Halfway through a critical fiscal year, the D.C. government is spending money deficit if left unchecked, but officials of Mayor Marion Barry's administration are trying to convince Congress and the public that neither incompetence nor extravagance is to blame.
They have compiled figures indicating that it is the rising cost of caring for pensioners and prisoners, the city's "liberal" medical care policies for the poor, and overspending by D.C. schools and Superior Court, rather than mismanagement, that is keeping the city in the red. They also have pledged to cut spending in other programs to eliminate the projected deficit without harming people dependent on those programs.
By releasing the figures on the projected deficit and pledging to eliminate it, City Administrator Elijah Rogers and Philip M. Dearborn, financial adviser to Barry, have staged a preemptive strike against critics in Congress who have been alarmed and angered at preliminary indications that the city would incur yet another deficit on top of the cumulative $388 million deficit from past years.
When a skeptical Congress holds hearings on the city's financial affairs this week, city officials will claim what Rogers calls a "splendid achievement" in staying within their budget in almost every area under Barry's control.
Rogers also has said he will announce a cost-reduction program within two weeks. The projected deficit "will be reduced to zero" by Sept. 30, the end of the fiscal year, Rogers pledged. "It's clearly manageable," he said. "Contrary to the impression that all those agencies are going wild out there, it is under control. The mayor has not been irresponsible."
The city efforts to convince Congress of its frugality are aimed at winning congressional approval of an emergency $184 million city bond issue to bail the city out of its fiscal crisis. Without that approval, said Rogers and Dearburn, the city government will run out of money this summer.
The House District Committee has postponed action on the bond issue until after a special hearing Thursday on the city's overall financial situation -- a hearing at which key members are expected to demand assurances that spending is under control before they vote on the bond issue.
Even if Congress approves the bond issue, however, the proposal may be in trouble because of deep skepticism in the City Council, which also must approve it. Aides to Councilman John Wilson (D-Ward 2), chairman of the Committee on Finance and Revenue, have prepared a confidential analysis claiming that the bond plan is unworkable because no investors would buy the bonds.
Wilson joined Barry, Council Chairman Arrington Dixon and D.C. Del. Walter Fauntroy in announcing the bond-issue plan, but he has made no secret of his doubts about its workability. Other members of the council share Wilson's view that only deep cuts in city staff and services and further tax increases will solve the District's financial problems.
Last week, Rogers and Dearborn released figures showing that at the rate of spending in the first five months of the fiscal year, the city would over-spend its $1.4 billion budget for the year by $59.4 million. This would be an improvement over last year's deficit of $105 million, but it would not placate either members of Congress, who are demanding that the city balance its budget, or potential investors in city securities.
In a memo to Barry that accompanied the figures, Rogers noted that 60 of the 76 agencies and programs listed in the budget are spending at or below their authorized rate. Those that are spending over their budget include agencies not under Barry's direct control, such as the public schools and D.C. Superior Court, and programs where the District has a fixed obligation, such as pensions. "There are still serious overall problems in maintaining the city's budget in balance," Rogers said. "They are not, however, problems of carelessness, excess hiring or waste."
The three biggest sources of overspending, the figures show, are the city's giant. Department of Human Services, spending at a rate that would exceed its budget by $19.4 million, mostly for Medicaid benefits; pensions for retired police officers, firefighters and teachers, over budget by $23.2 million; and the Department of Corrections, over budget by $7.7 million, mostly for the cost of housing District residents in federal institutions.
Medicaid is a perennial budget problem, not only because the cost of medical care is rising but because the District, as a matter of policy, provides Medicaid payments to persons for whom coverage is optional and for services that are not required by the federal government. DHS commissioner James Buford, at a congressional hearing last month, described the District's Medicaid program as "very liberal" and said that "we have not elected to reduce service to our clients."
Last year, the District provided Medicaid benefits to about 14,000 persons who were not automatically eligible under federal criteria. In addition, the District authorizes Medicaid payment for such "optional" services as emergency room care, dental care for children, optometrists and opticians, prosthetic devices, hearing aids and the most expensive of all, nursing home care.
Those programs could be dropped, but Buford said his plan calls for reducing Medicaid costs by trimming "inappropriate" hospital stays. It would save about $10 million a year, he said, to lower the daily average of 100 persons who are in hospital beds unnecessarily.
On pensions, as on the cost of housing prisoners, the city has less room to maneuver than it does on Medicaid. The District budgeted $119.2 million for pension payments to about $8,000 retired workers, but that has turned out to be not nearly enough. A wave of early retirements, encouraged by the city to cut the payroll, swelled the ranks of recipients at the same time it reduced the number of workers making payroll contributions to the pension funds.
In addition, Dearborn said, the budget only provided for a 5 percent inflationary increase in benefits. That was adequate for police officers and firefighters, who by law get only the same increase in pension as active workers get in salary, but inadequate for retired teachers, who get an increase equal to the increase in the cost of living -- in this case, 11.7 per cent. That left a gap of nearly $16 million in teacher pension funds to be made up out of operating funds.
City Administrator Rogers, in pledging that the projected deficit would be eliminated, refused to say what cost-cutting or revenue-raising measures are under consideration. Barry has said he opposes further tax increases and is reluctant to lay off any more city workers. Rogers did say that some positions that are now vacant will not be filled. His memo to Barry said that "each agency's budget projection is being reviewed. Those which can accomplish their mission without spending their full appropriations will have to contribute to the areas of greater need."