The bottom line: The mayor and council have to find at least $190 million to balance this year's budget, which runs until Sept. 30. (That number may rise; the CFO has identified $87 million in overspending, too, but that can be offset by underspending and other cuts yet to be identified.) Finding the money, actually, isn't hard: The city's budget reserve can cover it, but at least half would have to be paid back in the next year's budget.

And for that budget, passed by the council last month, they'll have to find another $150 million in cuts even without having to refill the reserve. Add that in, and it's at least $245 million.

Council finance guru Jack Evans says tapping the budget reserve, with only three months left in the fiscal year, "probably makes sense." But he counsels that all of it should be paid back in 2010 to avoid exacerbating other budgetary issues lingering in the 2011 budget.

The shortfalls, according to Gandhi, can be attributed to declines in each of the three major taxation areas: Income tax receipts are down, with declining income and investment losses leading to larger refunds. Property tax collections are underwhelming, too, due to vacant properties being given exemptions from high rates and from a spate of refunds that had been held back pending investigation into the OTR scandal. And sales and use taxes---particularly tourism-related taxes---are precipitously falling.

"The uncertainties surrounding the nation and District economic outlooks remain very worrisome and require careful monitoring," Gandhi writes.

If the council were to decide, as Evans suggests, to borrow from the reserve for this year and pay it all back in 2010, it would have three weeks to find $340 million in cuts before sending the 2010 budget to Congress before its summer recess.

"We'll do it," Evans says. "We've done it before."

The Office of the Chief Financial Officer is announcing this evening that Standard & Poor's, one of three outfits that rate municipal debt, has given the District a "AAA" rating on a recent bond issue. That's S&P's top mark.

In a statement, CFO Natwar Gandhi calls it "a gilt-edged rating."

Now it's not quite accurate to say that the new rating represents a rise in the District's credit rating, since S&P is passing judgment on a new type of debt instrument, something called income-tax-secured revenue bonds only recently authorized by the D.C. Council. But according to City Administrator Dan Tangherlini, this bond issue is "practically the same as" and "will do the same work of" general-obligation bonds---whose ratings are most commonly cited when referring to the District's creditworthiness.

The District's GO bond rating has been rated by S&P at the medium-investment-grade "A+" since November 2005. Tangherlini declined to say whether he thought corresponding rises would be in order for ratings on GO bonds and other city debt. A look at the bond rating history for GO issuances shows that S&P has been historically the first agency to grant the District ratings hikes in the post-control board era, with other players Fitch and Moodys following close behind.

So what's it all mean?

Most importantly, it means that the District will pay less in interest and related debt-service costs when it needs to borrow cash from Wall Street. Which is good, considering the hundreds of millions the District needs to cut from the fiscal 2010 budget---Gandhi estimates $4 million in savings in 2010 alone.