Senate Panel Recognizes D.C. Structural Deficit
By Spencer S. Hsu
Washington Post Staff Writer
Wednesday, June 23, 2004; Page B03
A Senate panel acknowledged yesterday that the nation's capital labors under an annual $470 million to $1.1 billion deficit because of federal limits on its tax revenue and requirements for services.
At a hearing, the Senate Appropriations subcommittee on the District added its weight to a growing push by Mayor Anthony A. Williams (D) and supporters in Congress for, potentially, billions in new federal dollars in coming years to offset rising health insurance, Metro subsidy and debt payments.
A General Accounting Office report last year concluded that the District government bears a unique burden of operating without state support and competing with high federal salaries and office rents. The GAO calculated the structural deficit at $470 million to $1.1 billion.
"I believe that the federal government must recognize the costs it places on the city and the burden it places on the city's infrastructure," said Sen. Mike DeWine (R-Ohio), the subcommittee's chairman, calling the hearing the "first step" in a drive by Congress to head off a "financial catastrophe" for the District.
"It is our duty and our responsibility to make sure that this city is placed on solid financial ground," DeWine said.
In prepared remarks submitted for the record, Sen. Mary Landrieu (La.), the panel's top Democrat, said, "This is the right time to revisit the current relationship between the District and Congress."
The statements came as some House and Senate members organized for what they expect will be a multiyear drive to pass legislation to prevent a repeat of the financial problems the city encountered in the 1990s, when the city had $600 million in deficits and was on the verge of bankruptcy.
Now, with the District continuing an eight-year fiscal comeback of balanced budgets and rising bond ratings from Wall Street, Del. Eleanor Holmes Norton (D-D.C.) has proposed an $800 million-a-year federal payment to cover D.C. debt payments and costs associated with infrastructure such as roads, schools and sewers.
Co-sponsoring Norton's measure is a bipartisan group of Washington area House members: Virginia Republicans Thomas M. Davis III and Frank R. Wolf and Democrats Steny H. Hoyer (Md.), the minority whip; Elijah E. Cummings (Md.), chairman of the Congressional Black Caucus; James P. Moran Jr. (Va.); Albert R. Wynn (Md.); and Chris Van Hollen (Md.).
Pepco executive Ted Trabue, chairman of the Greater Washington Board of Trade's D.C. Political Action Committee, testified that the Norton measure is critical to sustaining the District's economic renaissance.
The GAO report said that even management improvements "will not offset the city's underlying structural imbalance because it is caused by factors beyond the direct control of District officials."
Among its other findings, the GAO said the gap leads to a cycle of debt, deferred investment in schools, roads, bridges and sewers and population flight. The GAO said either raising taxes or cutting services likely would be counterproductive to the District's economy, since its tax rates are among the highest in the country.
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