The fiscal 1988 federal payment to the District approved by House and Senate conferees Wednesday totals $430.5 million. An incorrect figure was reported in some editions yesterday. (Published 12/18/87)

A Senate amendment to freeze all spending by the District unless the D.C. Council agreed to overturn a law prohibiting insurers from requiring AIDS virus tests was dropped last night by Senate and House conferees as they reached agreement on the city's fiscal 1988 budget.

While many of the conferees complained that the law has resulted in an insurance crisis in the city because most major insurance companies have stopped writing new life and health policies for individuals, most agreed it was up to District officials to decide how best to deal with the problem.

"I just have trouble with us legislating on this," said Rep. Bill Green (R-N.Y.), a member of the House Appropriations Committee.

D.C. Council member John Ray (D-At Large), author of the controversial insurance legislation, will hold a hearing next week on his proposal to amend the AIDS insurance law to meet some of its opponents' concerns. So far, the insurance industry and the city's homosexual community have been cool to Ray's newest proposal.

Although the conferees chose not to interfere with the law on acquired immune deficiency syndrome, they retained Senate language that put the 800-bed D.C. prison construction project on hold until at least mid-March while three alternative sites are reexamined, a move that city officials say will cost millions of dollars in delays and complicate the city's prison crowding problem.

Sen. Tom Harkin (D-Iowa), chairman of the D.C. appropriations subcommittee, sought the delay after receiving numerous complaints from residents near the site of the proposed $50 million prison, adjacent to the D.C. Jail in Southeast Washington, and the discovery of significant "archeological findings" on the 10.5-acre site.

In approving the District's $3 billion fiscal 1988 budget, the conferees agreed to delay the project until the General Accounting Office and the Federal Bureau of Prisons issues recommendations Feb. 1 on whether the federally financed prison should be moved to one of three other sites in the city. Then, by March 15, D.C. Mayor Marion Barry, in consultation with the House and Senate D.C. appropriations subcommittees, would be required to make a final decision on a site.

Moreover, under the language, Congress would agree to reimburse the District for any start-up costs if the mayor and Congress decide to shift the prison to another site. The District already has spent about $5 million of the $50 million appropriated for the project on design and site preparation work, according to a city official.

"I don't know that we have to pick the site, but I do believe we ought to take another look at it," Harkin said. "This is federal money we're spending. This is not the District's money."

But Rep. Lawrence Coughlin (R-Pa.), warned that there may be problems with the three other sites that Harkin has been promoting, which are the New York Avenue Brickyard in Northeast, an Anacostia Park-Fort Lincoln site, along the Anacostia River, and a site near Bolling Air Force Base. "I won't be here 10 years from now, but someone will be sitting here talking about where the prison should be built," Coughlin said, warning against further delays.

In other action, the conferees also: Adopted what has become standard antiabortion language in federal appropriations bills, barring the use of federal funds for abortions, except to save the mother's life or in case of rape or incest. The House had approved far more restrictive language that would have prevented the District from using its own revenue, as well as federal funds, to pay for abortions.

Approved a federal payment totaling $434.5 million, or $9.5 million more than the House had originally agreed to.

Mandated that the District reduce its accumulated deficit by an additional $20 million in fiscal 1988, instead of the $5 million proposed by the city.

Directed the D.C. fire department to take immediate steps to implement a program to ensure that two qualified divers and equipment are procured and operational early next year for each of the four rescue squads and two fireboats. Members of Congress were concerned about the slow rescue effort for victims of a helicopter crash in the Washington Channel in August and for other drowning victims.