The District faces some major challenges in achieving a clean bill of fiscal health. Expenditure growth continues to outstrip revenues by 7 to 10 percent each year. Thus, policy-makers begin with a built-in fiscal gap that must be closed through the budget processes. In addition, the District has been asked to assume administrative and financial responsibility for certain federal programs.

The projected expenditure and revenue trends indicate that we will have to reduce future costs or increase revenues by over a quarter billion dollars during the next five years to keep our budget in balance.

We will raise $987.7 million in local revenues in the 1979 fiscal year and, for that same period, we have received a federal payment to offset the impact of the rederal presence that totals $250 million. That figure represents 19 percent of our budget, the lowester percentage in 12 years . Compare it with the estimated $491.5 million we lose due to the federal presence and you get an idea of the magnitude of our problem. One particular cost of the federal presence is the array of restrictions on our home-rule power.Authority to tax non-resident income, for example, has been denied the District but is a right enjoyed by all 50 states and exercised by 26 states and 47 major cities. Further, the District receives about the same level of intergovernmental funding as comparable jurisdictions, which is contrary to the widely held impression that the District benefits inordinately from federal largesse.

All of which brings me to an obvious point: Approaches must be found to maintain essential programs and services in the face of mounting fiscal pressures. One way is to do more with less . Basically, we are talking about approaches for using scarce resources more productively. Such approaches cannot work magic, however. But they can help us to overcome a long-standing, fundamental weakness of government -- driving accountability for the productive uses of resources down from it's lofty, more esoteric perches at the policy-making level to the point of service delivery. In other words, we have to begin requiring managers "to manage."

The District government, like many big-city bureaucracies, is over-programmed as a result of the tremendous increase since the early 1960s in the scope of government services. It's also a reflection of the decline in other institutions (e.g., church groups, extended private sector) that had previously provided important community services.

To keep this trend in hand, ineffective programs, or those that are no longer relevant to current and future needs, must be eliminated, reduced or appropriatly modified.

So-called "privatization" of city services is another approach we must consider. This can take two forms -- direct-service contracts and user charges. The District already uses the direct-service contract method in many service areas, such as day care and parking-meter collections and others are under consideration. The user-charge approach attempts to place services on a self-supporting basis, by setting fees to recover the cost of service delivery. We raise approximately $100 million from user charges and fees and, as a result of Proposition 13, there is new interest in this approach.

We also have to improve operations. In two years, such projects were undertaken in 11 D.C. government agencies and achieved benefits valued at more than $10 million. These included the saving of 10,000 worker hours per month in refuse collection through a crew-reduction project, and increasing parking-meter revenues by 160 percent as a result of improved methods.

Regional approaches, under which everyone benefits from economies of scale, can also save money. In the District, we are involved in the provision of waste-water treatment, solid waste disposal, transportation and law-enforcement communications services on a regional basis.

Consolidation of facilities and functions is yet another "doing more with less" method, especially important as our population base shrinks and our fiscal pressures grow. The District has stressed multiple use of facilities in the past, such as a school, recreation center and library sharing the same building. We can also consolidate similar functions within a single organization (inspections, vehicle maintenance, etc.), so that multiple agencies aren't simultaneously, and thus wastefully, maintaining facilities, equipment and specialized work forces. (TABLE) (KEY OFF) ersonnel (KEYWORD) systems must be designed to provide powerful incentives for superior performance, ensure delivery of effective counseling and training services to employees not meeting expectations, and permit timely remedial action in cases of continued unsatisfactory performance. There are numerous other ways of improving government productivity, including use of variable operating hours and part-time staffing when peak demand occurs only at a selected time of the day, and, adapting available new technology to municipal problems. (COLUMN)Successful achievement of these objectives will have a significant and positive impact but it will not ensure urban fiscal health. The fact remains that attainment of long-term fiscal well-being requires solving longstanding systemic problems, such as restrictive intergovernmental relationships, especially with regard to budget matters, that, quite simply, cripple cities. To accomplish such solutions will mean federal financing of programs that are truly national in scope, such as welfare and medical insurance, and a greater reliance on block grant and revenue-sharing concepts of federal assistance, rather than narrow program categories. We also need far more rigorous evaluation and review of federal statutes and regulations impacting state and local governments. Too frequently, federal mandates have been effected with insufficient attention paid to costs and inadequate financial assistance. Finally, we will need to complete the process of home rule by giving the city's elected officials authority over budget-allocation decisions and by setting the annual federal payment on the basis of a more dependable formula that recognizes our unique financial responsibilities. (COLUMN)Only when these steps are taken will the management improvements in the District government is making have their full impact. Only by combining local and federal improvements will cities, like the District of Columbia, become fiscally hale and hearty. But meanwhile, there is much we can do to help. (END TABLE)