Ever since D.C. gained an independent chief financial officer back in the bad old control board days, CFOs have found themselves in the middle of many a bruising budget battle. Glen Lee hasn’t been in D.C. long, but he’s already keeping up that tradition.
Lee currently finds himself in an unenviable position: caught in the middle of a tug-of-war between frequent sparring partners Mayor Muriel Bowser and Council Chairman Phil Mendelson. The latter is trying to make Metrobus rides in the District free, while the former firmly opposes the idea. Lee’s role as the city’s top budget minder has made him a useful ally as she tries to sink the plan.
The fight is a wonky one, but consequential for Wilson Building whisperers wondering about the CFO’s role going forward (not to mention anyone hoping to hop on a free bus later this year). And it is likely to define the next few months of debate about the 2024 budget, formally unveiled Wednesday morning, as the city grapples with the end of federal pandemic relief funding and a $1.7 billion budget deficit.
“I cannot overstate how harmful your approach has been to our working relationship,” Mendelson wrote in an unusually biting letter to Lee on Monday, in a sign of just how contentious the dispute has already become.
To back up: Mendelson designed the free bus bill in a slightly unusual way, stipulating that the program can only go forward if city tax revenues exceed the CFO’s projections. That might sound unusual, but it’s a helpful way for lawmakers to fund pet projects without raising taxes to do so. (Consider, for instance, that the city also uses these “excess revenues” as a major source of funding for its main affordable housing loan fund and many large, city-backed construction projects.) Over the past several years, the city has shot past the CFO’s gloomy, COVID-depressed estimates, so it was reasonable to expect the same thing to happen again.
Last December, it seemed like Mendelson’s strategy paid off. Lee estimated that the city would beat his projections by $112 million in fiscal year 2023 and $57 million in 2024, more than enough to keep the bus program on track. But by February Lee changed his tune, suggesting that worsening property tax collections and other economic headwinds meant the city would barely have any excess revenue to speak of in 2023 and things would get even worse in subsequent years.
That worked out just fine for Bowser, who let the free bus bill become law without her signature. She consistently stressed that she supported the bill’s goals (who wants to be against something free for your constituents?) but she made her true feelings clear after repeatedly raising concerns about the challenges of implementing it and the fact that Virginia and Maryland wouldn’t be paying for the program even though these free bus rides would carry people out of the District. Accordingly, Bowser made a point of leaving the program out of her proposed budget when she presented it to the Council Wednesday.
This development has seriously irked Mendelson. He feels double-crossed by Lee, claiming that the CFO assured him the money would be there in December only to go back on his word. What’s more, the chairman believes he wrote the law to specify that money would start flowing to the program as soon as the CFO delivered his December estimates—if revenues dropped after that, it would be on Bowser to find funding elsewhere, he reasoned. Mendelson pressed this point with the CFO directly, and got Lee’s lawyers to pursue a second opinion from Attorney General Brian Schwalb’s office. Their lawyers landed firmly on Mendo’s side.
“Given that the revenue projections in the December 2022 revenue estimate were more than sufficient to fund the program for FYs 2023 through 2026, resort[ing] to the February 2023 revenue estimate was not ‘necessary’ under the statute,” the AG’s deputies wrote in a March 17 memo forwarded to Loose Lips. “During the FY 2024 budget process, the mayor and the Council will have an opportunity to reassess their funding priorities based on the February 2023 revenue estimate and determine whether and to what extent the Metro for D.C. Act’s set-asides should be maintained in the absence of excess revenue.”
Mendelson was more blunt in his tweets announcing the letter to Lee and the AG’s memo: “If the mayor doesn’t want free bus service, she should own it, rather than rely on the CFO’s cover for this policy choice.” So much for a thawing relationship.
Bowser officials are trying to paint this whole issue as one that’s out of their hands, arguing that the CFO has the final say on how legislation gets funded, not the AG, and they may well be right. The congressional intervention that created the CFO vested the position with quite a bit of power and autonomy as a bulwark against the perceived excesses of Mayor-for-Life Marion Barry and his Council contemporaries. (Of course, it’s worth mentioning that the mayor still has the authority to hire and fire the CFO, so it’s not an entirely independent position.)
It’s telling, however, that Bowser is also raising last-minute cost concerns about the free bus plan to help justify her decision not to fund it. In a March 16 letter to the CFO provided to LL, she suggested that he’d need to revise his cost estimate for the bill substantially upward due to a variety of factors. For instance, federal officials have warned that the city will also need to provide free MetroAccess Paratransit service for people with disabilities, or else risk running afoul of the Americans with Disabilities Act. Bowser officials also believe the CFO hasn’t accounted for increased demand on the Metrobus system and the capital costs that could generate.
“Because several councilmembers have stated their support for this proposal, it is important to understand the true and complete cost of launching and maintaining the program,” Bowser wrote. “I ask that your office expedite this financial analysis and share it with our residents.”
Her deputies declined to speculate on their own estimates for how much the program’s costs could grow, saying they’d wait on the CFO. A spokesperson for the office didn’t immediately respond to a request for comment.
For his part, Mendelson believes these cost concerns are overblown and an extension of Bowser’s overall opposition to the plan. His spokesperson says Metro officials assured Mendo the MetroAccess changes would only cost an extra $1.4 million—a drop in the bucket compared to previous estimates, ranging between $32 million and $47 million annually. Mendelson would rather trust Metro’s briefing on the program’s costs than wait on the CFO.
Ultimately, Mendelson will probably be able to get his way if he’s determined enough. Bowser’s deputies are already operating as if he’ll succeed, opting to halve the number of routes offered by the locally run D.C. Circulator in the budget over fears that a free Metrobus system will steal away passengers. (This is quite a far cry from Bowser’s 2019 tussle with the Council over making the Circulator free, when she was willing to produce some of the most cringeworthy government videos in recent memory to try and win the argument.)
But if his fight with the CFO is unsuccessful, Mendelson will need to find money for the program somewhere else, an unpleasant prospect in a year where Bowser already sliced $373 million in spending compared to last year. And why would Mendelson go through such a painful process for an idea that originated with another lawmaker?
The whole free bus idea came about after Ward 6 Councilmember Charles Allen backed a much more ambitious proposal that would have subsidized Metro rides for D.C. residents. That plan would have been even pricier and more difficult to manage, so Mendelson brokered the free bus plan as a compromise of sorts and promptly took it on as his baby.
There’s a political dimension here, to be sure—Allen is broadly seen as Mendelson’s most viable challenger for chair from within the Council, and it can’t hurt to blunt any potential criticisms should he run again in 2026. But it’s also a matter of principle.
Councilmembers have frequently accused Lee and his predecessors of overstepping their authority, posing as neutral bean counters but actually using their powers to enforce a fiscally conservative agenda. The CFO can tank a bill with a sky-high cost estimate (even if lawmakers dispute it) or even threaten to hold up certifying the whole budget over a policy dispute. This bus bickering is a battle with Bowser, to be sure, but it’s also part of a growing campaign against the CFO’s authority entirely.
“Your office has made a policy judgment,” Mendelson scolded Lee in his letter. “It is for the mayor, and ultimately the Council, to decide whether and how to offset reduced revenue growth.”