The House Budget Committee has voted to slash $61 million from next year's federal payment to the District of Columbia as part of the congressional inflation fighting drive to achieve a balanced national budget.
The action, disclosed yesterday, threatens to continue the city's current severe financial crisis into the 1981 fiscal year, which begins Oct. 1.
If both houses of Congress concur in the committee recommendation, it could have a "devastating effect" on city operations, Mayor Marion Barry testified at a Capitol Hill hearing.
Coupled with a probable reduction in the federal revenue-sharing program and the District's already tight financial situation, such a congressional cutback in the federal payment could throw next year's fiscal 1981 city budget as much as $100 million out of balance, Budget Director Gladys Mack said.
The city already is struggling with a financial crisis that could produce a deficit as high as $172 million by the end of the current 1980 fiscal year. Barry predicted again yesterday that it will be averted by his program of budget cuts and proposals for tax increases.
The payment cut -- the latest and potentially most devastating blow to the city's increasingly shaky financial structure -- came as Barry opened testimony before the House District Appropriations subcommittee on the delicately balanced $1.5 billion operating budget for the new fiscal year, which started Oct. 1.
The session was the first conducted by the subcommittee's new chairman, Rep. Julian C. Dixon (D-Calif.), a native Washingtonian who told Barry that "if we work together" the city should weather its crisis.
To help finance the budget, the District is seeking a federal payment of $300 million -- the maximum currently permitted by law. President Carter, seeking a change in that law, has proposed a $301 million payment, which would rise in future years.
Congress never has granted the full $300 million that is now authorized. Last year, it voted $238.2 million for the current budget.
The federal payment is an annual contribution appropriated by Congress to reimburse the District for tax revenues it cannot collect on government and foreign embassy property and for unusual municipal expenses related to the city's role as the nation's capital.
Before World War I, the payment provided half of the District budget. That proportion has dwindled over the years and the federal payment is now about 17 percent of the city's budget. t
The House Budget Committee, which is separate from the Appropriations Committee, voted last week to adopt a national budget ceiling that would hold the line on the federal payment to the District along with many other assistance programs to states and cities. Overall, the panel agreed to cut $16.5 billion from a new version of Carter's original January national budget.
A staff member said the Budget Committee's explicit intention was to hold the payment to the District at the same level as in the current year.
However, the $238 million payment is not all that the District hopes to get from Congress this year. The City Council is expected to vote today to ask the White House and Congress to approve a supplemental appropriation that would bring the total payment this year to the full $300 million that is authorized.
Under congressional budget procedures, the lawmakers adopt periodic resolutions setting budget totals the appropriations committees are not supposed to exceed but sometimes do.
Because the D.C. federal payment reduction is buried in the small print of documents detailing cuts in the $600 billion-plus national budget, it did not come to light until yesterday. Rep. Louis Stokes (D-Ohio), a member of both the Budget and the D.C. Appropriations panels, mentioned it almost casually to the mayor, who replied that he had heard rumors but knew no details.
Barry went no further than saying such a cut would have a "devastating effect" on city operations. He refused later to amplify that comment.
The federal payment cut would be added to a threatened $9.4 million reduction in the District's share of the federal revenue-sharing program.
Congress, in preparing to extend the life of the revenue-sharing programs, is expected to eliminate all aid to states while keeping it for cities. The District, which functions as both a state and a city, has projected that it will get $28.3 million next year, of which $9.4 million would be its state share. The cut would leave the city with $18.9 million.
Funds from revenue sharing are earmarked for a long list of city activities, including crime prevention, firefighting, paying the city's bill for boarding its felons in federal prisons, subsidies for schoolchildren on Metro and street cleaning. The largest single chunk, $6 million, would help finance the retirement fund for District school teachers.
Budget director Mack testified before the Appropriations panel yesterday that the proposed 1981 budget, drafted prior to the current city financial crisis -- is actually out of balance by $36 million. She and Barry said a revised version, bringing it into balance by program cutbacks and proposals for tax increases (the same ones he has already proposed to the City Council), will be submitted soon to Congress.
Mack told a reporter later that the combined effect of possibly losing $61 million of the federal payment and losing the $9.4 million in revenue sharing, when added to the existing imbalance of $36 million, would leave the city more than $100 million short of financing the 1981 budget.
But Mack cautioned that "we are talking about really iffy situations," and refused to be glum about the city's prospects.
Mack told the congressional panel that the federal Office of Management and Budget "has not yet agreed whether to fund the supplemental" appropriation that would provide the city with the remainder of the full $300 million of the authorized federal payment this year.
Even if OMB agrees, the city faces a problem with the supplement on Capitol Hill as a result of the Budget Committee's belt-tightening efforts. cA committee staff member said Congress has exhausted its current authority to pass supplemental bills and a new budget resolution soon to be drafted is likely to approve spending at a much lower level than in past years. d
The budget hearings, which will continue into late April, will resume today.