Norton calls for board to oversee D.C.'s finances


WASHINGTON -- The District of Columbia seems determined to dig itself out of the fiscal hole it finds itself in even if it means a temporary surrender of the limited home rule it gained for itself two decades ago.

A proposal by the district's representative in Congress, Del. Eleanor Holmes Norton, to set up an independent oversight board with the power to run the city's finances, and do what must be done to stave off imminent bankruptcy, has been met not with resistance but with almost relief.

Mayor Marion S. Barry Jr. stopped short of embracing the plan but suggested it was a step toward the "super solution" for which the city and Congress have been searching.

Ms. Norton, in an interview yesterday, described her proposal as a "pre-emptive move" to prevent the imposition of an oversight board by Congress without any participation by the district. Such a move became likely after developments this week weakened the city's fiscal standing,already destabilized by Mr. Barry's disclosure Feb. 1 of a $722 million budget deficit this year.

Ms. Norton said her proposal in no way diminished the city's political status. "This proposal saves Home Rule," she said. "The district will have a say in any oversight board and will be able to preserve many of its own prerogatives."

But George Peterson, a senior fellow at the Urban Institute and a longtime student of district affairs, said the Norton plan represents "a retreat from the movement toward full home rule and certainly statehood."

Mr. Peterson said Ms. Norton's initiative grew out of the "overwhelming necessity to deal with the two principal factors behind the district's state of crisis."

PTC The first of these, he said, is the "internal mismanagement of the district, the fact that over the past 10 to 15 years it gave generous benefits to recipients of [welfare] programs and to the work force."

The second factor, he said, is the city's structural problems, the fact that its taxing powers are more limited than those of many other cities, and demands for services within its boundaries are too great for its income. It is also short on private industry to provide jobs.

Ms. Norton, a nonvoting congresswoman and the district's only representative to Congress, said that an independent authority to manage the city's financial affairs became necessary this week after two Wall Street credit services dropped the district's credit rating to a level below that of 50 major cities in the country.

As a declared credit risk, the district would have difficulty selling its bonds on Wall Street except at very high interest rates. It will now have to turn to the U.S. Treasury for funds to meet its expenses. It is allowed to do this as a last resort under its home rule charter.

Had she not acted, Ms. Norton said, "the terms then would have been dictated by the Congress, and one of them would be an oversight board," but one established with no participation from the district government.

Before making her proposal public Thursday, Ms. Norton said she had discussed it with city officials, including Mr. Barry and congressional committees concerned with district matters.

Ms. Norton played down the significance of what she was proposing. It is only another fiscal mechanism, she said, that has been used in other cities, like New York, Chicago, Philadelphia and Cleveland.

"There are many different models," Ms. Norton said. "Some leave some empowerment to the city and others leave it none."

Who will be the new rulers of the district's finances and keepers of its purse? Ms. Norton said the makeup of the proposed oversight commission has been discussed but has not been settled. There have been reports that Clifford L. Alexander Jr., a former secretary of the Army, is being considered as a possible chairman.

By taking the initiative, in effect beating Congress to the punch, she said, the district could hope to have a major say in the makeup and powers of the board, and thereby retain a hand in its own destiny.

Members of the City Council have indicated support. A spokeswoman for Councilwoman Charlene Drew Jarvis said yesterday that "the more the city does for itself the more Congress will be comfortable and it will help stave off more radical proposals."

The council, Ms. Jarvis said in an interview earlier this week, has been pushing Mr. Barry to take stronger action in making budget cuts.

"Many of us feel the mayor has not made sufficient cuts in the work force," she said. "The majority of us believe the mayor is having a very, very hard time making the staff reductions needed."

It was during Mr. Barry's first three terms in office, through the 1980s, that the work force grew by 25 percent, making it the most expensive city work force in the country -- as measured by how much each district resident must pay to support it.

City employees represent the core of Mr. Barry's political constituency, a fact that critics say could hamper him in trying to deal with the budget crisis.

In his "action plan" for dealing with the deficit, revealed Feb. 2, the mayor promised to cut 5,000 jobs over the next five years. Many observers expressed doubt that he has the political will to follow through.

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