It's much too soon to draw many conclusions from a new study by the Greater Washington Research Center that shows the District's population is rapidly declining rather than stabilizing as most officials believed. Still, the study by Eunice Grier, of the Grier Partnership, raises questions not only about the District's tax base in the future but about its economic well-being.
As previously reported in The Washington Post, the basic finding in the study is that demographic trends in the next 10 years are likely to increase demands on municipal services. At the same time, taxpayer capacity to pay for those services is likely to lessen as the demographic trends continue, Grier noted in a study titled "The Changing Population of the District of Columbia."
Neither those findings nor recent disclosures by officials that the city faces a revenue shortfall bode well for the economic health of the District. Costs and demand for services will increase as the city loses population and a significant portion of its tax base. Households with lower incomes will increase faster than those at the upper end, Grier suggests.
A summary of related findings in the study is even more sobering. D.C. government expenditures for human services, public safety and education have all soared in recent years while revenue growth has slowed, Grier noted. "Budget deficits now loom as a serious prospect," she warned.
Potential deficits loom even larger in the context of Grier's finding that the District is losing mature citizens, many of them in their peak earning years. From 1980 to 1990, the District lost an estimated 9,000 persons between the ages of 18 and 64, according to Grier. "The greatest decline has been and will continue to be in the younger working-age groups under age 35," she estimated.
A substantial portion of that earning power -- real and potential -- as well as tax revenue, is shifting to Washington's suburbs.
This is by no means a continuation of the white flight that marked population shifts in the 1950s and early 1970s. Middle-income blacks are leaving also. Blacks moved out in such numbers during the 1970s that the District lost 118,000 residents, according to Grier. More than half of all blacks in metropolitan Washington now live in the suburbs, she noted.
In the meantime, revenue growth in the District has been declining since 1984. That's been exacerbated by the White House's and Congress's stubborn refusal to raise the federal payment to the District. The federal payment -- a contribution in lieu of taxes to compensate the District for the impact of the federal presence -- has changed little since fiscal 1985 and continues to represent a declining share of the city's budget.
The federal payment that President Bush recommended in the fiscal 1991 U.S. budget will finance only 13 percent of the District's fiscal 1991 budget, the lowest ratio in 25 years, say city officials. About 85 percent of the District's expenditures are supported by local taxes, service charges and fees, according to the D.C. Budget Office.
The fiscal ramifications of all this, when added to the implications of the research center's study, are pretty strong stuff. But is it enough to snap the District's mayoral candidates out of their political paralysis, brought on by a seeming reluctance to debate the issues while the incumbent faces criminal charges on alleged drug use?
If nothing else, the Grier study focuses attention on the District's economic health. It is a demographic study but strongly suggests that the District government needs to redefine its economic development goals and policies. The passive policy of relying primarily on real estate developers and traditional elements of the business services sector -- law firms, accounting firms and trade associations -- to drive economic development is no longer adequate.
Somehow, the District has to find a way to compensate for the decline in population, household income and tax revenue. It has, as Grier described it, a "disproportionate share of the area's low-income population" and a "disproportionately small share of the area's high-income households."
The loss of population may be attributed to a positive lure from local jurisdictions or other parts of the country as much as a negative push from the District, as Atlee Shidler, president of the Research Center, speculated. No one knows all the reasons.
Two things seem certain, however. The decline in population and the District's limited ability to raise additional taxes demand the adoption of an aggressive policy of attracting and retaining corporate and residential taxpayers. That ought to be done even if the White House ceases what amounts to economic strangulation.
In an earlier study for the Research Center, Stephen S. Fuller, chairman of the department of urban and regional planning at George Washington University, recommended the following:
"The District should place improvement of its housing and residential environment among its primary economic development priorities. A strong residential base in the District is essential to building a strong employment base, retaining local earnings and strengthening local retail service establishments."
That's as true today as it was almost three years ago when Fuller authored the study entitled "The District of Columbia's Changing Economy and Its Future Growth Opportunities."
Both studies -- Grier's and Fuller's -- can form the basis for a new and enlightened approach to economic development in the District.