Lessons from Natwar Gandhi, the Nation’s Most Independent CFO
As the District of Columbia’s CFO for more than decade, Natwar Gandhi’s turnaround story has been the envy of other financially struggling cities.
When Natwar Gandhi took over the District of Columbia’s finances 13 years ago, the city was still under the thumb of a congressionally appointed financial control board, running a $518 million deficit with its bonds in junk status. Today, the city boasts 16 straight years with a balanced budget, has been out from under the shadow of the control board for a dozen years and holds a $1.5 billion rainy-day fund and a AA general obligation bond rating. It’s a turnaround story that has earned many honors for the city’s chief financial officer (CFO), including being named a Governing Public Official of the Year in 2007, and has been the envy of other cities struggling with their own fiscal health following the recession.
In February, Gandhi, 73, announced that he planned to retire but would stay on until his successor was named and had a chance to settle into the position. In late September, Washington Mayor Vincent Gray tapped Phoenix CFO Jeffrey DeWitt as Gandhi’s replacement.
Earlier this year, Gandhi sat down with Governing to look back at his time holding one of the most unique public CFO jobs in the country. Here’s a condensed and edited version of that interview.
Your office stands out from other CFOs because although you are appointed by the mayor, you cannot be fired without cause—and Congress has the power to overturn any firing. What has that meant for D.C.’s finances?
This is as independent a CFO [office] as you can get anywhere in the country. You can disagree with the mayor in the morning, you can still be in the office in the afternoon. Everywhere else you’d be sitting at home. With all that power and independence, the CFO is given a huge responsibility to assure that the city remains financially viable. This has been a $2 billion turnaround. Other cities that have gone through this experience, like New York and Philadelphia? None have been able to come back as fast and as well as this city has. Of course, the credit goes to the control board and elected leadership. But at the end of the day, it is the fiscal discipline that Congress imposed upon the city via a control board and chief financial officer that has assured the city remains financially viable.
That power has also earned you the nickname “Dr. No” because you can nix proposed bills and projects that aren’t funded. How do you try to keep a good relationship with elected officials?
When a council member says, “I want to spend $100 million,” I can understand his perspective. His notion is that, “What’s the use of having a billion and a half dollars in your fund balance while I have homeless in my ward?” So my approach always is, “Let’s sit down, let’s understand and see how we can make it work without hurting the financial viability of the city.” And many times it’s not possible and we [must] say that. But I would say only when I have exhausted all the possibilities that it cannot be done, then I would say no.
Could other governments replicate your office’s independence?
I don’t think Congress or the president or any mayor or any governor would want to see a CFO of that power, because you are basically encroaching upon their prerogative, their powers and they don’t like it. When we explain to other mayors, other municipalities that this is what it takes, they say, “No, no.”
What is a new challenge facing CFOs today?
There is this sense that cities cannot simply go on the way that they have done in the past. There’s this idea that the federal government has all the money because they have a printing press, states have all the power, cities have all the problems. This is where the rubber hits the road. … [Meanwhile] you have people who can afford to leave cities for the suburbs and there is a gradual erosion of the tax base. The worst example of that is Detroit.
Any parting words of advice for your successor?
At the end of the day, it is your responsibility to make sure the city remains financially viable. And if you ever miss that, then you basically have no business being here. So you have to be obsessed about this.
Join the Discussion
After you comment, click Post. You can enter an anonymous Display Name or connect to a social profile.
LATEST FINANCE HEADLINES
Bank Regulators Are Getting Over Opposition to Marijuana Businesses22 minutes ago
States Ease Laws That Protected Poor Borrowers7 hours ago
Tax Breaks for Gas Companies Face Scrutiny in Texas7 hours ago
Sports Betting Now Legal in New Jersey2 days ago
Why Texas May Tap Its Rainy Day Fund During Boom Times2 days ago
The Week in Public Finance: The Motherly Advice Edition5 days ago