To establish an annual Federal infrastructure support contribution for the District of Columbia, and for other purposes.

Summary: District of Columbia Fair Federal Compensation Act of 2004 - Provides for an annual Federal infrastructure support contribution to the District of Columbia.

Establishes the Dedicated Infrastructure Account in the general fund of the District.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``District of Columbia Fair Federal 
Compensation Act of 2004''.

SEC. 2. FINDINGS; PURPOSE.

    (a) Findings.--Congress finds as follows:
            (1) A General Accounting Office (GAO) report of May 2003 
        found that the District of Columbia has a substantial 
        structural imbalance, ranging from $470,000,000 to 
        $1,100,000,000 annually, and that this imbalance is beyond the 
        direct control of local officials because it is caused by 
        mandates, legislation, and other requirements imposed by the 
        Federal Government.
            (2) The GAO report was preceded by 2 reports by 
        distinguished groups who also concluded that the District had a 
        structural imbalance: A 2002 McKenzie study commissioned by the 
        Federal City Council (an organization of regional and local 
        business leaders), and a 2002 study by the Brookings Institute, 
        led by Alice Rivlin, the former director of the Congressional 
        Budget Office and former chair of the District of Columbia 
        Financial Responsibility and Management Assistance Authority.
            (3) The components of the structural deficit are all 
        Federal in origin and consist of the following: Locally 
        provided services to the Federal Government; a Federal statute 
        which exempts from taxation 66 percent of the income earned in 
        the District; the exemption from taxation of 42 percent of the 
        real property owned by the Federal Government; and the 
        requirement to provide State services, such as special 
        education and mental health, although the District is not a 
        State.
            (4) The District's tax burden is among the highest in the 
        Nation because of the Federal requirements documented in the 
        2003 GAO report. However, the funding provided by these taxes 
        is still insufficient to meet the obligations of the District, 
        especially the long-term obligations to carry out critical 
        capital projects to maintain and improve the District's 
        infrastructure, projects that are not only typically funded by 
        a State but that the District must carry out because of its 
        mandate to support the infrastructure needs of the Federal 
        Government and the entire Washington region. As a result, the 
        District must obtain the funds needed to meet these obligations 
        through a continuous series of borrowings, incurring more and 
        more debt service payments each year, and causing the 
        District's per capita rate of general obligation debt to be the 
        highest in the Nation.
            (5) The GAO concluded that greater management efficiency by 
        the District government is necessary, but that ``management 
        improvement will not offset the underlying structural imbalance 
        because it is caused by factors beyond the direct control of 
        District officials''.
            (6) The GAO recommended against the only 2 alternatives 
        available to the District. Raising taxes would ``worsen D.C.'s 
        competitive advantage in attracting new businesses and 
        residents'' and cutting services for residents and visitors 
        would have ``undesirable consequences for the District's 
        economy''.
            (7) According to the GAO, the options are to ``change 
        Federal procedures to expand the District's tax base or provide 
        additional financial support and a greater role by the Federal 
        Government to help the District maintain fiscal balance''.
            (8) The District of Columbia, through prudent budgeting and 
        improved management, has had a balanced budget with surpluses 
        for 7 years; however, the District's Chief Financial Officer 
        (whose position was created by a Federal statute) has found 
        that severe fiscal problems are inevitable as the District 
        works to close spending pressures and find remedies to its 
        inherent structural imbalance.
            (9) Maintaining financial stability in the District, just 
        as in other cities, requires a stable, predictable source of 
        revenue that increases modestly but regularly over time.
    (b) Purpose.--It is the purpose of this Act to provide an efficient 
mechanism and formula for the transfer of revenue from the Federal 
Government to the District government, and to dedicate this revenue for 
the sole purpose of rectifying an annual structural imbalance which is 
due to--
            (1) Federal requirements and limitations on the ability of 
        the District of Columbia to generate revenue;
            (2) the use of District of Columbia real property by the 
        Federal Government for Federal facilities and other Federal 
        purposes; and
            (3) the District's status as a Federal city which is not 
        part of a State but incurs many of the same expenses as a State 
        that would otherwise be responsible for these expenses.

     TITLE I--DIRECT FEDERAL CONTRIBUTION FOR INFRASTRUCTURE COSTS

SEC. 101. ESTABLISHMENT OF DIRECT FEDERAL CONTRIBUTION TO DISTRICT OF 
              COLUMBIA.

    (a) Entitlement of District to Contribution.--For each fiscal year 
beginning with fiscal year 2005, the District of Columbia shall be 
entitled to receive an annual infrastructure support contribution to 
support the infrastructure used by the District of Columbia and in part 
by the region in accordance with this title.
    (b) Obligation of United States.--Subsection (a) constitutes budget 
authority in advance of appropriations acts and represents the 
obligation of the Federal Government to make annual infrastructure 
support contributions in accordance with this title.

SEC. 102. DETERMINATION OF AMOUNT OF CONTRIBUTION.

    (a) In General.--The amount of the annual infrastructure support 
contribution required by this title is equal to--
            (1) in the case of fiscal year 2005, $800,000,000; and
            (2) in the case of each succeeding fiscal year, the amount 
        required for the previous fiscal year, increased by the 
        applicable index described in subsection (b).
    (b) Applicable Index.--In subsection (a), the ``applicable index'' 
with respect to a fiscal year is the greater of--
            (1) the percentage by which the Consumer Price Index (all 
        Urban Consumers, United States City Average) for the 12-month 
        period ending on June 30 preceding the beginning of the fiscal 
        year exceeds such Consumer Price Index for the preceding 12-
        month period; or
            (2) 4 percent.

               TITLE II--DEDICATED INFRASTRUCTURE ACCOUNT

SEC. 201. ESTABLISHMENT OF ACCOUNT.

    There is established in the general fund of the District of 
Columbia an account to be known as the Dedicated Infrastructure Account 
(hereafter in this title referred to as the ``Account''), which shall 
consist of the following amounts:
            (1) Amounts deposited pursuant to section 202.
            (2) Such other amounts as may be deposited pursuant to 
        District of Columbia law.
            (3) Interest earned on amounts in the account.

SEC. 202. DEPOSIT OF ANNUAL INFRASTRUCTURE SUPPORT CONTRIBUTION.

    Each annual infrastructure support contribution made to the 
District of Columbia under title I for a fiscal year shall be deposited 
into the Account.

SEC. 203. USE OF AMOUNTS IN ACCOUNT.

    (a) In General.--Amounts in the Account may be used only for the 
following purposes:
            (1) Transportation activities, including the payment of the 
        local share of participation in public transportation 
        activities and road construction and improvement projects.
            (2) Information technology improvements for the District 
        government.
            (3) Debt service payments on bonds, notes, and other 
        obligations of the District government.
            (4) Building and facility maintenance, construction, and 
        capital improvement projects for District of Columbia public 
        schools and public charter schools.
    (b) Availability of Funds.--Funds appropriated or otherwise made 
available from the Account shall remain available until expended.