the Budget
Replenish the FSR.
The first question you have asked is:
What is the legal effect, if any, of the CFO declining to "certify" or otherwise calling into question
the validity of a duly enacted District budget that both meets the balanced budget requirements of
D.C. Official Code § 1-206.03 and otherwise complies with District law-solely because the
enacted budget does not direct an additional $217 million to the Fiscal Stabilization Reserve
Account established by the Council at D.C. Official Code § 47-392.020-1) as demanded by the
CFO?
We conclude that because there is no legal requirement or authority for the CFO to certify the budget, his
refusal to do so will have no legal effect on a duly enacted budget that does not replenish the FSR. Further,
the CFO does not have authority to dictate specific budget line items, including how much, if anything,
should be budgeted to replenish the FSR.
1. There is no legal requirement for the CFO to certify the District's budget.
Neither federal nor District law gives the CFO the power or duty to certify the District's budget. The Home
Rule Act expressly requires the CFO to certify many types of instruments and transactions, but the budget
is not one of them. 40 This is in stark contrast to the Financial Assistance Act's requirements that the
Authority "certify" both the Mayor's proposed budget and the Council's enacted budget during a control
year. When Congress "includes particular language in one section of a statute but omits it in another section
of the same Act, it is generally presumed that [it] acts intentionally and purposely in the disparate inclusion
or exclusion."41 This presumption applies "with particular force" when the contrasting provisions are "in
close proximity" to each other, as they are here. 42 The Financial Assistance Act assigned the responsibility
of budget certification exclusively to the Authority and limited this certification process to control years. It
did not transfer this authority to the CFO upon the Authority's termination but confined the CFO's budget
40
Section 424(d)(14) requires the CFO to "[ c]ertify[] contracts and leases (whether directly or through delegation) prior to
execution as to the availability of funds to meet the obligations expected to be incurred by the District government under such
contracts and leases during the year." Section 424(d)(16) requires the CFO to "[c]ertify[] and approv[e] prior to payment of all
bills, invoices, payrolls, and other evidences of claims, demands, or charges against the District government, and determining
the regularity, legality, and correctness of such bills, invoices, payrolls, claims, demands, or charges." Section 424(d)(27)
requires the CFO to "[ c]ertify[] all collective bargaining agreements and nonunion pay proposals prior to submission to the
Council for approval as to the availability of funds to meet the obligations expected to be incurred by the District government
under such collective bargaining agreements and nonunion pay proposals during the year."
41
Russello v. United States, 464 U.S. 16, 24 (1983).
42
Dep't ofHomeland Sec. v. Maclean, 574 U.S. 383,392 (2015).
6
responsibilities to the functions stated in section 424(d)(2), (5) and (26). Similarly, the Financial Assistance
Act assigned the CFO various certification authorities, but not budget certification.
This is so despite the CFO's practice to include a letter certifying that the budget is balanced when he
transmits the final Budget and Financial Plan to the Mayor for submission to the Council and to transmit
the Council-adopted budget to Congress. However, Congress's omission of a legal requirement for
certification of the budget-unlike the other certification requirements and the requirement for the
Authority's certification in a control year-indicates that the CFO's certification practice is not legally
required.
The Home Rule Act's fiscal impact statement requirement also does not provide a basis for the CFO either
to certify a balanced budget or to refuse to certify one where he believes there could be future short-term
cash flow mismatches. 43 Section 424(d)(25) of the Home Rule Act and D.C. Official Code§ l-301.47a
require the CFO to issue a fiscal impact statement indicating whether a law has unbudgeted costs, and, if
so, it provides that such a law cannot become effective until sufficient money is appropriated. 44 Budget
legislation that is balanced---one where estimated resources meet or exceed expenditures during a fiscal
year---does not include any "unbudgeted costs," and any fiscal impact statement the CFO would issue for
such legislation would necessarily reflect this conclusion. Further, once funds are appropriated, D.C.
Official Code§ 1-301.47a imposes no barrier to a law taking effect. The CFO's authority to prepare fiscal
impact statements thus does not allow him to block a budget from taking effect. Finally, the Council's
Fiscal Year 2025 Local Budget Act only covers the upcoming fiscal year; it does not include the future
years covered by the financial plan. The CFO's concerns about cash flow shortfalls in future fiscal years
would not be appropriately included in the fiscal impact statement for the FY 2025 budget.
Although the CFO is not required to certify the budget, he does have an important Home Rule Act role in
the budget process. The CFO prepares the annual revenue estimates, which are "binding on the Mayor and
the Council for purposes of preparing and submitting the budget."45 Therefore, although the Mayor, and
ultimately the Council, determine the District's expenditures, those expenditures cannot exceed estimated
resources, taking into account the CFO's estimated revenues. The CFO's transmission letter accompanying
the FY 25 Budget highlights this aspect of the CFO's authority, noting that if revenue forecasts change
during the year "such that an unbalanced budget would result, the budget must be adjusted, following
approved procedures, to re-establish balance. " 46
2. The Mayor and the Council decide whether to replenish the FSR.
In enacting the Financial Assistance Act, Congress expressly continued to reserve budget policy decisions
to the Mayor and Council. Although the CFO determines the annual revenue to be budgeted, the Mayor in
her proposed budget, and ultimately the Council in its enacted budget, have the "discretion ... to allocate
District government revenues" "among competing programs and activities."47 Once the CFO provides his
revenue estimates, his role in the budgeting process is limited to preparing the Mayor's budget under her
direction using his technical and human resources. Allowing the CFO to dictate that a certain fund be
43
D.C. Official Code§ l-301.47a.
44 Id
45
D.C. Official Code§ l-204.24d(5).
FY 25 Budget Book, at 244.
47 D.C. Bd. ofElections & Ethics v. District of Columbia, 866 A.2d 788, 794 (D.C. 2005) (citation omitted).
46
7
replenished would remove the local budget process from "within the control of the Mayor and Council"
and "interfere with the locally elected officials' decisions about how District government revenues should
be spent. " 48
The CFO has expressed concern that cash flow shortfalls in FY 2027 and FY 2028 could lead to deficits or
have a negative effect on the District's credit rating. And because he maintains that a balanced budget
requires overall financial stability, he asserts that a balanced budget requires full replenishment of the FSR
in the FY 25 Budget. The CFO's interpretation of the balanced budget requirement is at odds with the plain
language of the Home Rule Act. The Home Rule Act defines "balanced" as a budget that would not "result
in expenditures being made by the District government, during any fiscal year, in excess of all resources
which the Mayor estimates will be available from all funds available to the District for such fiscal year." 49
The unit of reference for applicable revenues and expenditures is the entire fiscal year, not month-to-month
cash flows. Thus, while having sufficient reserves is important to the District's financial stability, the
amount of reserves does not factor into whether, on the whole, budgeted obligations for a particular fiscal
year exceed available resources. The Mayor could therefore propose a budget and the Council could adopt
budget legislation that balances resources against expenditures without following the CFO's advice about
replenishing the FSR. This would be entirely consistent with section 7032(c) of the Fiscal Stabilization
Reserve Amendment Act of 2023, 50 which does not require FSR replenishment for expenditures from the
FSR for FY 2023 operating expenses.
The Council has created several reserve funds to smooth out mismatches in cash inflows and outflows. As
the CFO acknowledged during the budget briefing, because the FSR was created by the Council, the Council
has the authority to repeal it, and the District has several different options for addressing potential cash flow
shortfalls that might occur in Fiscal Years 2027 and 2028. Provided that they stay within the bounds of the
District's resources for the fiscal year at issue, it is ultimately the Mayor's and then the Council's
responsibility to determine how best to balance the District's cash flow needs and attendant financial risk.
B. The CFO Does Not Possess the Authority to Withhold Payment Under a Budget the Council
Detennines Is Balanced.
Second, you have asked:
May the CFO refuse to release funds appropriated pursuant to a duly enacted District budget that
meets the balanced-budget requirements of D.C. Official Code § 1-206.03 and otherwise complies
with District law-solely because the enacted budget does not direct an additional $217 million to
the Fiscal Stabilization Reserve Account established by the Council at D.C. Official Code § 47392.02G-1) as demanded by the CFO?
The CFO has no authority to refuse to release funds appropriated under a validly enacted budget. As a
statutorily created office, OCFO "possess only the authority that Congress has provided." 51 None of the 28
duties that Congress specified for the CFO gives him the authority to refuse to release lawfully appropriated
funds. The CFO is responsible for "[s]upervising and assuming responsibility for financial transactions to
48 Id.
49
D.C. Official Code§ 1-206.03(c), (d) (emphasis added).
Sec. 7032(c), effective June 27, 2023 (D.C. Law 25-50; 70 DCR 10366).
51
NF/B v. Dep 't ofLab., 595 U.S. 109, 117 (2022).
50
8
ensure adequate control of revenues and resources," but supervising transactions is not the same as refusing
to make budgeted funds available to pay valid obligations.
Indeed, the CFO's refusal to release funds under a valid District budget would cause precisely the type of
financial problems that the CFO's decision not to approve the budget would be designed to avoid.
Withholding all funds could cause the District to default on its obligations. If the CFO exercised discretion
to release funds for only some of the District's obligations, he would be carrying out a policy making
function that would extend far beyond the duties assigned to him under the Home Rule Act. The CFO
therefore cannot lawfully withhold funds.
I hope this opinion is useful to you in assessing how to proceed with the Fiscal Year 2025 - Fiscal Year
2028 Budget and Financial Plan. If you have questions about this opinion, please contact me.
Attorney General for the District of Columbia
9