District of Columbia: Briefing Summary of the
Long-Range Capital Financial Plan Report
The Office of the Chief Financial Officer (OCFO) has released the 2023 Long-Range Capital Financial Plan Report. The report looks at current assets, their condition, future capital needs, and funding availability to develop a long-range plan to address all identified capital needs of the District in the shortest possible time.
The District’s asset management system, the Capital Asset Replacement Scheduling System (CARSS), contains a detailed inventory of all District-owned assets, including land, buildings, roads and streets, vehicles, and equipment. This system provides the basis for developing the District’s capital improvement plan as part of the annual budget process and determining the cost of deferred maintenance for current assets.
The District is now generally recognized as having the most complete capital asset management system of any state or local government in the country. This system has been noted by the bond rating agencies as a key factor in the maintenance of the District’s high bond ratings, including a “Aaa” rating from Moody’s.
Key Highlights include:
- $14.08 billion of total capital needs identified; approximately $10.51 billion of those needs are funded in the FY 2024 - 2029 CIP.
- $3.57 billion of unfunded capital needs remain during the 6-year CIP period, up from $3.54 billion last year, of which approximately $1.40 billion is deferred maintenance.
- Reasons for the slight increase in unmet capital needs include a net decrease in the size of the capital budget due to lower revenue estimates in the out-years of the financial plan.
- Analysis shows that unmet capital needs can be funded as early as FY 2033, if the District commits 16.8% of its general fund budget to capital projects (12% to support debt service on borrowings and an average of approximately 4.8% on pay-as-you-go cash funding) and no additional capital projects are added before addressing currently identified unmet needs. If additional capital projects are added, the timeline to catch up with unmet needs could be extended significantly.
- The District has a comparatively lower cost of borrowing compared to its peers due to strong bond ratings: Aaa/AA+/AA+ by Moody's, S&P and Fitch, respectively. However, continued high interest rates, due to macroeconomic factors and current Federal Reserve policy, could impact future borrowing capacity.
- Challenges to executing this plan include a potential U.S. recession triggered by continuously tight monetary policy by the Federal Reserve, a federal government shutdown with disruptions to the local economy and persistently elevated borrowing costs due to 'higher-for-longer' interest rates. District-specific risks include continued high rates of remote work, especially amongst the federal workforce, an accelerated decline in federal employment, a stalled population recovery, and additional funding requirements from the District to address WMATA's projected operational funding deficit.
- The nation's capital remains in an enviable position compared to its peers to navigate these challenges and address its infrastructure needs due to prudent financial management policies (including very strong reserves and highly funded pension and OPEB liabilities), a state-of-the-art asset management system, and a resilient local economy.
2023 Long-Range Capital Financial Plan Report - Documents:
The report can also be found at www.DCbonds.com.
- 2022 Long-Range Capital Financial Plan Report
- 2021 Long-Range Capital Financial Plan Report
- 2020 Long-Range Capital Financial Plan Report
- 2019 Long-Range Capital Financial Plan Report
- 2018 Long-Range Capital Financial Plan Report
- 2017 Long-Range Capital Financial Plan Report
- 2016 Long-Range Capital Financial Plan Report