The D.C. financial control board, its direct involvement in city government fading, is planning a new mission: to boost the District's population, and its tax revenue, through a five-year effort to lure businesses, rejuvenate neighborhoods and improve schools.
The five-member board--which could be disbanded in two years, assuming the city's budget stays balanced--wants its legacy to go beyond a solid bottom line for D.C. finances now. It wants to retool the city's economy to help prevent another financial collapse of D.C. government, such as the one the board was created to reverse in 1995.
"Our interest is making sure that the financial turnaround we've seen is sustained after we're gone," said board member Darius Mans, a World Bank economist. "The missing link is economic development."
If the effort goes as hoped, D.C. residents and outsiders soon will begin seeing physical improvements to several neighborhoods, such as revamping of parks, recreation centers and schools. There would be clear goals so residents would know what the city would look like in five years, and how many people the plan would hope to add to the 523,124 living in the District.
The new tack shows how the presidentially appointed board is reinventing itself. In its first three years under former chairman Andrew F. Brimmer, the control board focused on the immediate, short-term goal of turning around the city's financial condition and services. That board had a tight grip on managing D.C. government.
Now, with the city's finances and services stabilized, the board, under Chairman Alice M. Rivlin, is looking at the District's future and wants to create an economic strategy. The board turned over daily management of the city in January to Mayor Anthony A. Williams (D) but has until 2001 before it is scheduled to shut down.
"The Brimmer board had to respond to the crisis the city was in," said board member Eugene Kinlow. "The role now is to see that the financial turnaround is not a mirage but a permanent structural change."
It's popular for government officials to say that they want to encourage more economic growth, but in the District's case, the need to increase the tax base is so critical that board members question whether the city can avoid future budget troubles without additional revenue.
Spending on existing services and programs is growing at a faster rate than the District's tax revenue, and the city is under pressure to spend more money for new services and labor contracts. Congress eliminated the annual federal payment two years ago, increasing the city's dependence on tax revenue to finance its operations. Congress also prohibits the city from taxing the income of nonresidents who work in the city and account for two-thirds of its jobs.
"What we need isn't so much jobs but more people to grow the tax base," said Rivlin, a Brookings Institution economist who succeeded Brimmer last year. "There's got to be a well-coordinated plan to make that happen. We're not just talking about improving the housing stock. Families won't move in unless the schools are better and the streets are safer."
"I totally agree with that," said Williams, who has made economic development an increasingly important part of his agenda. "What we do with public safety and schools all relate to rebuilding neighborhoods."
Williams's administration is devising a strategy that emphasizes revitalizing specific neighborhoods in all parts of the city, the Anacostia River waterfront, gateway streets into the city and downtown. He's convening a "summit" for D.C. residents Nov. 18 and 20, at which the mayor hopes people will volunteer ideas for specific improvements that Williams can address in next year's budget.
While control board members generally are happy with Williams's progress on economic development, Rivlin said, the city's effort--and those of other groups--is not being coordinated with the private sector, schools, nonprofit organizations and community groups.
That coordination is critical, Rivlin said. If additional housing is built in a neighborhood the city targets for revitalization, she said, it would not make sense to expect families to move there if the schools in the area aren't being upgraded at the same time.
"We've had a lot of individual plans, and the mayor's plan focuses on what the government can do," said Rivlin, a former Federal Reserve Board member who's also headed the federal Office of Management and Budget and Congressional Budget Office. "But no one has sat down and said, 'What can we as a city achieve in five years?' "
Rivlin recently convened a meeting of top public and private-sector development officials, the first in a series of sessions aimed at producing a short-term plan. The meeting centered on determining how many people should live in Washington and what their income mix should be. The District had a population of 756,492 in 1970 and has decreased by about 45 percent since.
Though no population targets were set at that meeting, participants expressed a desire to attract middle-class families back to Washington and put them in houses they can afford. Since 1990, the city has lost 83,776 people, or 14 percent of its population. As a result, the District has lost more than $60 million a year in revenue, a major reason the budget was unbalanced for six years.
"We agreed that what's missing in Washington is gaining back our middle-class families," said Richard Monteilh, executive vice president of the D.C. Chamber of Commerce, who attended the meeting. "The schools said they want more middle-class families, which drives up competition and performances of schools."
Rivlin and Mans are particularly impressed with the neighborhood rebuilding effort taking place in the dilapidated LeDroit Park section of Northwest Washington, near Howard University. Fannie Mae and Howard have teamed up to replace five blocks of boarded-up, unoccupied houses and vacant lots with 42 single-family homes. The development is part of a project to rebuild the Georgia Avenue street front, turn a reservoir into a public park, attract new businesses and create an arts district.
"That will really turn that area into one of the more attractive neighborhoods in the city," Rivlin said. "It will encourage shops along Georgia Avenue--dry cleaners, movie theaters--that will in turn create jobs for D.C. residents. Ideally the school planning efforts will be geared into it so the schools will be rehabilitated."
A year ago, the control board and D.C. government detailed an economic development strategy with 40 specific plans to promote jobs and growth. Work has been done on about half of them, which Rivlin said is the beginning of what she called an "intensive" effort to attract new businesses and stimulate neighborhoods. The board's five-year plan will attempt to build on last year's proposals, she said.
"The economic plan of a year ago was good work, but what's missing are clear targets on jobs and output and population," Mans said. "It requires coordination and sustained execution. This is where the District has been historically weak. Getting government to turn on a dime hasn't been easy. We don't have an ax to grind. We as a board can be the forum to bring people together."
The decision to pursue an economic development strategy is calculated to some extent. Board members, Williams, the D.C. Council and other city leaders agree that new residents alone won't solve the District's long-term financial crunch.
Congress will have to consider taking over more of the D.C. government's state functions--such as mental health--as it did with pensions and Medicaid, board members said. Lawmakers also may be asked to consider a federal payment in lieu of taxes, to compensate for the 41 percent of the District's property tax base that is exempted by Congress.
Another proposal gaining favor is a tax on the wages of nonresidents. The tax would not be felt by taxpayers directly because it would be offset by a credit on the federal income tax return.
But the timing may be shaky for the board and city to broach those politically sensitive requests with Congress.
"All are tough politically," Rivlin said of the proposals. "That's why I come back to economic development. We have to show we're making a major effort ourselves."