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D.C. Needs More Help Than Clinton Plan Would Provide, Studies Say

Congress should provide the ailing District government with a more generous combination of funds and management support than President Clinton's rescue plan for the city proposes, according to a pair of new studies slated for release today.

The District would continue to struggle with costs and burdens greater than other cities even if Congress adopted the entire White House proposal, according to a study by the D.C. financial control board. Because it lacks the support of a state government, the District needs more substantial federal assistance to pay for maintenance of roads, health-care programs and other activities, the study says.

Stephen D. Harlan, vice chairman of the control board, said the District government spends an estimated $1.1 billion a year on Medicaid and other programs that are paid for elsewhere by state governments. Harlan said numerous independent studies have documented this problem for years with little federal reaction. But he predicted that this time, the congressional response would be positive, despite the city government's reputation for waste and inefficiency. "It is a simultaneous equation," Harlan said. "Management has got to improve, and there has to be more funds. It absolutely has to be both. I believe Congress understands that."

Under Clinton's proposal, the federal government would take responsibility for a multibillion-dollar shortfall in a D.C. pension plan, fund the D.C. courts, house D.C. inmates, provide tax breaks to spur the D.C. economy and take other steps. In exchange for the fresh aid, the city would be required to give up an annual $660 million federal payment.

A new joint study by the Federal City Council and the D.C. Agenda Project says Congress should continue to provide the city with the annual federal payment. Although the White House plan would help the District cut program expenses, it would not offer the revenue needed to meet growing costs, making retention of the federal payment essential, the study by the business and civic leaders says.

Charles Miller, a partner at the law firm of Covington and Burling who was co-chairman of the group that produced the study said the federal payment should be at least $400 million to $500 million annually and grow predictably over time. He said the payment is needed because Congress has prohibited the city from taxing federal land or the income of commuters, who compose about two-thirds of the D.C. work force.

Miller said Congress should make continuation of the federal payment contingent on District officials cutting local income taxes to a level comparable to other jurisdictions in the region. He said a tax cut would bolster the city's economy and foster growth.

Rep. Thomas M. Davis III (R-Va.), chairman of the House Government Oversight D.C. subcommittee, called the Federal City Council report "interesting." Davis has said he would like to retain at least a part of the federal payment and see the D.C. government reduce taxes and the regulatory burden on business. But he also said that many legislators on Capitol Hill lack confidence that additional money given to the city will be spent wisely.

"The real questions for Congress are, 'What additional money should be put into the process?' and 'Will the money be spent efficiently?' " Davis said. "We are going to work our way through this issue."

Davis defended the broad outline of the Clinton administration's D.C. proposal, saying it would put the District on the right course. Although people can disagree over how much support the federal government should provide, he said, the Clinton administration deserves respect for coming forward with a serious proposal.

The control board study compared the District with eight other major cities, all of which enjoy considerable state government support. For example, the other cities included in the study pay nothing for Medicaid, the health care program for the poor, because that cost is shared by their state governments and the federal government.

Under current law, the District pays the highest possible rate of 50 percent of Medicaid costs, which amount to more than $350 million a year, and the federal government pays the other half. The Clinton administration has proposed increasing the federal share of the District's Medicaid expenses to 70 percent, but the control board urged that the federal proportion be at least 80 percent.

The control board also wants $60 million more in federal aid for roads than the Clinton administration proposes -- or the ability to impose tolls on D.C. streets and bridges -- and more federal support for D.C. mental health programs. Elsewhere, such programs have state support.

Harlan described the Clinton administration's proposal as a "good first step" but said, "It doesn't go as far as I'd like to have it go."

© Copyright 1997 The Washington Post Company

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