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HIGH STAKES

New CFO makes organizational changes

(Published July 31, 2000)

By OSCAR ABEYTA

Staff Writer

The District’s new chief financial officer knows the stakes involved in his job are high.

"The most fundamental problem I face is: will I be able to produce a clean audit on time," Natwar M. Ghandi said. "If I fail, then I am out of a job."

Those stakes were publicly demonstrated when Ghandi’s predecessor, Valerie Holt, was forced to resign May 19 after missing her deadline by three months. An unqualified audit, an annual check of the city’s finances known officially as the Comprehensive Annual Financial Report (CAFR) conducted by an independent contractor, is necessary to secure the city’s bond rating and to fulfill the requirements for the D.C. financial control board to go out of business.

Ghandi, just a month after being confirmed as Holt’s replacement by the control board, has already begun making major organizational changes in the agency to address some of the criticisms leveled at it by the control board and politicians.

On July 20, Ghandi announced he was starting divisions to deal with securing unclaimed federal grants, preparing fiscal impact statements for the D.C. City Council and, most importantly, train agency workers to use the office’s accounting software. The agency’s inability to master the new SOAR accounting program was largely blamed for the tardiness of the audit this year.

Ghandi moved into his current job from the Office of Tax and Revenue, where he is credited with turning around an agency plagued with mismanagement and chaos into one of the city government’s most effective and efficient departments.

He proudly touts the fact that the office now issues tax refund checks in two weeks or less, faster than the federal government and even Maryland’s tax office. He said he hopes to institute changes in the CFO’s office that would mirror his successes in the tax and revenue division.

In a recent meeting, Ghandi urged a group of employees to try to overcome the "culture of fear" that is rampant in the agency and the city government at large.

"This city is ruthless," he said later, shaking his head. "You can do a thousand things right, but if you do just one thing wrong…."

Ghandi said one of his main goals for the CFO’s office is to try to expand the city’s tax base. He noted that the city’s expenditures are rising by 3 percent while tax revenues are rising by only 2.6 percent

"We need to redefine our relationship with the federal government," Ghandi said. He said he supports Delegate Eleanor Holmes Norton’s proposal to earmark 2 percent of commuters’ federal income tax for the District. He said that 2 percent would translate into an additional $400 million annually for the District.

The District is the only jurisdiction in the country that is forbidden by Congress to tax the incomes of people who work in the jurisdiction but live elsewhere. As a result, Maryland and Virginia get to tax those workers and get extra tax revenue.

"What happens is we end up subsidizing two of the richest counties in the country," Ghandi said, referring to Montgomery County in Maryland and Fairfax County in Virginia. He said Norton’s plan would be a fair way of regaining some of that lost revenue because the money would come out of federal taxes, so no single state would bear the brunt of the cost.

Ghandi emphasized that an economically healthy District is necessary for the economic health of the entire region.

"You do not want a hollow center — you want it vibrant and vital and that insures that the periphery will prosper as well," he said.

Ghandi said the city’s financial health is good right now and he is happy with how quickly the city turned around from the financial crisis of the mid-1990s.

"We have come back from our control experience faster and better than any other city who’s had a control board like New York and Philadelphia," Ghandi said. "We have learned our lessons well."

Ghandi, who is a first generation immigrant from India, earned a bachelor’s degree in accounting from the University of Bombay, a master’s in business administration from Atlanta University and a doctorate in accounting from Louisiana State University. He was a professor of accounting at the University of Pittsburgh and was an adjunct professor at American University, Georgetown University and the University of Maryland.

"As a first-generation immigrant, I’m honored and touched to hold this position, and in the nation’s capital," he said. "Only in America could this happen."

Copyright 2000, The Common Denominator