Five key staff members in Mayor Marion Barry's office were given raises or promotions just four days before Barry announced a freeze on all hiring and promotions in the city government.
Dwight S. Cropp, Executive Secretary of the District government said that Ivanhoe Donaldson, the mayor's general assistant, was given a merit raise and that Lillian Sedgewick, a special assistant to Barry, and Marlene Johnson, the mayor's deputy legal counsel were both given raises based on advances in civil service grade.
Marie Dias, formerly a special assistant to Donaldson, was made a special assistant to Barry, and Sybil Hammond, Barry's appointments secretary, was also made a special mayoral assistant.
All five work in the mayor's suite of offices on the fifth floor of the District Building, and all are politically close to the mayor.
The raises and promotions were made on Feb. 25, just four days before Barry ordered a freeze on hiring and promotions for city government employes as part of an emergency program to avoid an estimated $172.4 deficit in the current city budget.
Several days later, Barry announced a series of new or increased taxes and users fees expected to total $24.1 million that will fall heavily in the city's commercial and business interests as a major part of his effort to make up the shortage.
Cropp said last night that the timing of the raises for Barry's office personnel was "coincidental." He said that in December, Barry began a series of meetings with his staff to assess performance during the past year and plan for the future, and that the promotions and raises were the result of those meetings.
The raises to the five assistants ranged from about $2,500 for Donaldson to about $4,300 for Johnson, Cropp said.
Earlier yesterday, local business leaders reacted angrily to Barry's proposed increases in business taxes, and blamed the city's financial crisis on an oversized District bureaucracy.
Barry received a chilly reception from members of the Greater Washington Board of Trade, who asked him pointed questions yesterday on his proposals to erase the city's projected budget deficit.
The session was part of a well-orchestrated plan to win support for the Barry budget-balancing proposals. Earlier this week, Barry briefed city employes and his political supporters on his proposed budget cuts, and he plans two television appearances this weekend. The briefing yesterday, however, was his first foray into clearly enemy territory.
Barry's proposals would place an increased burden of $9.3 million squarely on the shoulders of the business community this fiscal year in the form of higher taxes on commercial real estate and business equipment. Businesses would also be affected by a proposed 5 percent sales tax on professional and personal services.
"The end result of all taxes is higher unemployment and more inflation, which none of us want," Board of Trade president Ralph Frey said in introducing the mayor.Frey said the taxes would eventually be passed on in higher costs to the consumer, and called on Barry to take the "courageous and firm action" of further reducing government expenditures.
Barry told the business leaders that while his tax increases and spending cuts would balance the budget this year and produce a surplus of $12.6 million next year, by 1983 the city would once again be facing a major budget deficit of around $94 million.
He also said that he and his advisers have projected that the District may have a negative cash balance in coming weeks. He said such situations would be handled by controlling disbursements and, if necessary, by short-term borrowing.
However, the major thrust of the session was the immediate effect of the tax increases and the relative size of the government work force.
"I think justification of these increases requires a more basic understanding of the size of government," said developer Oliver T. Carr Jr., who along with others complained afterwards that Barry had not adequately answered a question he posed about how the size of the D.C. bureaucracy compares with other cities.
Barry told the business leaders that "we've gone about as far as we can go" in reducing the District payroll -- from about 36,000 employes in 1975 to about 32,000 now. He said his planned cutbacks would reduce the work force to less than 31,000 by September.
But Kenneth Luchs, president of the D.C. Board of Realtors, said, "It appears the mayor himself can't answer our questions. How do we know how Washington compares to other cities? I wish somebody could find out for us so we would have some basis for discussion."
John O'Neill, president of the Apartment and Office Building Association of Greater Washington, said he was "sure some cuts are still available" in the employment rolls. He suggested that the D.C. government is top-heavy, with high paid workers, and that some of those salaries might be reduced.
Barry said Washington was "roughly comparable" in size to San Francisco, which is both a city and a county and which Barry said he believes had "around 33,000" employes.
Luchs, O'Neill and others involved in real estate complained strongly about Barry's proposal to double the tax for recording deeds at the time of sale or transfer of property -- which they say will make potential buyers. even more reluctant to enter a sluggish real estate market.
And there was an audible gasp around the large conference table when Ed Meyers, an assistant to Barry's director of finance and revenue, told the business leaders that the proposed 5 percent tax on services would apply to real estate management fees and sales commissions.
In an opening statement, Barry sought to head off criticism of his decision not to touch residential property tax rates and instead recommend an increase in the commercial property tax rate.
Barry said that over the past five years, residential property assessments have increased an average of 158 percent, while commercial property assessments have increased an average of only 54 percent. "Logic would lead you to conclude that you could not go here (to the residential sector) unless you really had to," Barry said.
But O'Neill complained that the proposed 30-cent increase in the tax rate would make suburban areas even more attractive to developers and potential office tenants.
Real estate attorney R. Robert Linowers asked pointedly if Barry were considering imposing further tax increases if the city does not receive the $61.8 million supplemental appropriation that Barry is seeking from Congress. $6
"Not this year," Barry replied. "I don't plan to propose this fiscal year any additional taxes."