Congress has rejected a plan by the District government to spend about $4.5 million in federal money on the city's millennium celebration and other programs instead of on street repairs.

Lawmakers, noting that city roads are in critical need of repairs after years of neglect, said the District has no business spending federal transportation dollars on activities celebrating the year 2000.

But D.C. officials, acknowledging that they were not as precise as they should have been, now say most of the funds in question would pay for a year's worth of arts programs. Only $500,000 would be spent specifically on the festivities--and none for a New Year's weekend street party. They said they're confident that the issue will be resolved and that the city will eventually get the money.

Language scolding the city was tucked in at the end of the District's fiscal 2000 budget bill approved last week by a conference committee of lawmakers from both houses. The budget is awaiting final approval by the full Congress.

"Financing a millennium celebration is not infrastructure," Rep. Ernest J. Istook Jr. (R-Okla.), chairman of the D.C. appropriations subcommittee, said yesterday.

The subcommittee's top Democrat, Rep. James P. Moran Jr. (Va.), added: "I don't want to deprive D.C. of its money for the millennium celebration, but that's not exactly infrastructure. There must be another way to meet those costs in light of the fact that there is such a serious need for infrastructure investment in D.C."

The executive director of the D.C. financial control board and the spokeswoman for Mayor Anthony A. Williams (D) both said late yesterday that Congress has misunderstood the city's request for money. "This is not all for a party on New Year's Eve," said Francis A. Smith, director of the control board.

Many of the District's 1,020 miles of streets and 259 bridges have suffered from years of neglect--the severe budget crisis of the 1990s prevented even the most routine maintenance. More recently, the streets have been torn up by telecommunications companies laying fiber-optic cable. Resurfacing a typical street in the Washington region runs about $21,000 a lane mile, so $4.5 million would go a long way to fix D.C. streets.

The lawmakers said Congress approved a $50 million infrastructure fund for the District last year, believing the money should "exclusively" pay for the repair and maintenance of roads, highways, bridges and transit. A separate $25 million fund for economic development was set up at the same time.

When the financial control board and the Williams administration submitted to Congress a draft of how the city planned to spend the $50 million, it included $3.5 million for unspecified "millennium year activities." The money was to be spent by five organizations, among them the District's millennium celebration office.

The scrutiny over the infrastructure repairs has its origins in an earlier dispute. Rep. Thomas M. Davis III (R-Va.) and Moran recently sought to borrow $6 million from the infrastructure fund to finance an environmental cleanup at the Lorton Correctional Facility in Fairfax County, which is being shut down and converted to a residential and recreational area.

Del. Eleanor Holmes Norton (D-D.C.) objected, saying the lawmakers were in effect taking money from street repairs. Davis and Moran retreated, and Republican leaders found funds for Lorton elsewhere. But when the city produced its list of proposed infrastructure projects--under the title Millennium Activities--Davis and Moran acted.

The control board was subsequently directed to submit a revised plan without the millennium item. The revised list, obtained yesterday, replaced the millennium proposal with $4.5 million for "development through the arts." Among the planned uses for the money would be erecting historical markers in selected areas.

Staff writer Susan Levine contributed to this report.

CAPTION: Rep. Ernest Istook Jr. chairs the Appropriations subcommittee on D.C.