D.C. Chief Financial Officer Natwar Gandhi may be confused about a tax that should have been collected on commercial property loans. But at-large D.C. Councilman David Catania isn’t. “It was the Office of Tax and Revenue’s responsibility to collect the 1.1 percent recordation tax on the entire amount of a refinanced loan for a commercial property,” Catania asserted in a letter to Gandhi dated June 10. The letter included a detailed analysis of tax policy before the 2001 passage of the Tax Clarity Act and explained how the CFO should have implemented that law.
The letter comes after stunning allegations by two lawyers — Jeffrey Mitchell, with Oldaker Law Group, and James V. Stanton — that the city failed to collect more than $100 million in taxes during the past decade because Gandhi never properly implemented the Clarity Act.
“Given the current financial climate, it is extremely important that all District government offices diligently work to preserve our fiscal integrity and strengthen our citizens’ confidence that laws are implemented as written,” added Catania, requesting Gandhi answer by June 24 a dozen questions including when he first realized the recordation provision of the law hadn’t been correctly implemented; who at OTR was responsible for collecting the tax; and whether Gandhi had changed tax policy since the lawyers aired their concerns in February.
Councilman Jack Evans, who, as head of the legislature’s Committee on Finance and Revenue, oversees the CFO, also sent a letter dated June 7. While he has requested answers, the Ward 2 legislator seems to have adopted the CFO’s contention there was confusion over interpretation of the law.
“The most concerning aspect of this potential negligence is that, if substantiated, it would again raise questions about the thoroughness and competency of the OTR,” Catania said.
Truth be told, the CFO’s entire $131 million operation is a mess.
District agencies have routinely exceeded their authorized budgets, technically violating the federal Anti-Deficiency Act. Insurance premiums for workers on disability compensation have gone unpaid. The cost of D.C. Public Schools teachers’ contract was miscalculated. A midlevel OTR employee stole $50 million. And now it appears millions more in taxes weren’t even collected.
In most places, that kind of poor performance would prompt termination. In the District, nothing happens.
Many elected officials have appeared to suffer Stockholm Syndrome or trauma bonding. Their “illness” may date back to the era when the financial control board held sway over city affairs. Officials believed their destiny is intricately connected to the federally created panel and its functionaries, including Gandhi.
“If we get rid of him, we’ll have problems on Wall Street,” one elected official recently told me.
Gandhi hasn’t tried to alter that perception. In fact, he has used it to hold the city hostage, guaranteeing his employment through multiple missteps and indisputable evidence of incompetence.
If elected officials break out in a cold sweat at the thought of being separated from Gandhi, the loss of $100 million should be sufficient antidote. Shouldn’t it?
Jonetta Rose Barras’s column appears on Monday and Wednesday. She can be reached at [email protected].
