D.C. Council member John A. Wilson (D-Ward 2), warning that heavy debt is eroding the city's financial base, said yesterday he wants to cut by a third the fees paid to law firms and investment bankers who service the city's three-year-old bond program.

Wilson, scheduling council hearings in January on the selection and cost of the firms, which have received nearly $56 million in fees since 1984, said the city could have saved $18 million in that time by reducing the fees from about 3 percent of bond sales to 2 percent.

The District's handling of bond issues is the subject of a grand jury investigation, according to sources, with federal authorities probing for evidence of illegal political favors in the selection of financial firms.

Wilson, chairman of the Finance and Revenue Committee, made his comments after issuing a "white paper" on the city's debt. The report, one of the council's first comprehensive efforts to study the mounting debt, showed that the District now has about $6 billion in long-term debt, or nearly $10,000 for each of the city's 636,000 residents. Wilson said debt service costs are growing so rapidly that they threaten financing for other city programs.

The report showed that although the District spent $114 million in 1980 to pay interest and other costs associated with the city's debts, the figure has risen to $220.9 million this year -- just less than 10 percent of the city's $2.6 billion operating budget. The federal government's basic debt service is about 14 percent, or about $139 million out of the annual $1 trillion budget.

"We have a staggering debt at this point," Wilson said in an interview with reporters after his report was distributed to council members. "Something has to be done, {something} has to be cut. I want the issue to become real."

Wilson called for a review early next year of more than 500 city-financed construction projects to see which ones could be cut back or eliminated. He also proposed creation of a special council committee to recommend action on the city's long-term pension liabilities.

About half of the $6 billion in long-term debt -- a $3.4 billion unfunded pension liability -- is the city's obligation to provide pensions of future retirees. The remaining debt is associated with the city's capital improvement projects such as roads and building.

Wilson said he would introduce a resolution calling for the creation of the special council committee, adding that unfunded pension costs are expected to skyrocket to nearly $13 billion by the year 2005.

In labor negotiations this year, Mayor Marion Barry approved a 5 percent pay bonus for police officers who are eligible to retire but choose to remain on the force. Wilson said the inducement to stay on the force is cheaper than paying pensions and hiring replacement officers.

Wilson's public hearings would be the council's first major look at the city's three-year-old bond business.

Until 1984, the District borrowed funds from the U.S. Treasury, but now has the authority to borrow by selling municipal bonds on the market. With more than $1 billion in debt to the Treasury now refinanced in the private bond market, the refinancings have helped generate the $56 million in fees.

The private contractors generally are selected by Barry and his aides, according to city documents. Among contributors to the mayor's reelection campaign last year were law firms and investment bankers who have received city work, according to city records.