D.C. Council Passes $21.2 Billion FY2027 Budget — But a Constitutional Showdown With the City's CFO Could Hand Congress the Keys to D.C.'s Finances

Why It Matters to You

If you use childcare subsidies, receive housing vouchers, benefit from paid family leave, or rely on emergency rental assistance — the D.C. Council's final vote on the fiscal year 2027 budget directly shapes whether those programs survive the coming year. And if you are one of roughly 86,000 independent voters in the District, the same budget vote just handed you, for the first time, the right to participate in party primary elections starting in 2028. But the budget's passage comes with a serious catch: an escalating constitutional fight between the council and the city's independent chief financial officer that, if it tips the wrong way, could give Congress an opening to seize control of the District's finances — an outcome that hasn't happened since the fiscal crisis of the 1990s.

What the Council Did — and Why It Was Contentious

The D.C. Council finalized a $21.2 billion budget for fiscal year 2027, restoring funding for social services that Mayor Muriel Bowser had proposed cutting. The council voted unanimously on the measure's second and final reading, but the road to passage was anything but smooth.

The DC Council voted for the second and final time to approve the 2027 budget, which rolled back some of Bowser's proposed cuts to popular programs like paid family leave, housing vouchers, and the fund that supplements pay for early childhood educators.

The sticking point was how to pay for it. Tapping the rainy-day fund to float the budget provoked another showdown with D.C.'s independent chief financial officer, who implored city leaders to stop spending its savings funds, lest they invite intervention from Congress. Mendelson unveiled a budget that would restore several major cuts to the D.C. safety net — reductions that Mayor Bowser had proposed to plug a $1.1 billion gap.

Specifically, the restorations include $49 million more toward a child care subsidy program, restored benefits for universal paid leave, with $150 million coming from reserves.

Among the other program-level specifics baked into the budget's contingency structure: the contingency plan pledges the first $150 million in excess FY2026 revenues will go toward restoring the fiscal stabilization reserve; the next $9 million of recurring revenue will be transferred to the D.C. Housing Authority to use if the federal emergency housing voucher program expires; the next $3 million will be allocated for the Emergency Rental Assistance Program (ERAP). If there isn't excess revenue, the council's final budget will not reverse cuts to ERAP, leaving the program with a $7 million budget — a $1.6 million cut from fiscal year 2026.

The CFO Showdown: An "Unbalanced" Budget and the Ghost of the Control Board

The most consequential subplot of the budget battle is the open conflict between Council Chair Phil Mendelson and CFO Glen Lee — a fight with potentially citywide consequences.

Chief Financial Officer Glen Lee warned in a letter to Council Chair Phil Mendelson ahead of the vote that the use of the reserve means he could declare the budget "unbalanced." That word carries enormous legal weight. Lee's word matters because his job is to ensure that D.C. budgets are balanced, a federal requirement. There's fear that Lee labeling the budget "unbalanced" would invite intervention from Congress, which has final say over the city.

Lee did not mince words about the risk. Lee wrote to Mendelson that "without adequate local reserves, the District risks being unable to meet its basic obligations," like payroll or pension payments — because the government sometimes taps reserve funds to cover day-to-day expenses, since tax payments arrive unevenly throughout the year. Invoking the 1990s, Lee wrote that such a condition "would trigger the return of the federal control board."

Mendelson fired back hard. Mendelson said, "It is my belief that the chief financial officer is attempting to impose a policy view." He says it is not the first time the DC Council has tapped into city reserves and insists the council is not violating any policy, adding "the amount that is in this budget is small, less than 6% of the total reserve funds." He also accused Lee of overstepping his authority and said the council is seeking legal counsel from DC's Attorney General Brian Schwalb on how to proceed. Mendelson has taken aim at Lee in the past, accusing him of "hoarding cash," but this latest clash over funding is raising concerns that if Lee declares the budget unbalanced, this could open the door for Republicans on Capitol Hill to intervene in DC's finances.

Attributed analysis: This is not merely a bookkeeping dispute. The dispute — in which neither side yet seemed willing to blink — could have significant implications, potentially attracting congressional intervention and throwing D.C.'s long-standing fiscal stability into question. With Republicans controlling Congress and already scrutinizing D.C.'s autonomy on multiple fronts, a formal declaration of fiscal imbalance by the CFO would be a significant political gift to those seeking to curtail home rule.

Mendelson's legal backstop: Council Chairman Phil Mendelson is consulting Attorney General Brian Schwalb about how to move forward. Two years ago, Schwalb wrote in an opinion that the CFO's "failure to certify an otherwise valid budget would have no legal effect."

Critics in the budget community were blunt about the structural problem. Ward 7 Councilmember Wendell Felder said at the vote: "If we do not begin to make difficult decisions in the near future, we may very well find ourselves in the same position next year, facing many of these same challenges." And the DC Council voted unanimously to give initial approval to the city's nearly $22 billion FY2027 Budget and Financial Plan — even as they were adding more than $400 million in one-time funding to cover expenditures, which could be characterized as the epitome of performative, patronizing fiscal management that risks the city's financial standing.

The Democracy Dividend: 86,000 Independents Can Now Vote in Primaries — Starting in 2028

Buried in the same budget bill, but of equal long-term significance, is the final piece of voter-approved Initiative 83. Via an amendment to the Local Budget Act approved as part of the second vote on the measure, the second half of Initiative 83 — semi-open primaries — are not just the law of the land but now will also have the funding to be put into effect for the 2028 primary elections. Under semi-open primaries, District voters who are registered as independents will be able to vote in the party primary of their choice. District voters who are registered members of a political party must still vote in that party's primary election.

The council voted 9-2 to allocate $1.1 million toward semi-open primaries from 2027 through 2030. At-Large Councilwoman Christina Henderson, who is not affiliated with a party, introduced the amendment to add the funding to the 2027 budget.

The backstory: In November 2024, more than 72 percent of D.C. voters approved Initiative 83, which proposed that the district adopt a ranked-choice voting system for its elections starting in 2026, and open its primaries to voters who are not affiliated with a party. Ranked-choice voting was funded earlier, allowing it to be used in the June 2026 primaries — but the open-primary component had been left unfunded, after outgoing Mayor Muriel Bowser did not include funding for the initiative in her proposed 2026 budget.

Lawmakers voted to spend $1 million to open those primaries to D.C.'s 86,000 independent voters, who can currently only cast ballots in general elections. Councilmember Henderson made the stakes plain: "We all have constituents who are federal employees and are not affiliated with a particular party, or simply residents who have not chosen to join a party. They deserve a meaningful voice. We should not be telling our residents that our price of admission to democracy in the District is changing their voter registration."

Notably, Mendelson voted against the semi-open primary change, saying political parties should control their own nomination process: "It doesn't make sense to me that non-Democrats would choose who the Democratic nominee is." With the funding now approved, semi-open primaries are expected to be in place for the 2028 election cycle.

Analysis: The independent voter provision is arguably one of the most consequential structural changes to D.C. democracy in a generation. In a city where Democratic primary winners almost always go on to win general elections — and where an overwhelming majority of the District's registered voters are Democrats, meaning many races are effectively decided in the primary — extending the primary ballot to tens of thousands of unaffiliated residents fundamentally reshapes who decides D.C.'s political future.

What Comes Next: Congressional Review and a New Mayor's Inheritance

The budget will go to the mayor and then for a 30-day congressional review period. That review period is not merely procedural. With Congress already scrutinizing D.C.'s tax code and autonomy, and with the CFO dispute casting a shadow over the budget's legal certification, the 30-day window is a period of genuine vulnerability for the District.

The budget also sets the table — and the challenges — for whoever wins the mayoralty in November. Whoever takes office in January 2027 will inherit a budget that used one-time reserve funds to patch structural gaps, with the CFO's warning about long-term fiscal stability still unresolved. Many councilmembers expressed concerns the body was only filling gaps for a year, setting the new mayor and council up with many of the same issues.

What D.C. Residents Should Watch

• CFO's formal declaration: Watch whether CFO Glen Lee formally certifies the FY2027 budget as balanced or follows through on his threat to declare it "unbalanced." A formal finding could trigger congressional scrutiny of D.C.'s finances within days. Track updates at cfo.dc.gov.
• Attorney General's legal opinion: Council Chair Mendelson has asked Attorney General Brian Schwalb to weigh in on whether the CFO can legally block the council's use of reserves. Schwalb's response will determine how the two sides proceed — and whether the standoff escalates. Follow the Office of the Attorney General.
• Congressional 30-day review window: The FY2027 budget now enters the federally mandated congressional review period. Given the ongoing effort by some members of Congress to restrict D.C.'s financial autonomy, residents should watch for any action by House or Senate oversight committees. Check WTOP and The DC Line for developing coverage.
• ERAP and housing voucher contingencies: Whether emergency rental assistance and housing voucher programs receive their full contingency funding depends entirely on FY2026 revenue coming in above the CFO's estimate. Residents relying on these programs should monitor year-end revenue reports from the Office of the CFO.
• Voter registration for semi-open primaries in 2028: Independent voters do not need to take any action today, but the DC Board of Elections will begin education and outreach efforts funded by the $1.1 million appropriation. Watch dcboe.org for registration and participation guidance as 2027 draws closer.
• What the next mayor inherits: The November general election will determine who takes over a government with structural budget gaps, a contested relationship with its own CFO, and a new democratic architecture to manage. Follow the mayoral race coverage at The DC Line and Axios D.C.

Sources: WTOP; WUSA9; NOTUS; Axios D.C.; The DC Line; Street Sense Media; DC Council (official); The Hill; DC News Now / WDCN; DC Fiscal Policy Institute.