D.C. Mayor Marion Barry predicted flatly that the District government will run out of money next year unless the city is able to carry out his proposal to borrow $215 million through the federal government.
"At some point in 1981, if this government doesn't get this relief we're going to run out of money, and that's a fact, Barry told the City Council.
A cornerstone of Barry's plan announced in a televised speech Monday, is a proposal to borrow $215 million through the Federal Financing Bank to handle what administration officials said are pressing cash needs.
Barry's statement that the city would not be able to pay its bills without the loan, was the administration's most alarming description to date of the District's financial woes.
Barry, City Administrator Elijah B. Rogers and other aides told sometimes skeptical council members that in recent months officials have been scrambling to make payrolls, pay local suppliers and meet other obligations. At times, Barry said, the city's bank balance has been as low as $20 million, which was described as "dangerously" low.
"We need that cash," Rogers said of the requested $215 million loan. "One day, if we don't have it, everything will come to a halt."
Barry's appearance before the council was disrupted several times by members of the Community for Creative Non-Violence, a self-proclaimed advocate group for the poor.
The group came equipped with battery-operated toys with a recorded laughing voice that members set off whenever Barry mentioned his concern for the poor. They managed to halt the proceedings five times and at one point even Barry smiled at the joke.
Five members of the group were dragged from the room by security officers and arrested on a charge of disorderly conduct in a public place. All five were released after being told they would have to pay a $50 fine each.
Barry, who was flanked by his top financial aides, spent much of his two-hour presentation defending his assertion that the city needs to borrow the $215 million. Council members repeatedly asked whether the money was needed all at once or whether some of the borrowing could be deferred.
Barry said the city's deficit will be $409 million by Sept. 30, the end of the 1980 fiscal year. This includes a $125 million cash deficit for the current fiscal year, Barry said, plus an accumulated deficit of $284 million built up in years past.
Barry acknowledged that only $90 million of the $284 million accumulated debt represents pressing cash needs -- as reported by the federal General Accounting Office.
He said that $90 million plus the current year's $125 million deficit yields the $215 million figure for the loan request.
Barry read to the council a list of the taxes he said would have to be increased if the borrowing plan is not approved by the council and Congress. These included increases in the property and sales taxes and several business taxes. But Barry repeated his position that the citizens of Washington are already overtaxed, and that he does not plan to recommend any new taxes before 1982.
Council member Wilhelmina J. Rolark (D-Ward 8) replied, however, that perhaps some tax increases should be considered "when people are being forced from their jobs" by Barry's program of laying off city workers. Barry wants to reduce the city's payroll of 35,000 jobs by more than 6,000 jobs by 1982.
Council Chairman Arrington Dixon and several other council members asked how Barry's savings plan for the current fiscal year was going.
"We don't know," Barry replied. He said he had not been able to determine yet whether agencies were overspending their budgeted authority from Congress -- which, if true, could amount to a violation of the law.
Council member Betty Ann Kane (D-At-Large) said after the meeting that she did not believe she could intelligently take action on the financial crisis before having such information. Kane has filed a Freedom of Information Act request for such data.
Council members also expressed concern over whether Barry had cleared the key points of his plan with the White House and Capitol Hill before making it public.
"We didn't seek approval or permission to put out this plan," Barry said. However, he said, key federal officials had been told beforehand some of the options he was considering.
Meanwhile, the Council's Finance and Revenue Committee approved yesterday the mayor's proposed increase in business property taxes. The increase, which still must be passed by the full council, would raise $74 million next year by raising taxes on commercial property from the current rate of $1.83 per $100 of assessed value to $2.13.
John A. Wilson, chairman of the committee, said yesterday that proposals to lower the city's new 6 percent gasoline tax will not be considered during the current fiscal year.
That means that the gasoline tax passed July 1 over the ojbections of local service station owners will go into effect Aug. 1 as scheduled. The station owners had fought the increase because, they said, it would cause them to lose business.
Testifying earlier at a House District Committee hearing on urban problems in Washington and elsewhere, Barry said reaction to his Monday night speech "from our friends on [Capitol] Hill is cautious to optimistic." In a reference to critics, the mayor added, "There are those who will use any reason, any excuse not to support" the city's position.
"It would be a tragic situation for the nation's capital . . . to go bankrupt" Barry said. Rep. Ronald V. Dellums (D-Calif.), the committee chairman, said he agreed with the city's assessment of its financial crisis. Another key member of Congress, Sen. Patrick J. Leahy (D-Vt.), chairman of the Senate D.C. appropriations subcommittee, had disputed the city's figures Tuesday.
"The figures are real, the issues are real and have to be dealt with," Dellums said. "The federal government has some real responsibility."
But, Rep. Michael D. Barnes (D-Md.), who represents suburban Montgomery County, told a reporter that he will oppose a proposal by Barry for congressional authority to reimpose a tax on the earnings of professionals who live in the suburbs and do business in the District. Barry hopes to use revenue from such a tax to fund the city's share of Metro costs.