City Administrator warns of sharp fiscal pressures; highlights program work including Sun Bucks and gun violence grants

City Administrator Kevin Donahue told the Committee on Executive Administration and Labor on March 6 that the Office of the City Administrator will transmit a balanced FY26 budget to the Council in early April but that the administration faces ‘‘a difficult year’’ of revenue constraints and program reductions.

Donahue said the OCA coordinates the district’s operating and capital budgets, performance management, and several cross‑cutting offices such as the Lab at DC, the Office of Gun Violence Prevention (OGVP), the Office of Racial Equity (ORE), the Office of Budget and Performance Management (OBM), and a newly organized Sustainable Urban Infrastructure team that now oversees Vision Zero and the Highway Safety Office. He described OBM’s routine ‘‘cap stat’’ performance meetings and said the office held 18 such meetings in FY24 and has continued them into FY25 to focus on budget formulation and operational issues.

Why it matters: Donahue framed the FY26 budget as constrained by slower revenue growth and rising program costs. He singled out Medicaid as an immediate budget pressure driven by rising enrollment and higher health‑care costs, and he warned that a proposed federal change to the district’s Medicaid match could be catastrophic if adopted by Congress.

Details from testimony • Sun Bucks: Donahue highlighted Lab at DC’s role in the Sun Bucks summer food benefits program. He said the program distributed about $7 million to roughly 58,000 low‑income students and that roughly 45,000 students were preapproved using eligibility data from other programs, reducing the need for individual applications.

• Gun violence grants: Donahue said OGVP awarded 127 grants totaling about $1.3 million to 86 organizations in FY24–FY25 and described OGVP as providing grants plus follow‑up support.

• Office of Racial Equity: Donahue and Dr. Amber Hu told the committee that ORE trained more than 1,900 agency managers and supervisors in FY24–FY25 (the city administrator later said roughly 1,550 MSS active managers were trained, about 60% of active MSS employees).

• Sustainable Urban Infrastructure: Donahue said a team that coordinates DPW, DDOT, and other agencies is leading a mayoral initiative to keep visible commercial corridors clean and abate graffiti — initially funded for 40 additional DPW workers and later expanded to 80.

Medicaid and federal match risks Donahue and budget director Jenny Reed said the city faces a local Medicaid pressure of roughly $200 million for FY26 because of enrollment and inflation in health costs. Donahue warned that a separate federal policy option discussed in Congress — reducing the district’s Federal Medical Assistance Percentage (FMAP) from 70% to 50% — would translate to a roughly $1.1 billion annual loss in federal funds and an estimated $2.4 billion reduction in program resources, a scale he described as ‘‘consequential and catastrophic’’ for hospitals, providers and several city agencies that receive Medicaid reimbursements.

Budget posture and next steps Donahue said the administration has frozen nonessential travel and supplies and will pursue a combination of spending reductions and revenue options during budget formulation. He told the committee the OCA will transmit a balanced FY26 operating budget in early April and that any late federal changes that arrive after the submission could require council adjustments.

Ending Donahue closed by saying the administration aims to maximize taxpayer value while protecting core services, and he thanked staff for preparing written binders and for their work on performance and programs. The committee said it will follow up on several program and budget questions during upcoming oversight and budget hearings.