Online NewsHour: Trouble in Washington, D.C. -- March 7, 1997

CAPITAL WOES

MARCH 7, 1997

TRANSCRIPT

Kwame Holman looks at Washington, D.C.'s problems and possible solutions.
KWAME HOLMAN: Orange Hat patrols are common in urban cities, but here in Washington, D.C.'s diverse neighborhoods that spread East from the U.S. capitol building the anti-crime citizen patrols have a sense of urgency. Bill Ebbs lives 12 block from the capitol and organizes the Orange Hats.
BILL EBBS: The crime problem has completely gotten out of control up here, and we have a serious problem with drugs, a serious problem with burglaries into cars and to houses and we actually even had a murder in the alley behind the houses here about six months ago.
KWAME HOLMAN: The crime rate in Washington actually is down, but it's seen as emblematic of the broader problem. The city government is insolvent to the point that on Orange Hat Patrol Night the local National Guard donates its high intensity anti-crime lights. Over the last several years money and management problems often made it a daily guessing game as to whether the city could deliver such basic services as police and fire protection. Even a congressionally-mandated financial authority installed two years ago hasn't ended the district's rising budget deficit. Local officials say fear the city can't right itself helped drive out 63,000 mostly middle income families since 1990. A third of those who remain in this majority black city of 540,000 live at or near the poverty line, so middle class homeowners like dentist Bill Ebbs are vital.
BILL EBBS: I've tried for a year and a half since I've been here to have, for instance, public works things to happen as far as getting trees cut down, as far as getting allies cleaned up. And it takes months and months and months just to get answers. 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; I'm going to move to the suburbs.
KWAME HOLMAN: President Clinton reportedly as concerned about the decline of the city he lives in throughout his first term, but aides say he hoped Washington's long-time mayor, Marion Berry, could work them out under the watchful eye of an independent control board. Finally, after rock bottom student test scores and a financial emergency forced the control board to take over the school as well the President acted. In December he proposed the federal government take over some of the city's financial responsibilities. The President talked about it at a Washington public school two weeks ago.
PRESIDENT CLINTON: We made this proposal for the Congress to relieve the district government of some of its financial burdens. As I have said many times, one of the major problems with the District of Columbia is that it has too often been a not quite place. It's not quite a state, but it's not quite a city. So it has been loaded up with responsibilities that normally are only borne by states. I think that is wrong, and I think we should do better about that.
KWAME HOLMAN: Washington is, indeed, a hybrid of city-state. In addition to traditional municipal services such as police, fire, and schools, it provide state-like services, a 7,000 inmate prison, a four-year public university, a mental hospital, and it pays a state-sized share of the cost of the region's subway system. Inside one of the abandoned floors of the Wilson Building, Washington's city hall now awaiting renovation, District of Columbia council member Frank Smith is hopeful his city will be fixed as well. He says the district began running out of money to pay for the myriad services it provides as taxpayers fled at the same time an economic downturn took hold at the beginning of the decade.
COUNCIL MEMBER FRANK SMITH, District of Columbia: The decline in revenue has been slow and gradual up to probably five or six years ago, and it has become very dramatic. And we just didn't act fast enough to cut back on the government to keep us actually from going into insolvency, which is where we are now.
KWAME HOLMAN: To try to stabilize the district the President has proposed the federal government renovate and run the district's prison, relieving the city of a nearly $200 million a year budget item, oversee and fund the city's court, pay a higher federal share of Washington's bill for medical services to a large poor population in the Medicaid program, take over Washington's pension plan for retired city government workers, eliminating another $300 million annual item from the city budget. The President also has offered to spend millions to help Washington repair its notoriously potholed streets and to spur economic development in the city. Council Member Smith says the offer of help from the federal government is both appropriate and overdue.
COUNCIL MEMBER FRANK SMITH: I've sat here at this window and watched the inaugural parade a few weeks ago when the President marched down the street. We have plenty of our police officers out here guarding him every time he moves around or every time a diplomat moves around in this city, a visiting head of state. There's a big demonstration, our officers are out here; they use our water and our sewer, so the government is a consumer. The federal government is a consumer, and it should pay for those services that it extracts from the people of the District of Columbia.
KWAME HOLMAN: In fact, the federal government does pay the district an annual fee as compensation for federal and other land the city is forbidden to tax. But the so-called federal payment, close to $700 million this year, has been called unfairly low by city officials for years. Eleanor Holmes Norton is the district's non-voting delegate to the House of Representatives.
DEL. ELEANOR HOLMES NORTON, (D) District of Columbia: If you look closely, the federal payment worth over some $700 million on papers now down to only $1/2 million, $500 million, because it hasn't been raised since 1991, and I can tell you without fear of being contradicted, has almost no chance of being raised in the foreseeable future. So it's an amount that goes down, down, and down.
SPOKESMAN: Good morning. And welcome to the first hearing of the 105th Congress of the District of Columbia subcommittee.
KWAME HOLMAN: Indeed, Congress, led by a handful of committees that oversee the district, has been reluctant to increase that payment the city receives for untaxable federal land, calling on the city to improve service delivery first. Office of Management & Budget Director Franklin Raines says the plan he designed for President Clinton would eliminate that payment altogether.
FRANKLIN RAINES, Director, Office of Management and Budget: Well, the federal payment over the years has been pointed to as the compensation for a wide variety of limitations on the city, and the value of those limitations has always greatly exceeded the amount of the federal payment. But we tried to do a change of paradigm. What we tried to say is that this federal payment can't carry all of that weight. And what we need to do is instead of compensating the city by giving an annual lump sum payment, we should compensate the city by taking over some of its expenses.
KWAME HOLMAN: In the Old Executive Office Building Raines explained that like most things in the federal budget Congress is in no mood to spend more on the District of Columbia.
FRANKLIN RAINES: I think the prospects of getting large amounts of additional federal dollars are very small, given the effort to balance the budget. Indeed, we are going to have to work very hard to get the President's plan approved because it does involve additional federal costs, and I think going beyond the President's plan will be quite problematic in this year.
KWAME HOLMAN: But city officials, from the mayor to the city council to the control board, point out that some estimates show the President's plan actually takes away nearly as much as it gives and could leave the city exactly where it is now--strapped for cash.
COUNCIL MEMBER FRANK SMITH: The federal government, they shouldn't just be looking at us saying, well, we're going to take over a few things here and a few things there to make up for all of those services that you provide to us, and we're going to try to come out of this thing with a zero sum gain. That means you're never going to be able to pay police officers; you're never going to be able to fix your schools and your roads because you don't have any money to fix them with. So what they're doing is really dooming us to this situation that we find ourselves in now where we cannot provide adequate services for our people here in the District of Columbia.
KWAME HOLMAN: Delegate Norton acknowledges such potential problems but says the President's offer is the last best hope for the teetering district.
DEL. ELEANOR HOLMES NORTON: I think really the only option the district has now is to understand that this plan is probably the only thing we're going to have to work with, so what we have to do is work out the problems we see with this plan because we don't--this is probably our last chance.
KWAME HOLMAN: Whatever the outcome of the revenue debate, working in the district's favor is an unusual amount of bipartisanship about helping Washington. Republican leaders including House Speaker Newt Gingrich and Senate Majority Leader Trent Lott support tax breaks to help Washington lure back middle class residents. And already there are tangible signs of hope for the city. Home sales are up. Work on the city's schools is showing progress, and major downtown construction is underway. And if Congress accepts the President's plan, it would be historic for the district. Congress would be removed from any further authority over the budget of the nation's capital.

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