The Carter administration has proposed to cut federal funding of a District of Columbia pension program to half the amoung sought in legislation pending in Congress, an action that could deal a fatal blow to the measure.
The decision by the Office of Management and Budget to trim the support would add about $20 million a year to the city's precariously balanced budget and ultimately cost local taxpayers an estimated $400 million.
However, the OMB action brought such an angry reaction from congressmen who attended a White House task force meeting Tuesday that the administration is expected to reconsider its stand, according to participants in the meeting.
James Dyke, an aide to Vice President Mondale, who heads the task force, said the pension issue would be reviewed along with other matters dealing with District finances before recommendation is made to the President.
Formation of the task force, to set a federal "agenda" for congressional and administrative action on District matters, grew out of a meeting of congressmen with the President in March.
At that time, the House District Committee already was considering a bill - modeled on one that was considered but not enacted last year - to put the city's pension programs for police, fire fighters, judges and teachers on an actuarially sound basis.
At present, the city has no established pension funds for these groups of employees. It includes pension payments, currently $69 million annually, in each year's operating budget. The city's unfunded debt, which ultimately must be paid, now totals around $2 billion.
Other city employees are included in federal civil service pension programs.
The decision not to create pension funds was made by Congress in the 1930s. Because House District Committee members agreed with city officials that the program ought to be put on a solvent basis, the pending bill was drafted, subjected to hearings and endorsed April 24 by the committee. It would relieve District taxpayers of $800 million of the pension burden in annual payments to be made over the next 25 years.
On May 10, James M. Frey, an assistant director of OMB, sent a belated report on the bill to Rep. Charles C. Diggs Jr. (D-Mich.), chairman of the District Committee. Ordinarily, such reports are sent before hearings are held.
Frey said the administration would support a bill cutting the federal contribution in half, to $400 million. "In examining the present situation, our view is that the federal government, as one of the many District 'taxpayers,' has borne fully its share of the costs of the current (pension) systems through the annual federal payment" to the city, Frey wrote.
Frey's boss, OMB director Bert Lance, reaffirmed the position in a letter to Diggs on May 14.
Rep. Romano L. Mazzoli (D-Ky.), chief sponsor of the pension measure, said he warned at the task force meeting that more federal assistance is necessary and deserved.
"In the lexicon we use around here (on Capitol Hill), it may be a fatal blow to the bill" Mazzoli said.
Diggs said he would delay any attempt to get the bill passed by the House until a final decision is made by the administration.