The internal U.S. Department of Labor memorandum makes the matter quite clear: The federal agency was preparing to "take over" management of one of the District's lagging year 2000 repair programs.

"The District of Columbia continues to be at a high risk of Year 2000 failure for its unemployment insurance benefits and tax systems," says the August memorandum addressed to Assistant Labor Secretary Raymond L. Bramucci. "In response . . . [federal officials have] developed a proposal for the department to take over the procurement of D.C.'s Y2K-related contract support and to hire a full-time project manager who would jointly report to the department and D.C."

Despite that blunt language, D.C. and federal officials said last week that no such move was ever considered.

"It was an unfortunate characterization," said Howard Waddell, a spokesman for the Labor Department.

D.C. Chief Technology Officer Suzanne J. Peck added: "They never suggested that. It is absolutely not a takeover."

Since the memorandum, the city and the Department of Labor have signed an agreement providing the District with $1.95 million in extra federal funding to repair the city's unemployment insurance and tax systems and "technical assistance" from a few Labor Department staff members.

Whether the federal agency really considered taking over management of the District's repair effort may never be clear. What is clear is that the two now are working together to ensure that the 3,700 or so unemployment checks the city sends out each week--worth a total of about $1.5 million--are not interrupted come Jan. 1.

On that date, older computer systems that have two-digit date fields and have not been repaired may incorrectly interpret the new year as 1900, not 2000. The mistake could result in myriad miscalculations.

"We are delighted," Peck said of the arrangement that has been worked out. "And they are delighted."

The Department of Employment Services was one of five D.C. agencies cited by the U.S. General Accounting Office this month because it had slipped behind schedule on its Y2K repairs. Peck said that in each of those cases, the amount of work behind schedule is tiny compared with all that has been completed on time.

"We are making such enormous strides," she said, offering reassurance to the public that critical city systems will not fail Dec. 31.

Not surprisingly, the original federal memo describing the state of affairs ends on a less optimistic note.

"Even with the additional funding requested by D.C. and the [Labor] Department's direct involvement in managing the benefits and tax system contracts," the memo says, "we think D.C.'s chances of success are marginal."

Outreaching Spokesman

D.C. Mayor Anthony A. Williams (D), criticized on occasion for not connecting with lower-income residents, is making an effort to get closer to the people.

Williams has hired Ken Snyder, 33, as his new director of communications and has asked Snyder to improve communication between the administration and D.C. residents, particularly those in low-income parts of the city who have been among the mayor's harshest critics.

Snyder, in his second week on the job, said he wants to "open a clear line of communication between the people demanding changes and the people who are implementing the changes."

"Ultimately, this administration wants to form partnerships with the public," he said. "The mayor has asked me to be a pipeline to the people in neighborhoods throughout the District of Columbia. We want to make people aware of what we're trying to accomplish."

That means more town hall-style meetings to get residents' opinions. The administration already has heard residents' complaints about open-air drug markets in lower-income areas, and will step up efforts to shut them down, Snyder said.

He said Williams is so frustrated with drug dealing that the mayor himself plans to go to drug markets "night after night."

Williams "literally wants to shine a bright light on alleys and watch drug dealers scurry until they are tired of seeing the mayor and go somewhere else," Snyder said. "When you run drug dealers out, businesses will be more comfortable moving in."

Snyder most recently was communications director for John F. Street, the former Philadelphia City Council president who won the Democratic nomination for mayor.

Snyder said he realizes that people in the community are concerned and frustrated by crime and that they are eager to know exactly what Williams is doing to reduce violence.

"People don't just want to hear that the mayor is frustrated," Snyder said, "they want to see him doing something about the problem."

Agency in Transition

A transition of sorts is underway in the agency that serves as the District's cash register.

The city has a new chief financial officer, Valerie Holt, who in June became the permanent replacement for Williams, who of course went on to another job in D.C. government. But the changes extend far beyond Holt.

Tom Huestis, who as deputy CFO for finance was responsible for overseeing all borrowing by the District, the investment of its cash and the collection of all fees, left Aug. 13 to return to Philadelphia.

Abdusalam Omer, who as deputy CFO for budget and planning supervised the preparation of the city's $4.7 billion budget, is now Mayor Williams's chief of staff. Norman S. Dong, who was the executive director of the CFO's Office of Grants Management and Development, is now the interim city administrator, under Williams.

Other departures include Steve Russo, chief financial officer for financial operations; Elaine Merguerian, the official agency spokeswoman; Steven Harris, chief financial officer for D.C. General Hospital; and Stephanie Mitchell, chief financial officer for the Department of Corrections.

Some of the turnover was to be expected with the departure of Williams and arrival of Holt, 50, given that each chief financial officer presumably would put in his or her own team.

Holt said only one of the changes was at her initiative, Mitchell's departure from Corrections.

Some of the departing executives noted that what is really underway is a transition of the agency from one that was overseeing the rebuilding of a nearly bankrupt city to one that supervises day-to-day financial affairs.

"It is a new era," said one former official, who asked not to be identified. "Tony had brought in people to do a certain job, and that was aggressive transition work. The office, for a time, was almost almighty. Now it is really a support office for the mayor."

Well, not really. Holt still reports directly to the D.C. financial control board, which will be around until the District balances four budgets in a row, meaning 2001 at the earliest. Holt said her challenge is to build on the base that Williams created. "This is going to the next phase and not a leveling-off," she said.

She noted that she particularly wants to see improvements in financial planning in city agencies.

One top official who is still around is Natwar M. Gandhi, the deputy CFO for tax and revenue. Gandhi was a candidate to be Williams's replacement before Williams named Holt to the post. So there was some speculation that he might be leaving soon. But Clarice Nassif Ransom, a spokeswoman, said Gandhi recently told Holt that he planned to remain for "several more years," until the city completes installation of a new integrated tax system.