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After '96 Effort to Shrink D.C. Government, a Mountain of Tasks Remains

It wasn't supposed to end this way.

After the five members of the D.C. financial control board delivered their prepared remarks and completed their final scripted round of budget cutting for 1996, they sat around Friday talking frankly about how difficult it has been to turn the District government around. One by one, the once-optimistic presidential appointees lamented their inability to bring swift improvements.

We made a significant "error" in the budget process, acknowledged board Chairman Andrew F. Brimmer: Because city managers weren't held accountable for millions of dollars in cuts, they didn't happen.

We've made only "marginal progress," conceded Vice Chairman Stephen D. Harlan. Contracting and personnel systems remain in disarray; financial information is still questionable. Bureaucracy, complained Constance B. Newman, is blocking implementation of new ideas.

Joyce A. Ladner offered the darkest assessment of all: "We can balance the budget a lot more easily than we can fix the system."

As 1996 draws to a close and board members reach the halfway mark in their three-year terms, much work remains before the District fulfills President Clinton's vision of a "city that works" and Mayor Marion Barry's goal of urban "transformation."

Crime, underachieving schools, high taxes and an unwieldy city bureaucracy are routinely cited by residents fleeing to the suburbs. In the 1990s alone, the city has lost more than 50,000 residents, and Del. Eleanor Holmes Norton (D-D.C.) has warned repeatedly that only radical changes will stop the hemorrhaging.

Still, 1996 was a year of extraordinary upheaval in a city government known over the years for resisting change rather than embracing it. Barry, long a defender of the government's size, declared in February that it was too big and needed to shrink from 40,000 workers to 30,000 workers. His "transformation plan" called for privatizing more services, improving efficiency and dealing with residents in a friendlier manner.

The control board, after engaging in skirmishes with the mayor, grew increasingly assertive. It forced a member of Barry's Cabinet to resign despite racially tinged protests, rejected millions of dollars of questionable contracts with some of the mayor's associates and quashed numerous bills approved by the D.C. Council.

The board then swung into action with full force on the D.C. public schools.

Saying the schools were failing to provide children with a decent education, the board brushed aside home rule defenders and fired school Superintendent Franklin L. Smith, revoked most of the D.C. school board's powers just days after the November elections and put Julius W. Becton Jr. and a new panel of trustees in charge of the system.

In the new year, the board will complete major reviews of the University of the District of Columbia and the police department that Brimmer says will lead to noticeable improvements.

A year ago, control board officials were criticized for "not doing anything," said D.C. Council member Jack Evans (D-Ward 2). But after taking forceful action on the schools and other matters, the board has become "a player," he said.

The council, for its part, struggled through the year without a strong sense of direction, and it failed to establish solid lines of communication with the control board. "Unfortunately, the council really can't seem to find its own way," said D.C. Council member Harold Brazil (D-Ward 6).

But in recent months, council members showed that they, too, could help steer the city. They voted to slash welfare benefits and approved a resolution calling for cuts in youth programs and at UDC -- which the control board adopted despite Barry's objections.

Along the way, Brimmer told Congress the board was pushing the District toward a balanced budget by 1999. But the pace was too slow for congressional Republicans, who decried the city's payroll as bloated and whacked $25 million out of the 1997 "consensus" budget that Barry, the D.C. Council and the control board had endorsed.

With the end of the year nearing, and the familiar sound of cut, cut, cut echoing all around, control board members reached the same conclusion that Barry and other D.C. leaders had come to years before: Cuts alone would not fix the city's problems.

The question was what to do about it. Recognizing that Washington is not just any city, but the nation's capital as well, they figured there must be something more that the federal government could contribute. But behind closed doors, Franklin D. Raines, a top presidential budget adviser, had told control board officials that the city needed to improve its management and reduce spending further before it could make a strong case for more federal funds.

With the clock ticking, control board members said they began to fear that their tenure might end with a balanced budget but a bleeding city still in decline. For the conservative fiscal panel, the time had come to take a calculated political risk.

On a cool December day, all five board members appeared at a news conference to ask the federal government to take responsibility for about $1 billion in D.C. programs -- including Medicaid, road and bridge maintenance, pensions and prisons -- that typically are paid for by state governments. Barry had made the same plea last year but had been rebuffed.

The board waited anxiously to find out how the president -- who had eschewed District affairs during his first term after political advisers urged him to avoid close association with Barry -- would respond.

At first, Clinton and other White House officials said that they didn't know much about the proposal's details but that it sounded too costly. But with first lady Hillary Rodham Clinton eager to make revitalizing the District a priority of her own -- and local criticism of the president's hands-off approach mounting -- the administration reversed course within a day.

To ensure prompt and clear communication of the president's new message, White House officials contacted Dave McConnell, a veteran local radio reporter, and made sure he attended a news conference Dec. 13 and asked a question about the District. They even reserved a special chair for McConnell, so Clinton would know just where to find him.

When the question came, Clinton, a quick study on economic and political matters alike, suddenly appeared well-versed in District issues. With television cameras rolling, the president said that the capital city suffered from a "not quite" factor; it was not quite a city, not quite a state, and it needed more federal support.

"The American people need to understand the unique challenges facing Washington," Clinton said. " . . . I promise you a more serious effort."

Inside the administration, Cabinet members went to work on a D.C. aid package to include in the federal budget submitted to Congress in early 1997. But concerns lingered that the president's strong public commitment to the city would ease pressure on the mayor and control board to cut costs. Raines, an expert on the District's finances, knew that for all the talk of D.C. spending reductions and job cuts, the actual results had been overstated.

The city government still spends more than $5 billion a year, just as it had before the control board was created in the spring of 1995. Despite a large drop in its population over the last decade, the city has not reduced spending -- in part because an increasing proportion of D.C. residents are poor and need assistance.

The control board has shifted spending priorities: Tax dollars are being directed toward public safety, public works and public schools and away from salaries for other administrators. And instead of projecting spending increases and spiraling budget deficits, the D.C. government is planning for leaner times and smaller annual shortfalls. Yet overall, the total amount spent by the government annually has not changed much.

"We have succeeded in arresting the increase," Brimmer said. "Our task now is to achieve actual reductions."

Making substantial additional cuts without harming city programs won't be easy, in part because the city still lacks detailed information about what it really costs to pick up the trash, educate children and provide other core services. "You are talking about doing laparoscopic surgery with a meat cleaver," said D.C. Chief Financial Officer Anthony A. Williams. "It doesn't work."

As for Congress's major beef -- the size of the payroll -- Brimmer said the board has failed to force reductions rapidly enough. While boasting of his willingness to make tough decisions, Barry recently said that he cut about 10,000 jobs from the District government. But a review of internal D.C. payroll data shows that the mayor's claims are exaggerated. The government has reduced the number of jobs under the mayor's control -- but the reductions haven't been as large as Barry says or as dramatic as Brimmer wishes.

The payroll of the District government and a series of new off-budget entities it has created now stands at about 37,194, down from 40,377 a year ago. That means 3,183 jobs have been cut. More than a third of the positions were in the public school system, where the mayor has little control.

"We did not make as much headway as I had hoped we would in reducing [the] payroll," Brimmer said. "We will take steps now to make certain that we don't just get paper cuts and that we get real cuts."

By paper cuts, Brimmer is referring to a kind of sleight of hand that makes it look as if jobs have been eliminated when they actually have been transferred to different accounts. For example, the District government moved about 1,146 employees this year from its payroll to the new D.C. Water and Sewer Authority, which is run by one of Barry's Cabinet members. Nobody lost a job, but the mayor says those 1,146 positions have been eliminated since they no longer appear as part of the official D.C. budget.

Barry made 6,944 jobs disappear from the city payroll this year. But more than half of those positions -- about 3,760 -- actually were transfers to new D.C. government entities, such as the Water and Sewer Authority and a new city holding company that will oversee D.C. General Hospital.

City Administrator Michael C. Rogers said the job transfers should be tallied as real reductions because the local government is no longer financially responsible for the operations. "It has been a year of solid progress," he said.

But Rogers also noted that the Water and Sewer Authority is part of the D.C. government. And he agreed that if D.C. General Hospital ran into major financial problems, city officials would have to consider pumping in more money before allowing it to shut down.

For most District residents, the arcane issues of budgeting matter less than the condition of city streets, the safety and cleanliness of neighborhoods and the quality of schools. With a new D.C. sports arena under construction, the prospect of White House aid on major financial problems, and both the control board and the mayor pledging service enhancements across the city government, the year ahead offers promise. But signs abound that basic problems must be solved -- and choices made about what services the city can afford -- before daily life in the capital gets better.

Said Rep. Thomas M. Davis III (R.-Va.), chairman of the House Government Oversight D.C. subcommittee, "We are moving in the right direction, but we still have far to go."