FOR YEARS, the District of Columbia was able to avoid the kinds of severe financial constraints that have affected many of the nation's largest cities, particularly those along the Eastern seaboard. The sheltered, government-based economy here was able to spend greater and greater amounts on social programs, in part because of a major downtown office-building construction boom. The mayor and the D.C. Council packed more programs into the budget than they could pay for, relying on the steady revenue stream and end-of-the-fiscal-year numbers juggling to get them through. That cannot be done anymore.
Now, the local economy is softening and no longer plumps up the cushion. The city's latest revenue projections for the current fiscal year, released last week by the Department of Finance and Revenue, illustrate the point. Through April of this year city tax collections amounted to $1.9 billion, some $28 million less than expected. That might seem like a relatively manageable shortfall, but the city's fiscal cushion has largely disappeared, and the demand for more government services continues to grow.
The shortfall mainly comes from corporate franchise taxes, which represents the same kind of decline that has confounded financial policymakers in many other cities. John A. Wilson, chairman of the D.C. Council's committee on finance and revenue, says that the city has run behind its estimates in the past, "but not to this magnitude." On Friday, Mr. Wilson's committee "very, very, very reluctantly" passed on to the full Council legislation allowing the administration of Mayor Marion Barry to borrow an additional $50 million to meet the D.C. government's cash flow requirements for the rest of the fiscal year.
It's been said before, but bears repeating -- the District is staring at deep financial trouble that demands more curbs on spending. From 1984 through 1989, the D.C. government work force grew by 22.2 percent. The size of this government is so great that there is now one city employee for every 13 residents. Tax increases are no longer palatable to city residents, who are already heavily burdened, and there are indications that a continued drop in the city's population will make it even more difficult to gain more revenues through higher taxes. The District's unusually long fiscal winning streak is over.