IT DEFINITELY qualifies as closing the barn door after the horse have escaped, but the District Council should be commended for passing a law requiring close public scrutiny of how the city spends every cent in the future. The council voted Tuesday to put the law into effect. It does not matter if the money comes from a taxpayer's pocket, from a federal grant or from a loan; from now on, the city council will have something to say about how money spent by the District is handled. For a council that shied away from dealing with year's budget problems, the new law is quite a departure.

If the council's new review system had been in place during the past fiscal year, the city's budget problem would not have come to District residents as a surprise. There would not have been the constant shifting of estimates -- really guesses -- as to the size of the deficit. And the city government could not have hidden the deficit for a time by discreetly borrowing money from the federal Treasury. Any plan to borrow money, including plans to repay the loans, would have had to be reviewed and approved by the council. As a result, heads of city agencies would have been held accountable for any failutre to save money.

But under the city's current system of finances, it is not yet known to the public which city agencies failed to save money. The exact amount of debt the city will have at the end of the fiscal year is also in question. Council member Betty Ann Kane was even forced to file a request under the Freedom of Information Act to get facts on the city budget. With the new budget review procedure, that should not again be necessary.

The most important part of the new law requires that the council approve the city's total budget -- money from grants as well as tax revenues. Currently, the council only reviews how money will be spent if the money comes from taxpayers and Congress. Nearly half a million dollars in grants, about a quarter of the total city budget, is never looked at by the council. The lack of review for grants has cost the city money: grants sometimes require matching funds from the city; sometimes they run out, leaving the city under pressure to pick up the cost of the program. Now city leaders will be able to decide if they actually want the grants before the city gets involved with them.

Every feature of this bill is necessary to change the city's current budget procedure -- a procedure that failed to set off alarms as the city's financial crisis approached last year. The mayor may feel some discomfort with the council's increased power over the budget, but that concern is not as important as the need for line-by-line attention to how the city money is being spent. The council has taken on more responsibility for watching the city's dollars. Better late than never.