Washington may be the capital of the free world, but the District of Columbia is experiencing a severe financial crisis. In an effort to turn the District's fortunes around, the federal government has taken most power away from elected Mayor Marion Barry and has put the city's day-to-day operations in the hands of an appointed control board. Kwame Holman reports.
DEMONSTRATORS: (singing) We're fighting for our freedom--we
shall not be moved.
KWAME HOLMAN: This small but determined group of activists has fought a lonely battle in recent months on behalf of Washington's 24-year-old system of self-government, known as home rule.
DEMONSTRATOR: Since we don't have a lot of people, the way to be effective in a demonstration like this is that we want to march single file, in one lane. Take one lane, single file.
KWAME HOLMAN: Two years ago amid long-standing problems of crime, poor schools, and a bankrupt--and by all accounts mismanaged--city government, Congress and the president stripped some of the powers of Washington's elected officials and gave them to an appointed control board. 
That apparent loss of democracy got at least tacit approval from many Washington residents worn down by the condition of their city and few have turned out for protests like this.
DEMONSTRATORS: (chanting) Hey, hey, ho, ho, the board has got to go.
KWAME HOLMAN: But on this day two weeks ago, the activists were saying their numbers were about to swell because the control board--again aided by Congress and the president--had just gone too far.
DEMONSTRATORS: (chanting) Hey, hey, ho, ho, the control board has got to go.
Arrests and protests
KWAME HOLMAN: Two hours earlier at the White House, the president had signed the historic balanced budget agreement. Buried inside the mammoth legislation was a measure encouraging the control board to go beyond oversight and take over direct management of a large chunk of Washington's 35,000-person bureaucracy.
Until that moment, those powers rested with the city's controversial longtime Mayor, Marion Barry. 
Immediately after the bill signing, the protesters stormed a meeting of the control board at a downtown Washington church.
(DEMONSTRATORS SHOUTING)
KWAME HOLMAN: After the arrests, other citizen-activists had their say.
CITIZEN ACTIVIST: How you could serve on this board, realizing that it is fundamentally wrong. Wrong never makes right. And if you want to do right, you in good conscience must step down. Why? Why? Yes, the city is drowning. I did not vote for Mayor Barry. I will not vote for him again, but he was the duly elected mayor of the city. (applause) He was a duly elected member, and for him to advocate that, I don't know how you can sleep at night.
KWAME HOLMAN: Board member Joyce Ladner, herself an activist in the civil rights movement of the 1960's, took note of where she is 30 years later.
JOYCE LADNER, Control Board: We didn't ask for the new legislation. The authority didn't lobby for it, but we accepted the responsibility with the full faith and the hope--the full faith and the hope that you citizens of this great city will join us under a big tent to work together to make the management reforms as quickly as possible so that we can return to an expedient reparation of home rule as quickly as possible.
MAYOR MARION BARRY, Washington D.C.: This bill took democracy away from the people of Washington, all 600,000 of us--
KWAME HOLMAN: Washington's four-term Mayor Marion Barry.
MAYOR MARION BARRY: Things are improving in Washington. We've got problems, sure. But crime is down by 25 percent; murders are down by 30 percent. Our streets are cleaner now; trash is being picked up in a much more efficient way. A lot of exciting things are happening in terms of restructuring government. But even if all of that was not happening, there is no justification that anybody can give for taking power from the people. That's a basic, fundamental, human and civil right.
A city in decline
KWAME HOLMAN: The nation's capital has been battered in recent years. Crime and poor schools helped drive tens of thousands of middle class residents to the suburbs, leaving behind a core of poor and elderly, mostly black residents, many of whom rely on expensive government services, such as Medicaid and nursing homes. As the tax base shrank, the city government struggled to pay for a series of state-like services no other city undertakes, including a sprawling mental hospital and a 5000 inmate prison. Two years ago, the city government essentially went bankrupt, and the control board headed by former Federal Reserve Board Governor Andrew Brimmer took over the city's finances.
MAYOR MARION BARRY: There are those who advocate that I should fire at least 5,000 of you all right now. I'm not going to do that.
KWAME HOLMAN: But management problems with the city government work force--once as large as 45,000, now at 35,000--continued. It historically has been ill-equipped and ill-managed. Critics of Marion Barry--mayor for most of the 24 years of home rule--say he could not or would not address his bureaucracy's fundamental inadequacies
ANDREW BRIMMER, Chairman, Control Board: Up and down the line there are failures, and that's what we have to correct. The Mayor apparently has not been able to come to grips with that. So we frankly were--had lost patience with that.
KWAME HOLMAN: Now the control board, responsible only to Congress and the president, is in direct charge of most of the bureaucracy. Brimmer says the board will hire a team of management consultants but making improvements won't be easy.
ANDREW BRIMMER: I see the failures day by day. Under the arrangement, I approve most of these contracts. And let me tell you that last Friday, 7:00 at night, our staff person who handles these contracting issues for us walked into my office at 7:00 at night and handed me a contract and said please sign this on an emergency basis so we can pay Bell Atlantic, so they won't cut off the police telephones. A huge management failure. The computers didn't do that. A manager failed to give that.
KWAME HOLMAN: As for Mayor Barry, he retains authority over public libraries and recreation and tourism activities. The mayor says he and the control board have worked together to improve service delivery in parts of the government already and he should have been allowed to continue to do that while keeping the full powers vested in him by DC voters.
MAYOR MARION BARRY: I welcome collaboration. I welcome new ideas. I welcome using the big stick of the control board to cut through our procurement laws, cut through our personnel laws. We welcome it. The issue is not whether or not we can make progress. The question is do we have to do it at the expense of the abrogation of democracy, that's all.
KWAME HOLMAN: Virginia Republican Tom Davis is chairman of one of the congressional committees that oversees Washington.
REP. TOM DAVIS, (R) Virginia: I would hope the mayor would try to engage in this in a positive way, trying to help the city, instead of sulking in a corner saying you've taken away my authority. If he had done more of that the last two years, I don't think he would be in this bind now. Democracy isn't an automatic in any society in terms of its ability to work. It depends on strong leaders and cultures of accountability, no corruption and these kind of things, and those are not automatic. So I think we have to recognize that democracy is young in the city and it needs nurturing, and I think these changes that have been brought upon the city at this point are going to be helpful in that regard.
Federal government to become the District's "state"
KWAME HOLMAN: Davis points out the same law that removed the mayor's authority also will bring big benefits to the nation's capital. The federal government essentially will act as the city's state. It will house Washington's felony prisoner population gradually over the next few years; take over the city court system; 
pay a bigger share of the huge Medicaid bill the city pays for health services to the poor; and take over a police and firefighters' pension fund liability that's grown to $5 billion dollars. Most of it accrued before home rule took effect in 1973. And Congressman Davis says the good things for the city don't end there.
REP. TOM DAVIS: If you live in the city, you can get a $5000 first-time home buyers tax rebate. Nowhere else in the country will you get that. If you put businesses in most of the city, you're going to be able to get in employer tax credits, you are going to be able to get other kinds of tax relief. This is our effort to help the city.
KWAME HOLMAN: Last week the city's various policy-makers had a reconciliation of sorts.
They all vowed Mayor Barry will have a part in the control board's management of the city government.
REP. TOM DAVIS: We're trying to enlist all the talent we can. He's the chief elected official of this city, and we're going to try to keep him involved in this process.
KWAME HOLMAN: A major goal of the effort to revitalize the nation's capital is to stem the hemorrhage of middle class residents who have fled the city's woes. In a NewsHour report last winter dentist Bill Ebbs was on anti-crime patrol with a group of his Capitol Hill neighbors. He said crime and poor city services had him on the verge of joining the exodus from the city.
DR. BILL EBBS, Dentist: (February) I think to keep me in the city much longer something drastically has to change. I mean, within the next year personally. If not, I'm going to sell my house and I'm going to move to the suburbs.
"I am tired of dealing with issues that I don't think I should have to deal with."
KWAME HOLMAN: Six months later, Ebbs still lives on Capitol Hill and works in a clinic 12 blocks from the White House. He says he recently had a bad experience.
DR. BILL EBBS: I was actually driving down the street about 11 o'clock a couple of Saturdays ago on my way to a party—about 11 o'clock--and stopped at the intersection and saw a guy pull a gun out and shoot a guy on the corner, literally right in front of my car, and ran away. And I know the guy died because I came back the next day and there's a little sign there, and they had held a memorial for him that said he had died.
I am tired of dealing with issues that I don't think I should have to deal with, such as pubic works, you know, having things done, the potholes repaired, rat control in the city, the amount of crime that's in the city. I am constantly on edge here, and I am tired of living like that.
KWAME HOLMAN: Ebbs says he'll wait to see if the federally mandated takeover of the city government will work
DR. BILL EBBS: The city is in such desperate need for help that we don't have a choice but to go the way we are right now. The federal government has to come in here and straighten things up. I'm hoping that in three to four years that we will be able to again elect a mayor who will have the ability and the authority to run the agencies of the city. It does bother me that I live in the District of Columbia, and that I pay taxes like everyone else, and that I don't have the representation that I should. But I don't know what else to do right now. I don't know how else to live in the city, and I think a lot of Washingtonians feel the same way, that something has to change.
KWAME HOLMAN: The new law mandates that the control board's over the city government is to be only temporary. After the city's books are balanced and its management reformed, the nation's capital's elected government will take over again.
