D.C. is near bankruptcy as Barry and GOP Congress prepare to take office


WASHINGTON -- A man approached the information desk at the District of Columbia's Department of Motor Vehicles the other day and wanted to know how crowded it might be the day after Thanksgiving for a driver's license test.

A woman behind the counter looked glum. "We may not be open," she said. "The city is so broke, they're talking about furloughs, and we may not be here on Friday."

She was wrong about the furloughs. The city's outgoing mayor, Sharon Pratt Kelly, promised she would resist asking city workers to stay home as a way to save money.

But the woman at the counter was right about the city's going broke.

The District of Columbia's financial situation has grown so bleak in recent months that Mrs. Kelly's successor, Mayor-elect Marion S. Barry Jr., who takes office on Jan. 2, called a news conference this past week to brace residents. "This is the most serious crisis since Home Rule," he said, referring to the limited self-government Congress bequeathed the capital 20 years ago.

The city's budget deficit, approaching $450 million, is so large, Mr. Barry said, that the city could run out of cash to pay employees and contractors by early January.

Mr. Barry said that every city program and agency was under review, a sign that services such as street cleaning, trash collecting, and pothole fixing are likely to be reduced.

Also on the table are benefits for union workers, overtime pay, and the survival of the District of Columbia Law School.

The local eligibility criteria and benefits for entitlement programs such as Medicaid and Aid to Families With Dependent Children are also likely to change.

A committee of experts appointed by Mr. Barry after the election vTC has already proposed detailed cuts of more than $154 million for the 1995 fiscal year. But those are only the first steps toward complying with a congressional order that the district government scale back by at least 2,000 positions and $140 million in spending, the committee chairman, Elijah B. Rogers, said last week in presenting the report to Mr. Barry.

More urgent, Mr. Rogers said, was finding an additional $291 million in spending cuts to prevent the district from going bankrupt.

And adding to the challenge is the prospect that the incoming Republican-led Congress might be less sympathetic than the outgoing Democrats, especially to a city where Democrats outnumber Republicans by more than 10 to 1, blacks outnumber whites by more than 2 to 1, and the mayor-elect once served prison time for drug possession.

Some House Republicans have said they favored restricting the district's right to borrow money from the Treasury, a move that would undermine the city's ability to repay loans and cause its credit rating to drop.

Rep. Newt Gingrich of Georgia, the presumed next speaker of the House, is expected to eliminate the Committee on the District of Columbia as part of an overall House restructuring. Also, he has suggested eliminating voting rights for the district's lone representative in Congress. That suggestion has raised cries of "taxation without representation" and has led one group to seek ways for largely white and mostly prosperous northwest Washington to secede from the district and join Maryland.

And there is no indication that the new Republicans have any interest in raising the annual federal payment, now $660 million, that the district receives in lieu of property taxes it cannot collect on real estate owned by the government and foreign countries.

Caught in the middle of all this is the district's representative, Eleanor Holmes Norton, who won a third term this month with 89 percent of the vote. A year ago she helped bring a vote on statehood for the district to the House floor. The measure failed 277-153, but the fact that it reached a vote suggested that many members felt the district could be trusted to take care of itself.

But now, with the city's fiscal problems growing to such magnitude and the district fighting to maintain what autonomy it has, Ms. Norton contends that politics will be less critical than immediate steps by the new Barry administration.

"There's not a very large difference between Democrats and Republicans when it comes to D.C. finances," she said in an interview last week. "The attitude is driven by events. If events lead to insolvency, there is no Republican or Democratic way to deal with it except to warn people not to let it happen."

Critics of Mr. Barry point out that he was not a fiscal conservative in his previous years as mayor and that he built his formidable political base by adding thousands of government employees and often awarding city contracts on a no-bid basis.

These critics say that the future of the district depends heavily on his ability to eliminate jobs, cut services, and make other hard fiscal decisions.

"I don't think he's capable," said Rep. Pete Stark, a California Democrat and the outgoing chairman of the Committee on the District of Columbia. "He took a city that was growing and prospering and led it toward bankruptcy with his friends, cronies and crooks. It was one big happy romp. I don't know if he can turn all that around."

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