59

In fact, Ms. Norton, we support the automatic appropriations of
a portion of the Federal payment. But on the other hand, if I were
to make a recommendation, I think we ought to get at least a quar-
ter of the Federal payment up front so we can meet these obliga-
tions.

Well, how do you then control the spending? It is very easy. It
is very unlikely that this Congress, in regard to how reactionary
it may become, is going to cut 75 percent of the Federal payment
out of your total amount. So if we have $660 million this year, the
average monthly appropriation would be about $55 million, which
means we still could not meet our retirement board payments, and
it causes interest, too. Whenever we don’t make those payments,
they charge us interest on the money they have been making by
investing it.

The Metro charges us interest on the money they had to borrow
when we don’t make our payment. So we need at least $100 million
upfront just for those two payments alone, not to mention the fact
if you look at the last 4 or 5 years, an increasing amount of Federal
payment initially has gone to pay past bills from the year before.

How do you control that? First of all, Mr. DeSeve knows that, as
you said, Ms. Norton, if we owe the Treasury $200 million, they are
going to get theirs upfront. It is nonsensical to say we can’t protect
our money because you’re going to get it upfront.

Second, once the appropriation is made, you make the adjust-
ments. You know, if it is less than 660 in a quarter that is less
than that, you make the adjustments on the back end. So if it is
$600 million, so we’ve gotten a quarter of 660, you make the ad-
justment on the $600 million as you appropriate it. Take out the
Treasury borrowings and give us a quarter. That would be a more
manageable way of getting our money.

The same is true with your local appropriations. We look at our
cash-flow. With our local money we don’t spend at a monthly rate
of one-twelfth, one-twelfth, one-twelfth. Suppose we spend in the
first 2 or 3 months at a rate greater than the annual expenditure
for our local money; once the appropriations are made, you make
the adjustments on the back end to ensure that you don’t over-
spend for the rest of the year. That is not difficult to figure out in
terms of how we do that.

For those who advocate even with our local money that it be
spent at one-twelfth the rate, is really not dealing with reality. We
ought to be able to spend according to our plan.

First of all, our budget would have been looked at by the Author-
ity with their recommendations for 1996, for instance. The city
council would have approved our budget for 1996 with their author-
ity. And then the Authority’s recommendation would have been be-
fore the Congress, and that would be our guideline for how it would
spend within the appropriations title.

So a lot of protections here against overspending and also it gives
the local government its priority of how we spend our money. So
I thought I would add that.

Also during the shutdown, as you probably know, a lot of ex-
penses continue, and I want to give you a couple of examples, a few
examples of the impact of the shutdown.


25

require prior notification of the Financial Responsibility and Management Assistance Authority

about the Mayor's spending plan, providing for some continued oversight. However, without a

pro rata formula to restrain the funding levels, the District Government could obligate full year
amounts at any rate, potentially undercutting Congressional prerogatives in final appropriation

action.

Section 3 of the bill appropriates the pro-rata monthly share of the Federal payment in
cases of a funding hiatus for the District. The amount would be based on the lower of the House-
passed or Senate-passed versions or the previous year's enacted level. This could constitute a
permanent indefinite appropriation of the Federal Payment which could diminish Congressional
oversight of direct Federal funding to the District. Moreover, an automatic disbursement of the
Federal Payment could impair the mechanism established for repayment to the Department of the
Treasury of advances made, pursuant to the Financial Responsibility and Management Assistance

Act of 1995. The Administration is opposed to this provision

That concludes my testimony. I will be glad to respond to any questions that you or other

Members of the Subcommittee may have at this time.


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
WILLIAM F. CLINGER, Jr., Pennsylvania, Chairman

BENJAMIN A. GILMAN, New York
DAN BURTON, Indiana

J. DENNIS HASTERT, Ilinois
CONSTANCE A. MORELLA, Maryland
CHRISTOPHER SHAYS, Connecticut,
STEVEN SCHIFF, New Mexico
ILEANA ROS-LEHTINEN, Florida
WILLIAM H. ZELIFF, Jn, New Hampshire
JOHN M. McHUGH, New York
STEPHEN HORN, California

JOHN L. MICA, Florida

PETER BLUTE, Massachusetts
‘THOMAS M, DAVIS, Virginia

DAVID M. McINTOSH, Indiana

JON D. FOX, Pennsylvania

RANDY TATE, Washington

DICK CHRYSLER, Michigan

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

WILLIAM J. MARTINI, New Jersey
JOE SCARBOROUGH, Florida

JOHN B. SHADEGG, Arizona
MICHAEL PATRICK FLANAGAN, Illinois
CHARLES F. BASS, New Hampshire
STEVEN C. LaTOURETTE, Ohio
MARSHALL “MARK” SANFORD, South

Carolina
ROBERT L. EHRLICH, JR., Maryland

CARDISS COLLINS, Illinois

HENRY A. WAXMAN, California

TOM LANTOS, California

ROBERT E. WISE, Jr., West Virginia

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

JOHN M. SPRATT, Jr., South Carolina

LOUISE McINTOSH SLAUGHTER, New
York

PAUL E. KANJORSKI, Pennsylvania

GARY A. CONDIT, California

COLLIN C. PETERSON, Minnesota

KAREN L. THURMAN, Florida

CAROLYN B. MALONEY, New York

THOMAS M. BARRETT, Wisconsin

GENE TAYLOR, Mississippi

BARBARA-ROSE COLLINS, Michigan

ELEANOR HOLMES NORTON, District of
Columbia

JAMES P. MORAN, Virginia

GENE GREEN, Texas

CARRIE P. MEEK, Florida

CHAKA FATTAH, Pennsylvania

BILL BREWSTER, Oklahoma

‘TIM HOLDEN, Pennsylvania

BERNARD SANDERS, Vermont
(Independent)

James L. CLARKE, Staff Director
KevIN SABO, General Counsel
JuprrH McCoy, Chief Clerk
Bup MvERs, Minority Staff Director

SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
THOMAS M, DAVIS, Virginia, Chairman

GIL GUTKNECHT, Minnesota

JOHN M. McHUGH, New York

STEVEN C. LATOURETTE, Ohio
MICHAEL PATRICK FLANAGAN, Illinois

ELEANOR HOLMES NORTON, District of
Columbia

BARBARA-ROSE COLLINS, Michigan

EDOLPHUS TOWNS, New York

Ex OFFICIO

WILLIAM F. CLINGER, JR., Pennsylvania

CARDISS COLLINS, Illinois

Ron HAMM, Staff Director
Howarp Denis, Counsel
ANNE MACK, Professional Staff Member
ELLEN Brown, Clerk
Denise WILSON, Minority’ Professional Staff

aD


68

Mr. WILLIAMS. Just very, very briefly, Mr. Chairman.

Thank you, Mayor, Mr. Chairman and Ms. Norton. Thank you
for your cosponsorship of this legislation.

I would just very, very briefly say that I echo the remarks of the
Mayor in terms of the program impact of disruptions of Federal
shutdowns on the District because, after all, the appropriations
process is about achieving performance and fiscal integrity, and I
think both of those aims and objectives are thwarted by a disrup-
tion and its effect on the District.

Performance is certainly undermined in that many, many serv-
ices directly impacting city residents cease. Not only that, but fiscal
integrity is also undermined in the sense that there is a loss of rev-
enue, there is an inability of the District to properly manage and
forecast its financial affairs and very, very important life, a diver-
sion of the District from the important task of composing and de-
veloping for consideration of the Mayor, the Authority and this
Congress its preeminent objective and that is its financial planning

udget.

in terms of my concerns with the legislation, I would echo the
Mayor’s remarks in terms of the Federal payment. The concern
with the stream of Federal payments in Section 3 is—I think, goes
to the reliability, it’s an entitlement, what kind of appropriations
is it, what kind of scoring implications are there?

I think that all of us can work together to try to see that the Dis-
trict has the infusion of cash it needs at the beginning of the year
so that it can once again divert its attention from these fires and
these crises to this long-term financial planning that puts the gov-
ernment on the footing that I know all of us want to have it on.

I would also endorse the views of the Authority as it relates to
the role of the CFO in the apportionment process in setting these
obligations and expenditures. I think that making the language in
the first section of this bill consistent with the Authority Act is con-
sistent with the CFO’s reporting responsibilities, both through the
Mayor and the CFO’s responsibility for setting obligations and ex-
penditures in a control year. With that, that’s my testimony.

Thank you.

[The prepared statement of Mr. Williams follows:]


79

should not have been exempted. These are essential services day
to day, and, you know, as this stretches out, what you can go with-
out for a day or two, and what you can’t go without for a week or
two. So I would just be interested in your thoughts on that.

Mayor Barry. As I said, we started with public safety, obviously,
fire, police, and corrections, et cetera. Then we looked at the edu-
cation system. We included the public schools, but not UDC. Again,
it was a judgment, since there was no clear-cut guidelines. Then
health and safety. That’s how the trash came into it, at some point.

After a while, we said we no longer can let this trash—outside
of being unsightly, it was unhealthy, to have trash in our neighbor-
hoods where rats and dogs and everything could get into it, or just
smell. And we took it as far as we could in terms of, like, health
clinics.

I agree we need to—if we don’t get this through, we need to bet-
ter define what’s essential from a local government point of view.

Mr. Davis. Got to give you more flexibility.

Mayor Barry. I think all of our services are essential.

Mr. Davis. The administration gets beat up a little bit by Federal
employees who think they are essential, and the people they are
helping think they are essential and they are not declared that,
and then those services aren’t provided.

But at least in the case of the Federal Government they are rep-
resented, they are at the table when the impasse comes. The Presi-
dent has a pen; he can Sign it or not sign it. He may or may not
have gotten what he feels he can do, but they are at the table. The
same with Congress. You are not at the table. It seems to me there
is a big difference here.

Mayor Barry. Not even in the room.

Mr. Davis. You are reading about it, right?

Mayor Barry. Yeah.

Mr. Davis. We weren’t in the room either. It was a small room.

To me, this is a manifest injustice that should not happen, and
we are getting complaints from vendors who live all around the re-
gion, just as you are. When they can’t get through to you, they call
us.

Many of your employees live out in the suburbs as well, people
who drive and work in the city. We are seeing, you know, that the
level of service isn’t the same. But this is just an unintended con-
sequence. This is stupid, this should not have to happen again.

e have just got to write a bill that will pass muster with the
pay-go legislation, and get it through Appropriations. It is very dif-
ficult to find people who would disagree with the proposition that,
because Congress and the President can’t get their act together and
can’t get their job done, for whatever reason, that somehow the
city, with its own tax money, 85 percent raised locally, that the cit;
can’t go ahead and continue operating. I mean that is just stupid,
and I haven’t heard anybody stand up and defend that position. So
in theory, everybody is with us.

Now, the problem comes when you put the specific legislation up,
as you have heard today, and we are going to hear more people
start nitpicking at pieces of it. We have got to frame this in such
a way that we can get something out of committee, get it to the
floor, and get the leadership behind it.


15

Ms. Norton. Thank you very much, Mr. Chairman.

May I express my appreciation and that of D.C. residents and of-
ficials, to Chairman Tom Davis for stepping forward on the basis
of principle and the best interests of the District, to hold this hear-
ing and then move for a rapid markup. Instead of sidestepping the
crushing effect of a shutdown on a city in the midst of the worst
financial crisis in memory, the chairman has taken hold of the
issue, resolved to explore it and seek a solution.

The D.C. Fiscal Protection Act, which the chairman has cospon-
sored, is a simple idea, about simple efficiency, and if I may say
so, simple justice. In essence, it would allow the District to obligate
and spend local tax-raised money to avoid a government shutdown
when there is a Federal budget dispute or the D.C. appropriation
is not signed by the beginning of the fiscal year.

Almost 85 percent of the D.C. appropriation is locally raised.
Keeping a complicated city functioning is so transparently nec-
essary that I believe the only reason that Congress has not acted
before now is that until last month there had never been a shut-
down of any significant duration.

Whatever partisanship, even hostility, the District has some-
times received from the Congress, I do not believe that Members
intend to do the District active, deliberate harm. However uninten-
tional, a shutdown does exactly that.

The District, with the help of the financial authority, must fix
the District government. Only the Congress can fix the shutdown
problem. We had best be about that with some haste. Even if the
city were in the best shape, a shutdown of any significant duration
would be crippling to residents and services.

Unlike the Federal’ Government, a city provides frontline serv-
ices, almost all of which are essential to day-to-day decent living.
Yet because the applicable statute, 31 USC Section 1341, relates to
Federal agencies, the District by the letter of the law initially was
forced to shut down many vital services. Among them were all 13
public health clinics; 2 of the 13 are specialty clinics for highly
communicable diseases, such as tuberculosis.

Another example was the Parole Board, shut tight, with parolees,
unsupervised in a city whose high crime rates are directly related
to recidivism. The Postal Service, I was told, is a fee-generating
agency, albeit with a hefty Federal subsidy. Yet most fee-generat-
ing agencies in the District were not considered essential, despite
a severe financial crisis and the delay in the Federal payment that
puts a premium on every single dollar the District can collect on
its own.

I do not believe Congress has been aware of or intends these ir-
rational and harmful consequences. Congress has been the Dis-
trict’s severest critic, taking no prisoners on issues of inefficiency
and waste. Despite the evidence Congress has gathered over the
years to support its criticism, this body would be hard-pressed to
find an example of greater waste than that which this body unwit-
tingly caused during the week-long shutdown.

Despite unrecoverable losses in productivity, District employees,
like Federal employees, simply had to be paid because they were
forced on to administrative leave. The case for back pay for district
employees was especially strong because of horrendous wage give-


14

AND PUBLIC SAFETY.

CLEARLY, THE SIMILARITY BETWEEN THE DISTRICT'S OPERATING
ENVIRONMENT AND NEEDS, AND THE FEDERAL GOVERNMENT'S ARE
COMPLETELY DIFFERENT. THE DISTRICT GOVERNMENT IMMUNIZES
CHILDREN, FEEDS THE ELDERLY, INSPECTS ROADS AND BRIDGES, ISSUES
BUILDING PERMITS, AND, IN SOME INSTANCES--WE EVEN BURY OUR DEAD.
LET ME STATE FOR THE RECORD THAT LAST MONTH'S FEDERAL SHUT DOWN
ABRUPTLY INTERRUPTED EACH AND EVERY ONE OF THE ABOVE SERVICES--
AND THEN SOME. THE SHUTDOWN WAS SO SUDDEN AND PRECIPITOUS THAT
WE ARE JUST BEGINNING TO FULLY RECOVER FROM THE DEVASTATING
AFFECT OF THE FEDERAL CLOSURE.

FRANKLY, THERE IS NO GOOD OR LOGICAL REASON TO TREAT THE DISTRICT
AS A FEDERAL ENTITY WHEN CONGRESSIONAL CIRCUMSTANCES REQUIRE A.
FEDERAL SHUTDOWN. FIRST AND FOREMOST, 80 PERCENT OF OUR FUNDING
IS DERIVED FROM LOCAL TAX DOLLARS--NOT FEDERAL FUNDS. WHY
SHOULD OUR CITIZENS BE DENIED SERVICES WHICH THEY HAVE, IN EFFECT,
FULLY PURCHASED, SIMPLY BECAUSE OF OUR UNIQUE ORGANIZATIONAL
STRUCTURE AND RELATIONSHIP TO THE U.S. CONGRESS? CERTAINLY
CONGRESS WOULD NOT CONSIDER SHUTTING DOWN NEW YORK CITY,
CHICAGO OR LOS ANGELES, NOR ARLINGTON, PRINCE GEORGES , OR FAIRFAX
COUNTIES, FOR THAT MATTER. WHY SHOULD THE NEEDS OF DISTRICT


32

committee, on H.R. 2661. A copy of the letter is in the Members’
packets.

Without objection, so ordered.

[The information referred to follows:]


103

building permits or inspections, those are the kinds of things that
are—that result in very costly delays for all sorts of business activi-
ties, so while we have not been able to really quantify the impacts,
it certainly did have a very large impact on the business commu-
nity.

Ms. Norton. Well, the regret goes far beyond the business com-
munity. The District has had even in the: best of times a very hard
time holding onto business. It is impossible to run a business in the
District at the same cost that one does it in—in the suburbs. And
again, we have a compounding of problems that will never be docu-
mented I think fully because of the way in which those expendi-
tures flow.

Thank you—I want to thank you the—first, the panel for very
enlightening testimony, and I want to thank the chairman as well.

Mr. Davis [presiding]. Thank you.

Let me ask a couple questions. Let me thank you for being here.

You are a very important part of building the record for this leg-
islation, knowing not only how it affects the citizens of the city,
which we have heard earlier, but how it affects the rank-and-file
workers of this city who are out there trying to do their jobs every
day and have been under tremendous pressure over the last 2
years with the downsizing at the District level. And, of course, the
business community which has suffered as well. And the health
side of it, in terms of how this is affecting people who are in need.

And I think we all recognize that we have got some difficult
questions still ahead. The key is to keep talking to each other, to
try to communicate with each other to recognize that unfortunately
change has to happen. It’s occurring at the national level, it’s hap-
pening in businesses and local governments across this country.
But to try to be there at the table as the decisions are made and
have it done in the fairest way. I think that’s all we can legiti-
mately ask.

I hope there will not be a lot of congressional micromanagement
of this. You have a control board and a city government that are
dealing with some tough problems, and the last thing they need is
for us trying to pinpoint things and micromanage what we are in-
terested in. The bottom line hasn’t be been met yet. We still have
some tough decisions.

When I was in Fairfax, our decisions many times had to be, do
you downsize or does everybody get a pay cut, employees across the
way, or try to save jobs. We did this in a dialog with employees
where we could try that balance across the way.

T have to say it is not the subject of the hearing today, but I had
mentioned earlier the problem with the traffic stoppages that I
think hurts the overall cause. I think whatever happens from that
in terms of violation of laws, will happen. But over the long-term
if we are really going to continue a dialog, I will pledge to you our
best efforts.

I know the control board will, and I will work my side of the aisle
to see if we can get some fair resolution of this. But people are
being hurt when traffic is stopped, when trash trucks are circling,
when bridges are blocked. They have nothing to do with our dis-
putes and it only hardens them in a way toward the people who


39

Mr. Davis. And now I am pleased to call our next distinguished
witness to testify, Dr. Andrew Brimmer, the chairman of the Dis-
trict of Columbia Financial Responsibility and Management Assist-
ance Authority.

Dr. Brimmer, I commend you for the strong and effective leader-
ship you're providing in accordance with the law, which passed
through this subcommittee last spring: As the main sponsor of that
legislation, which was really bipartisan, I want to start by saying
that the authority is correct in its interpretations of the legislation
and the power it confers on you and the CFO and the Inspector
General.

I encourage you to persist and I’m confident that you will. ’'m
not surprised that the authority is now universally referred to as
the control board, and I think both names are appropriate, though
we get many calls from people unable to get your phone number
because they are asking the information operator for the number
of the control board. But I have a feeling you’re not suffering from
a lack of phone calls.

I also want to say that although we have all the key people here
today, this is not a hearing on the authority or that legislation or
to address questions that have been raised about its implementa-
tion. The subcommittee will conduct an oversight hearing on that
very soon.

I intend to address a number of concerns at that time. However,
that time is not today and I would encourage the Members and the
witnesses to try to confine their remarks to the very important sub-
ject that is the subject of this legislative hearing, which I know the
control board and the city and the delegate from the District, I
think, are all, and the administration, are all supportive of.

As you know, Dr. Brimmer, it’s the policy of this committee that
all witnesses be sworn before their testimony.

Would you please rise with me and raise your right hand?

[Witnesses sworn.]

Mr. Davis. Thank you very much.

You can be seated and the subcommittee will carefully review
any written statements you care to submit, Dr. Brimmer.

STATEMENT OF ANDREW BRIMMER, CHAIRMAN, DISTRICT OF
COLUMBIA FINANCIAL RESPONSIBILITY AND MANAGEMENT
ASSISTANCE AUTHORITY, ACCOMPANIED BY JOHN HILL

Mr. BRIMMER. Thank you very much, Mr. Chairman.

And I have with me Mr. Hill, who is the executive director of the
Authority. And I would hope that if some issues arise where a re-
sponse from him would be appropriate, that would be acceptable.

Thank you for inviting me to testify today on H.R. 2661, the Dis-
trict of Columbia Fiscal Protection Act of 1995 that would permit
the District to spend its own funds when the Congress has not en-
acted a budget for the District of Columbia.

The recent closures of large portions of the District government
because of the Federal budget impasse resulted in furloughs which
cost the District millions of dollars in lost productivity. ‘The city’s
critical financial condition would be aggravated by any more such
actions.


64

First of all, let me thank Congresswoman Norton and Congressman Davis for their
leadership in holding this hearing and their continued effort to demonstrate for the Congress
and all of America the unique circumstances of the Nation's Capitol.

1 am here to emphatically endorse the DC Fiscal Protection Act, sponsored by
Congresswoman Norton. There are a great many inequities and imbalances in the relationship
between District citizens and the Federal Government. Most of these issues spark intense
debate and philosophical controversy. Here is an issue today that should not be controversial
and should provide a good opportunity for every member to demonstrate they really care
about the people who live and work in Washington, D.C.

It is not the conscious intention of anyone to purposely shut down the Federal
Government. But this, of course, is the natural consequence of failure to craft legislative
agreement on Federal spending policy. This bill is not about those natural consequences
is about unintended consequences.

The consequences of shutting down the Federal government, and application of the
Anti-Deficiency Act, are dramatically different for local government functions. The Federal
Government performs few direct citizen services that cause serious harm when interrupted —~
even for an extended shutdown of four or five days. The District Government, however, must
use these same guidelines to alter or stop trash collection, issuance of licenses and permits,
performing health and safety inspections, providing care to families and children, delivery of
home care and food to the elderly, library service, or operate the car impoundment lot.

Local government is largely dedicated to service delivery, providing protection,
regulation, services, and care on a daily basis to citizens. Unlike federal agencies, DC
Government is responsible for inspecting and licensing child care facilities, responding to
child abuse complaints, issuing business and drivers’ licenses, parking control, inspecting and
approving construction, overseeing individuals on parole, delivering home care to sick, older
citizens, operating playgrounds for children, picking up trash, keeping traffic lights working,
and operating the draw span of the Woodrow Wilson Bridge.

Terminating these services for even a day does not save money. It compounds
problems and adds expense as well as pain to the lives of nearly 600,000 Americans who
happen to live in the capitol city of the greatest nation on earth. Additionally, it harms the job
‘we must perform as host to the Congress, 19 million visitors annually, the diplomatic
community, and Americans who do business with the Federal Government.

It is not reasonable that there is a connection between stopping public services for only
one city in America and the legislative process of establishing national economic policy. It
simply doesn't make sense.

Let me remind the Congress and the nation that we are not talking about federal tax
dollars here. Washington, D.C., is the only jurisdiction in American whose local revenues are
appropriated by the Congress. When an impasse on budget forces a Federal government
shutdown, we are required by law NOT to spend local taxpayers’ funds on local taxpayers’
problems. We are, under threat of indictment, conviction, fines, and imprisonment, prevented
from spending local revenues for services approved by local, elected, public officials.

More than eighty percent of the District Government budget is made up of local
revenues -- including property taxes, personal and corporate income taxes, sales and gross

2


35

Mr. Davis. I will not read the entire letter, but there are two ex-
cerpts from the first paragraph that are very important.

Quote: “We estimate that the bill would increase direct spending
by about $534 million in fiscal year 1996.” And, quote: “Pay-as-you-
go procedures would apply.” Now these are—unquote. These are
significant problems and I raise them at this time because I want
to hear OMB’s position on them.

Mr. DeSeve, do you agree that pay-go applies to Section 3?

Mr. DESEVE. We’d like to study the CBO letter. We haven’t seen
it. We’ve heard references to pay-go. Again, looking at the appro-
priations history, we don’t believe this triggers a pay-go event in
any way. We can’t see——

Mr. Davis. We’d be interested in your comments and then get
back with CBO.

Mr. DESEVE. We’d be happy to. As I said, we haven’t seen the
letter, we'll be prepared to make comments.

Mr. Davis. OK.

Also, Mr. DeSeve, CBO reads the Federal payment automatic ap-
propriation is open-ended, without a provision for subtracting any
amount already paid. In this case, where the District has already
received more than $300 million of the fiscal year 1996 payment
through the two continuing resolutions that have been in effect, if
the bill were passed in its present form and a new continuing reso-
lution were not put in place, then Treasury would automatically
send the District a check on January 1, and every month there-
after, for one-twelfth of the fiscal year 1996 Federal payment.

The result could be that the District would receive a Federal pay-
ment because of the advances of more than $900 million in fiscal
year 1996.

And while I am certain that my colleague from the District would
be happy to accept this money and the Mayor would be happy to
have it, I’m equally certain that this was not an intent to create
such a situation.

You also see a problem here where the language is not limited
and does not include provisions to adjust automatic appropriation
according to the amount already disbursed.

Mr. DESEvVE. Honestly, we didn’t look at that. But I think if
there is a concern, I think it’s easily clarified and we’d be happy
to work with you to do that.

Mr. Davis. I believe that is the interpretation as to how pay-
go —

Mr. DESEVE, Is that how they got pay-go?

Mr. Davis. If you could look at it, help clarify it, work with Ms.
Norton’s office and the committee staff as we redraft this, we’d like
to try to remedy the problem here.

Once again, I appreciate you coming forward, the administra-
tion’s willingness to step up to the plate on this issue, and give this
the concern and, frankly, the priority it deserves.

Mr. DESEVE. Thank you very much, Mr. Chairman.

Thank you, Ms. Norton.

Ms. NorTON. Thank you very much, Mr. DeSeve.

Mr. Chairman, are you going to call the next witness? Because
I would like leave to enter into the record three editorials concern-
ing the shutdown of the District.


67

Coast Guard that for the first time since this date, we were unable to provide this
function.

Human Services .

@ For two days of the shutdown, all eleven of the District's public health clinics were
closed. Persons with chronic, long-term illnesses (diabetes, hypertension, etc) who
utilize these services did not receive treatment nor medication throughout this period.
In addition, pediatric visits were not available, nor were we able to provide
immunizations to our children or perform vital pre-natal and well baby care.

© The District’s tuberculosis clinic was also closed for a two day period. Again,
persons in need of medication, treatment and monitoring were not able to secure these
services.

The DC Fiscal Protection Act is a reasonable approach to stop these unintended
consequences when a Federal shutdown occurs. It carefully provides for services to continue
without jeopardizing authority or responsibility for Congressional oversight, involvement of
the Financial Authority, or members of the elected DC Government.

Passage of this legislation in no way influences the struggle involving the Executive
and Legislative branches of the Federal Government on balancing the Federal budget. The
intent of Congress will still be served without the inclusion of District Government services in
any shutdown.

There is an ancient African parable which says that when elephants fight, the grass
gets trampled, The citizens I represent are clearly the grass in this situation. ‘The Congress
has a good opportunity to stand on the side of the citizens without in any way jeopardizing its
responsibility or authority for national or Washington, D.C., issues.

T urge prompt passage of this legislation. And I again thank Congresswoman Norton
and Congressman Davis for their efforts on behalf of the people of the district.

END


104

are blocking the bridges when they ought to be in sympathy with
those people.

I understand the frustration that many working people in the
city feel right now. All I can say is that there will continue to be
tough decisions. There are tough decisions at the Federal level as
we sit here and work about balancing the budget. But let’s try to
have a dialog and do that first.

If at that point you are still frustrated, come see us and let us
know. It just puts everybody in an untenable position and it divides
people who ought to be allies and puts them on opposite sides with
the kind of traffic stoppages we have.

It is not just my constituents. I saw Mr. Sweeney, the head of
the AFL-CIO, was caught up in the traffic jam the other day that
was caused by the trash trucks circling at Thomas Circle. So every-
body ends up being hurt in many cases. They stopped an ambu-
Jance in that case which was an unintended consequence of their
actions.

Let’s try to work together. Let’s recognize that we’re not all going
to get all we want. And certainly the working employees of the city
know that. It has been a couple of tough years, and I recognize
that. Ms. Norton recognizes that. The Mayor, the council are sifting
through some tough no-win decisions for them. Let’s just keep that
dialog going.

I would be happy if you would like to say anything now. We can
do it at a later hearing. I would ask you to please refrain from try-
ing to escalate this rhetoric on the traffic, because we have no
choice here in Congress but to come down very hard on anybody
with noble purposes. I just want you to understand that it’s not
being addressed where we might be in sympathy with the issue.

Mr. FLANAGAN. Mr. Chairman.

Mr Davis. Let me just yield, and I will give you a chance to re-
spond.

Mr. FLANAGAN. I think it is important to note in the record, not
withstanding your excellent comments, that the activity that was
participated in was illegal. This is not legitimate union behavior.
This is illegal activity under the D.C. Code, and I think that’s im-
portant to part of the discussion.

Mr. Davis. I had made that point earlier, too.

Mr. FLANAGAN. I thank the chairman.

Mr. Davis. I made it earlier on. I think we know that. I under-
stand the frustration. I think Ms. Norton does. I don’t mean to sug-
arcoat it, though. This is going to be a congressional response as
opposed to a city response or a control board response, and I’m not
sure that’s better. So we understand. You don’t have to say any-
thing, but if you’d like to, that’s fine.

Mr. SCHLEIN. I want to just say I appreciate your offering the
good services of your office, and you know, certainly I don’t want
to talk about any of the details about what happened, as you said,
this is—this isn’t a hearing on that. But thet. would want to just
emphasize that the workers that we represent want to be a part
of the solution to the city’s problems.

We have well-demonstrated that with the sacrifices we have al-
ready made, and it is increasingly frustrating, we feel, that we’re
shut out of the process. And the fact is that we have been shut out


45

Revenue by Source

Taxes & other locally
generated revenue (67%) i

| qa Federal payment (13%)

i}
| Grants (20%)

‘The District of Columbia Fiscal Protection Act of 1995 (H.R. 2661)

This bill contains two major provisions that authorize certain actions when the Congress has
not approved a budget for the District after the fiscal year has begun. First, Section 2 would
allow the District to obligate and expend its funds without an appropriation subject to certain
limitations; and Section 3 would authorize the automatic monthly apportionment of the federal

payment.


87

Ms. Norton. I wish you would explain that again, because, as
the saying goes, all I know is what I read in the newspaper. The
newspapers were telling that there were all these payments out-
standing, vendors calling. Of course, as the chairman says, they
call us, too.

What does it mean that it looked like you already had the money
over there and therefore you couldn’t draw down from the Author-
ity what was needed? I don’t understand that.

Mayor Barry. The first continuing resolution allocated, I think,
$70 million for vendor payments.

Ms. Norton. That is right.

Mayor Barry. And about $50-some million, our daily prorated
share up until November 13th. And so if you take the $70, $50, so
it was over $100 million that the Authority had, because they get
the Federal payment first, and they then disburse it to us to put
in our bank account, and for a period of time they held the money
and we didn’t get it. I can find out precisely how long, but it was,
in my view, Mrs. Norton, too long. But, again, that’s been worked
out where they now know what our balances are.

Before Mr. Williams came, I said to the Authority, “We need the
money now.” But for whatever reason or another, we didn’t get it
now.

Mr. RoceErs. The first continuing resolution allocation, I believe
it was $270 million to the District, of which $147 went to repay the
Treasury loan. The balance went to the Authority and then was al-
located to us based on the presentation of—to them, of demonstra-
tion to them what our payment priorities would be for the disburse-
ment of those funds.

Ms. NorTON. Wasn’t there an amount of $70 million or so—

Mayor Barry. The bottom line, Mrs. Norton, is that the Author-
ity has the Federal payment that was left from having paid the
Treasury. In our view, that should have been disbursed.

Ms. Norton. Let me ask you about the $70 million. As I recall,
that was supposed to go for vendors’ payment. Here I am speaking
for the vendors now. This wasn’t going to you in any case. Was that
money released so that you could pay vendors?

Mr. WILLIAMS. I think that this has all been worked out, Ms.
Norton. I think that criteria have been established to the satisfac-
tion of the Authority.

We have a briefing today to the Authority on our disbursement
schedule for vendor payments on the basis of our cash-flow. We had
the briefing with the Mayor, and I think that this whole issue with
the flow of payments has been resolved.

There has been some conservatism in holding payments, but
there has been, I think, great uncertainty in terms of our future
revenues, receipts. That’s being——

Ms. NorTON. Future receipts from the District or from——

Mr. WILLIAMS. From all sources, to our cash pool. But I think
this is being abated.

If, for example, we are able to receive the loan that the Mayor
has requisitioned from the Treasury and/or our Federal payment to
the amount we need it, we’ll see an abatement of these pressures,
although they will return, and that gets to the Mayor’s point, his


104TH CONGRESS
nese" HR, 2661

To amend the District of Columbia Self-Government and Governmental Reor-

To

1
2

ganization Act to permit the District of Columbia to expend its own
funds during any portion of a fiscal year for which Congress has not
enacted the budget of the District of Columbia for the fiscal year,
and to provide for the appropriation of a monthly pro-rated portion
of the annual Federal payment to the District of Columbia for such
fiscal year during such portion of the year.

IN THE HOUSE OF REPRESENTATIVES

NOVEMBER 17, 1995

Ms. NoRTON introduced the following bill; which was referred to the
Committee on Government Reform and Oversight

A BILL

amend the District of Columbia Self-Government and
Governmental Reorganization Act to permit the District
of Columbia to expend its own funds during any portion
of a fiscal year for which Congress has not enacted
the budget of the District of Columbia for the fiscal
year, and to provide for the appropriation of a monthly
pro-rated portion of the annual Federal payment to the
District of Columbia for such fiscal year during such
portion of the year.

Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,


H.R. 2661, DISTRICT OF COLUMBIA FISCAL
PROTECTION ACT OF 1995

WEDNESDAY, DECEMBER 6, 1995

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 10:07 a.m., in room
2247, Rayburn House fice Building, Hon. Thomas M. Davis
(chairman of the subcommittee) presiding.

Present: Representatives Davis, Gutknecht, Flanagan, and Nor-
ton.

Also present: Representative Clinger.

Staff present: Ron Hamm, staff director; Howie Denis, counsel;
Anne Mack, professional staff member; Ellen Brown, clerk; and
Denise Wilson, minority professional staff.

Mr. Davis. Good morning, and welcome.

The hearing on H.R. 2661 will come to order.

I strongly support the purpose of this bill and commend my
friend and colleague, Delegate Norton, for her sponsorship and the
effort she has put into trying to find ways to keep the District of
Columbia government moving forward.

The situation that caused this bill to be introduced has hurt the
District of Columbia at a time when it needs help from the Federal
Government, not additional problems. We’re here today to look for
ways to ensure the ongoing operation of the D.C. government dur-
ing any future budget impasse can be resolved.

As you all know, on November 13th, the continuing resolution
funding the District of Columbia and parts of the Federal Govern-
ment expired with no new continuing resolution signed by the
President. Beginning on November 14th, those Federal Depart-
ments without a fiscal year 1996 appropriation and the District of
Columbia were forced to furlough nonexempted employees. This sit-
uation not only disrupted many regular government services, but
in this time of crisis in the District of Columbia government, halted
almost all ongoing efforts at reform.

With the District’s cash and budget shortfalls and the need for
Herculean reform efforts, it now seems to me that we can’t allow
this situation to recur. Yet we are rapidly approaching the possibil-
ity of another shutdown. The current continuing resolution expires
December 15th.

The District’s appropriation is still in the conference committee,
and while I hope that the committee can reach an agreement soon,
it appears that it may not be able to do so for the appropriation

ie)


42

shut down any of its services again which would unnecessarily
waste more District resources.

That concludes my statement, Mr. Chairman and Mr. Hill, and
I would be glad to respond to questions that you or other members
of the subcommittee may have at this time.

{The prepared statement of Mr. Brimmer follows:]


73

TESTIMONY OF MICHAEL C. ROGERS
CITY ADMINISTRATOR
DISTRICT OF COLUMBIA GOVERNMENT
BEFORE THE HOUSE D.C. SUBCOMMITTEE
ON H.R. 2661 THE D.C. FISCAL PROTECTION ACT
DECEMBER 6 1995
GOOD MORNING CONGRESSWOMAN NORTON, CONGRESSMAN DAVIS AND
MEMBERS OF THE HOUSE D.C. SUBCOMMITTEE. I AM MICHAEL C. ROGERS,
CITY ADMINISTRATOR FOR THE DISTRICT OF COLUMBIA GOVERNMENT. I
APPRECIATE HAVING THIS OPPORTUNITY TO TESTIFY IN SUPPORT OF H.R.
2661: CONGRESSWOMAN NORTON’S “D.C. FISCAL PROTECTION ACT.” LET ME
STATE FOR THE RECORD THAT THIS PROPOSED LEGISLATION IS ESSENTIAL TO
THE HEALTH, SAFETY AND WELL-BEING OF OUR GOVERNMENT IN EVERY,

POSSIBLE SENSE.

THE HOME RULE LAW ENACTED IN 1973 COMBINED A FULL SERVICE CITY
AND A FULL SERVICE STATE INTO A SINGLE GOVERNMENTAL ENTITY, THE
LIKES OF WHICH HAS NO COUNTERPART ANYWHERE IN THE UNITED STATES.
OUR STATE FUNCTIONS, FROM AN OPERATIONAL STANDPOINT INCLUDE THE
PROVISION OF PUBLIC ASSISTANCE, MEDICAID, CORRECTIONS, MOTOR
VEHICLE AND HIGHWAY CONSTRUCTION PROGRAMS, AMONG OTHERS. OUR
CITY/COUNTY RESPONSIBILITIES INCLUDE LIBRARY SERVICES, PARKS AND
RECREATIONAL ACTIVITIES AND FACILITIES AND OTHER TRADITIONAL
MUNICIPAL FUNCTIONS ASSOCIATED WITH THE PROVISION OF EDUCATION


82

Mayor Barry. Abortion. Those are two issues that I think are
holding it up.

Mr. Davis. Abortion is an issue in everything we do up here. I
tell you, you are not getting treated any differently than any other
agency.

On the education issue, my judgment, for what it is worth, is
that this was essentially put together to help the city, like a lot of
these other initiatives. I think this educational initiative could
have been helpful to the city.

I recognize there are some institutional issues given past city ref-
erendums that make the city reluctant. Maybe there is something
that could be worked out that could be mutually agreeable. But I
am hopeful we can get the appropriations through.

Mayor Barry. Mr. Chairman, the Gunderson approach, the
scholarship fund, is the only area there is any disagreement about.
We support emphatically the rest of the Gunderson situation, and
I understand what we're trying to do, trying to figure out a way
to get low-income families who have children in public schools to
have an opportunity to get scholarships.

The problem is, when the Federal Government puts this money
into the pot, that then appears to some people to be a voucher.

Mr. Davis. I understand. I just hope we can work—whatever
happens, we can continue to work——

Mayor Barry. We want the rest of it, I tell you that, every nickel
of the rest of it.

Mr. Davis. Let me ask one other question. You know, we work
hard up here to help the city, keep it from being shut down because
of the budget battle. But at the same time, we are seeing city em-
ployees themselves, on city time, and with city equipment, actively
shutting down parts of the city with a demonstration.

In fact, there is an article today in the paper that showed the
new head of one of the AFL-CIO was caught up in that traffic jam
yesterday.

I just want to air this to you. We will be talking more about this,
and this is not new, but it appears that it constitutes a misuse of
public property. Then we hear that trash trucks were disabled and
needed to be repaired. This would appear to constitute destruction
of property, if that actually occurred.

In addition, we have heard reports that the city government in-
tends to pay overtime to pick up the trash that wasn’t picked up
because of the demonstration.

Now sitting back where I sit, that just looks unacceptable, and
I hope that you can take care of our specific concerns on this mat-
ter, or we could pursue this further at another hearing. I under-
stand that this wasn’t your demonstration, but that you were just
reacting to it.

And I certainly understand the anger, the frustration, of a lot of
city workers, because they have been put through the mill over the
last couple of years. Even before you came on, this has been build-
ing.

But in the larger context—and I think I speak for a majority of
Members here—we expect the District government to enforce its
own laws and its labor work rules, and if city employees are paid
to work they should not be condoned for illegal actions.


H.R. 2661, DISTRICT OF COLUMBIA FISCAL
PROTECTION ACT OF 1995

HEARING

BEFORE THE

SUBCOMMITTEE ON THE
DISTRICT OF COLUMBIA

OF THE

COMMITTEE ON GOVERNMENT
REFORM AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
ON

H.R. 2661

TO AMEND THE DISTRICT OF COLUMBIA SELF-GOVERNMENT AND GOV-
ERNMENTAL REORGANIZATION ACT TO PERMIT THE DISTRICT OF CO-
LUMBIA TO EXPEND ITS OWN FUNDS DURING ANY PORTION OF A
FISCAL YEAR FOR WHICH CONGRESS HAS NOT ENACTED THE BUDG-
ET OF THE DISTRICT OF COLUMBIA FOR THE FISCAL YEAR, AND TO
PROVIDE FOR THE APPROPRIATION OF A MONTHLY PRO-RATED POR-
TION OF THE ANNUAL FEDERAL PAYMENT OF THE DISTRICT OF CO-
LUMBIA FOR SUCH FISCAL YEAR DURING SUCH PORTION OF THE
YEAR ————_

DECEMBER 6, 1995

Printed for the use of the Committee on Government Reform and Oversight

ae

U.S. GOVERNMENT PRINTING OFFICE
40-279 CC WASHINGTON : 1997

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-055021-1



108

Honorable Thomas M. Davis
December 5, 1995
Page two

through which Congress retained exclusive legislative oversight
to ensure the unimpeded functioning of our national government.

Any continuing resolution or other form of legislation that
provides automatic or permanent-type funding even if for a short
period would in our view abrogate cur Constitutionally charged
responsibilities. It is our strong feeling that we consider each
annual appropriations bill on an individual basis to determine
whether a continuing resolution is necessary

We hope our views are helpful in your deliberations on H.R. 2661.

Sincerely,

SSL

Bob Livingston
Chairman

Subcommittee on District
of Columbia Appropriations




109

Mr. Davis. This meeting is adjourned.
[Whereupon, at 1:15 p.m., the subcommittee was adjourned.]

e)


30

then of course what we got to do is to come up here, wait until we
can get the Appropriation Committee together, it’s already off into
large cosmic issues facing the Federal Government, and we may be
left right where we are now, that sometime during the month or
2-month, or whatever, somebody gets around to appropriating some
cash for the District of Columbia.

And I raise this for this reason; when, in fact, Congress had to
figure out what to do for politically sensitive matters like Social Se-
curity and the like, somehow it managed to get something through
for them. I was waiting in line and said, hey, while you’re in that
line of things that must go through, would you let the District
through that line? And you know what?

We weren’t even allowed to stand in that line, so that some
money was let go and I think the continuing resolution overcame
it and everybody was able to get out, but some money was let—
Feterans payments, Social Security, because that affected Mem-

ers.

And I can understand that. No Member is affected by the D.C.
appropriation except me. And I was standing in that line and they
closed the gate and said, huh-uh, not you, Eleanor. Your folks are
not the Veterans Administration, and your folks are not Social Se-
curity, so you can’t get in this line.

And my challenge to you, is how do I make sure that the District
gets some cash during this period when its appropriation has not

een funded?

Mr. DESEVE. This is exactly our concern with proration. To the
extent that proration does not allow the early funding of obliga-
tions of the District, but rather funds them on monthly basis, it de-
feats the exact problem that you were trying to address.

Mr. Davis. If the——

Ms. Norton. How does it——

Mr. Davis. If the gentlelady would yield for a second, maybe I
could clarify?

Isn't it true that the city has gotten over half their payment
now?

Mr. DESEVE. That is correct, Mr. Davis.

Ms. Norton. Because the Congress has acted. Suppose it hadn’t?

Mr. Davis. The point is if Congress hadn’t acted and the Federal
payment were prorated, the District would not have had access.

Mr. DESEvE. That’s correct. It would have gotten approximately
$50 million, $55 million a month. That’s our point, we’d much rath-
er see it front loaded to the District to match its obligations than
prorated.

Ms. Norton. That is no answer whatsoever. My bill will—that
is no answer.

Just a second, Mr. Chairman. We're talking about a minimum
one-twelfth. What is this, I’m sorry, I really want to give you more,
and that’s why I’m against your kind of proration?

Mr. DESEVE. Yes, ma’am.

Ms. NorTON. Because, in fact, the Congress can always give it
more. I just want to make sure the District isn’t left with any cash.
If you want to have it more prorated, let me know what the figure
is, because I’d be glad to accommodate you.

Mr. Davis. If the gentlelady would yield again?


89

our obligations being made according to plan—big, big issue; and
then finally, if all else fails, controlling disbursements and control-
ling the cash according to some emergency plan.

Mayor Barry. Ms. Norton, Congressman Walsh knows better, in
the sense that he knows that there are four or five discrete areas
in the District’s budget—I can describe some of those—that have
been over the years underfunded. He knows that.

Take Medicaid, for instance. He knows that’s where the over-
spending occurred in 1994 and 1995. The same is true of the
AFDC. The same is true with foster care, and the same is true with
a couple other court orders.

But in the overall aggregate, look at the other agencies of govern-
ment. You'll find this: They were not overspending. We have very
good records, information on where the overspending occurred.

Now, in 1994, I suspect there was some decisions made which—
I wasn’t there—allow Public Works to over spend, but that was a
conscious decision on somebody’s part. That was having roads and
things done during that particular year, as you probably know. But
the District knows exactly where there are pressures on overspend-

ing.

On the other hand, Mr. Williams has a heck of a time trying to
bring some stability to this budget on these short-term CRs. I mean
it goes back and forth. We’re now trying to work out a way where
we take it to 4.994, which we think eventually will emerge; how-
ever it emerges, either through a long-term CR or our bill.

And then I am going to make a recommendation to the Authority
about how to redistribute that 4.994 and try to bring some stabil-
ity. It is—Ms. Norton, I can’t begin to describe to you the problems
and the frustrations and the uncertainty that this creates.

Mr. RoceErs. Let me say, if I may, that we have got to solve this
budget problem. But from an operation standpoint, as being the
one for the Mayor and for the citizens of this government on the
front line every day trying to solve operating problems, we have got
a cash problem. The fact is that if I have a fuel oil vendor that
hasn’t been paid in 2 months or 3 months, and they are threaten-
ing not to deliver fuel oil to our hospitals, to our prisons, because
they can’t take it any more, they have to get our attention. That
is an operating problem that hits us in the face, and it is not the
budget that solves it, it is the cash problem that we have got to
address in order to solve these frontline operating issues.

We are going to do the financial plan and meet all of the require-
ments of the new act. But the bottom line: We can do that; we can
cut this budget. If we don’t solve the cash problem, we are still
going to be faced with the specter of spending a disproportionate
amount of our time trying to figure out who not to pay, because we
don’t have the cash.

Ms. Norton. Well, Mr. Williams’ answer really scared me, be-
cause it looks like, you know, he spends what he has, but in terms
of obligating, he has to be very careful altogether. He knows what
money he has to put up for AFDC or for payroll, but it looks like,
in terms of running the city and obligating the city’s money, he is
aware of the problems that are inherent, and the particular posi-
tion he is put in, I think, is an untenable question.


84

Mr. WILLIAMS. One cost we haven’t talked about. We've had
meetings, and the Mayor has been briefed on this and has been
part of some of them, meetings with the rating agencies who are
looking at the city and looking at the city’s credit.

When they look at credit in jeopardy, such as a city, they look
at the ability to posture the city to get out of its current status and
back into the markets. For example, is there some disruption in the
city or the Authority’s ability to borrow? Is there some threat to the
underlying reliability of that credit? And very, very importantly,
are there obstacles to the city’s financial recovery?

And certainly, disruption of the city by Federal shutdowns would
be in that category and does not help the city in the kind of refi-
nancing that we have to do, as the Mayor recalled.

Ms. Norton. Yes, you can take this off in dollars of interest that
the District will have to pay.

Our largest work force, of course, is not District workers, it is
Federal workers, a very large taxpaying work force. One thing,
among the things you can’t calculate, is how many of those Federal
employees will say, look, they can shut me down if I live in the
suburbs, but at least they can’t shut my services off. Another dis-
incentive to remaining in the District, very tragic.

I called Janet Reno on the first day of the shutdown, after look-
ing at the statute, and urged her to be helpful to the Corporation
Counsel if problems arose on your interpretation of what was es-
sential, and the chairman, of course, in his first question touched
upon really the terrible question. Here you are essentially having
to make a guesstimate—I can hardly think it was anything else—
as to what is essential.

The statute clearly contemplating Federal agencies and not a liv-
ing, breathing city, and, you know, you made some choices that at
earlier times we didn’t make. At the time of the first furlough,
when we didn’t say schools, the reason we didn’t say schools is be-
cause the Federal Government wouldn’t say schools, and yet, given
the fact that the only kind of crime that is continuing to rise in this
country is crime by juveniles, if you move back several steps and
decide what is essential, you invariably get to schools.

I was impressed with what the Mayor said about recreation fa-
cilities, which goes to the same point. Let me ask you about the
issue we have been discussing on the amount of money. Please be
assured that my one-twelfth was foisted upon me by legislative
counsel, the problem being appropriating in advance.

So legislative counsel informed us we certainly can’t appropriate
an amount in advance, because that surely is going to be scored
and going to have very great difficulty.

But legislative counsel did say that it thought that a reasonable
formula for appropriation would pass muster. After all, we have a
Federal payment formula, don’t we? That Federal payment formula
is a formula in advance.

And the reason I didn’t go above one-twelfth, again, on advice of
legislative counsel, was that they thought if you appropriated by a
very high formula, that you would not have a very good chance of
getting any formula. J certainly didn’t mean the one-twelfth to be
a minimum—I certainly meant the one-twelfth to be a minimum.


a -

12
13
14
15
16
7
18
19
20
21
2
23

12

5
(b) CONFORMING AMENDMENT.—The fourth sen-
tence of section 446 of such Act (sec. 47-304, D.C. Code)
is amended—
(1) by striking “and subsections” and inserting
“subsections”; and
(2) by inserting “and section 446A,” after “‘sec-
tion 490,”.
(c) CLERICAL AMENDMENT.—The table of contents
for subpart 1 of part D of title IV of such Act is amended
by inserting after the item relating to section 446 the fol-

lowing new item:

“See. 446A. Expenditure of Distriet funds during delay in Congressional
enactment of budget.”

SEC, 38. AUTOMATIC MONTHLY PRO-RATED APPROPRIA-
TION OF FEDERAL PAYMENT DURING PERIOD
OF DELAY IN ENACTMENT OF DISTRICT OF
COLUMBIA APPROPRIATIONS ACT.

(a) IN GENERAL.—Title V of the District of Colum-
bia Self-Government and Governmental Reorganization
Act (see. 47-3405 et seq., D.C. Code) is amended by add-
ing at the end the following new section:

“PRO-RATED APPROPRIATION OF FEDERAL PAYMENT
DURING PERIOD OF DELAY IN CONGRESSIONAL EN-
ACTMENT
“Sec. 504. (a) IN GENERAL.—For each fiscal year

for which the annual Federal payment is authorized under


54

tem. Overall, we believe that as of the end of November, that figure
was in the neighborhood of about $200 million.

John, do you have any additional information beyond that?

Mr. HILu. The—because the payment system of the District of
Columbia, as Dr. Brimmer said, only records or records obligations
that—and expenditures that are being cued for payment, the only
ones that are currently in the system as of the end of October, it
was about $238 million, I believe, that were from the past fiscal
year. We are currently in the process of having an audit of ac-
counts payable done so that we can know the total amount of ac-
counts payable which should be released some time in December.

But as a result of the—the overspending that may have occurred
in fiscal year 1995 and our estimation of the backlog of invoices
being entered into the system, we think that it could be as high
as $200 million.

Ms. Norton. Dr. Brimmer, do you believe that under the exist-
ing authority were we to give—let me reframe that.

If we were to give you or the District through this bill the right
to obligate its own funds, do you believe that you have sufficient
authority to prevent the District from overspending in relation to
the amount available?

Mr. BRIMMER. Yes, I do. The instrument for doing that, of course,
would be the Chief Financial Officer. And the Chief Financial Offi-
cer has put in place a system whereby designated ceilings against
which the departments and agencies can spend. I believe if he has
not already announced those, they will be announced very soon. I
know these—the designations have been made and I believe the
Mayor or the city administrator would have plans to announce
those some time in the near future.

Now, as to whether the agencies will stick within those ceilings,
I assume they will, because the Chief Financial Officer would be
in a position to monitor those on an ongoing basis. And I assume
that if there were any indication that the agencies were, in fact,
spending at a rate which would exceed those ceilings, that fact
would be called to their attention and they would comply with the
Chief Financial Officer’s instructions to moderate that spending to
keep within the ceiling. So when you say do we have the authority?
The authority rests with the CFO and I think it is sufficient.

Ms. Norton. Thank you.

He, of course, is not only responsible to the Mayor but also to
you, and if you find that there was somehow a setting of ceilings
in a way that did not—that did not conform to the amount avail-
able, then you of course would have the authority to deal directly
with him and the city.

Mr. BRIMMER. Precisely.

Ms. Norton. Thank you.

One more question concerning Federal grants. I noticed, Dr.
Brimmer, in your testimony that you said not only—you said Fed-
eral payment, we should not be able to ob—obligating the Federal
payment would mean you might be obligating in a future year
something you might not get, and I allowed how with this Congress
that coul Be true.

Now, with Federal grants, though, which you also include, you
said Federal payments or Federal grants, I am assuming that t!


96

Fortunately, over the years, shutdowns have been few and short in duration. But
this last shutdown was undoubtedly the longest in history. No other city in America was
impacted in the same way as the District of Columbia. Yes, it's true that the City's
empioyees were forced to stay home, and that their income for that period was in
question. That likely resulted in further frustrating the already dwindling morale among
employees that are struggling to uphold their responsibilities from day to day; Mrs. Norton
and others here today have discussed this at greater length.

But if you are not concerned about the employees themselves, consider the
570,000 taxpaying residents and the countless business establishments that could not
rely on even the most basic of municipal services, such as trash collection. One week of
delay in licensing and permitting, inspections and other business-related regulatory
processes increases costs in what is already a costly and overly complex regulatory
environment and further hinders economic development activities crucial to the City's
future. These are services that are largely paid for by locally generated revenues. It is
this element more than any other that is at the root of our membership's concerns
regarding the impact of a government shutdown specifically, and the erosion of the tax
base generally.

‘The Board of Trade and the entire DC business community has been diligently
working with the City, and more recently with the Financial Responsibility and
Management Assistance Authority, to address the chronic problems that have contributed
to the continued erosion of the City's business community and middie class tax base

Further, we are committed to continuing our efforts to help the City achieve tax parity with


5

RESIDENTS AND BUSINESSES BE DIFFERENT FROM ANY OTHER LOCALITY IN
THE COUNTRY?

SECOND, SUCH AN ACTION COMPLETELY DESTABILIZES AN ALREADY
FRAGILE OPERATING ENVIRONMENT. OVER THE LAST FISCAL YEAR ALONE,
APPROXIMATELY 3,700 EMPLOYEES HAVE LEFT THE DISTRICT GOVERNMENT.
MANY OF OUR AGENCIES ARE HAVING GREAT DIFFICULTY PROVIDING BASIC
SERVICES WITH REDUCED STAFF AND FEWER OPERATING DOLLARS. THE
DEPARTMENT OF RECREATION, WHICH CURRENTLY STAFFS IT’S CENTERS
WITH AN AVERAGE OF 1.5 PERSONS IS A GOOD EXAMPLE OF THIS, AS ARE
CRITICAL FUNCTIONS IN THE DEPARTMENT OF CONSUMER AND REGULATORY
AFFAIRS (FOOD INSPECTORS) AND OTHER AGENCIES. THE FEDERAL
CLOSURE BACKLOGGED WORK ASSIGNMENTS AND LEFT WORK ORDERS
STACKED UP FOR FOUR DAYS AT OUR FLEET AND BUILDING MAINTENANCE,
OPERATIONS, DIRECTLY IMPACTING OUR ABILITY TO MAKE EMERGENCY
REPAIRS AT DISTRICT FACILITIES AND ENSURE THE AVAILABILITY OF

WORKING EQUIPMENT AND VEHICLES.

THE CLOSURE ALSO IMPACTED OUR ABILITY TO GENERATE REVENUE. GIVEN
OUR FISCAL CIRCUMSTANCES, IT IS TOTALLY INCOMPREHENSIBLE WHY THE
DISTRICT WOULD BE TREATED AS A FEDERAL AGENCY. ALTHOUGH A FINAL
FIGURE IS NOT AVAILABLE, WE DO KNOW THAT WATER BILLS WERE NOT
COLLECTED NOR WERE WATER BILLS MAILED OR BUILDING PERMITS ISSUED.


36

Washington Post editorial of Saturday, November 18, 1995; of
December 1, 1995; and the Afro-American editorial of November

5, 1995.

Mr. Davis. Hearing no objection, it’s so ordered, will be entered
as part of the record.

[The information referred to follows:]


48

Financial Officer (CFO) should prepare the notification that the Mayor submits to the Authority.
The District of Columbia Financial Responsibility and Management Assistance Act of 1995
(Public Law 104-8) clearly stipulated that the CFO was to be a key official in the District
responsible for the fiscal affairs of the District. Requiring that the reporting of obligations and
expenses be prepared by the CFO and then submitted by the Mayor ensures consistency with the

intent of Public Law 104-8.

We also have concerns about Section 3, which would automatically release the federal payment
in monthly increments when there is no appropriation. Allowing expenditure of federal funds
without an appropriation raises several fundamental questions. First, there does not seem to be
sufficient justification to alter the historical practice of expending federal funds only when they
have been appropriated. In addition, although the legislation sets forth a formula for determining
these monthly allocations, there is no guarantee that any of these amounts will be the final
congressionally-approved federal payment. As a result, we do not support this Section as

currently drafted.

Tn summary, the Authority supports the broad intent of this legislation. However, we believe
the legislation should be amended (1) to prohibit the obligation or expenditure of funds equal to
the federal payment or federal grants without appropriation and (2) to make it clear that the CFO

should prepare the report to the Authority of planned obligations and expenditures under this Act.


53

Mr. BRIMMER. Yes, yes.

Ms. Norton. I see.

Mr. BRIMMER. And that was possible because the requirement is
that a borrowing would have to be repaid from the Federal pay-
ment, at least that could be secured for the following year. So that
was done. But I agree with you, that is an accommodation. It
would be better if there were a way that they could have this
ahead of time.

Now, we had some discussion about this and I am going to ask
my colleague to describe the consideration we gave to it and sug-
gest pe has some suggestions how we might do it.

ohn.

Mr. HILt. One of the things that—one of the things that the Au-
thority is very concerned about is the rollover that occurs every
year from the previous fiscal year of bills that could not be satisfied
by cash payments from the previous fiscal year. Right now, the Dis-
trict is carrying a substantial portion of bills that really related to
last fiscal year and to fiscal year 1994 that have caused a huge
drain on cash resources for 1996.

I think there are two problems that exist: The first is trying to
solve or to make the District whole for past overexpenditures of re-
sources. That will help to provide additional resources to the city.

The second is allowing the District to borrow against the 1997
Federal payment over next year’s Federal payment, which is al-
ready included in the legislation, the ability to do that. So part of
solving the cash problem is to bring the District whole from pre-
vious fiscal years.

Ms. Norton. And how do you intend to recommend that be done?

Mr. HILL. Well, currently we are looking at a number of different
options. We are looking at the possibility of a debt offering, the pos-
sibility of some other infusion of cash. But these are in very forma-
tive stages right now and we are still working with the District
government and will be working with the Congress also on that.

Ms. Norton. I agree with you, unless we solve that problem, I
don’t know how we get ever to a balanced budget because we keep
rolling over debt.

Could you—we read in the papers—and this is one of the reasons
that I’m concerned about the possibility of getting no Federal pay-
ment early enough to do any good, about enormous—even with the
CFO in place, enormous calls on cash that the District seems un-
able to meet.

Would you describe the District’s cash position? Is it—I mean, is
there any hope even if we appropriate the full Federal payment
any time soon and the District gets the ability to obligate and
spend its own money, that the District’s cash position will be im-
proved in the—in the foreseeable or in the coming months?

Mr. BRIMMER. Well, let me comment on that.

Ms. Norton, the first thing is the schedule of payments, which
the city has shared with us, captures a number of obligations that
are already in the system that have been processed, and the
amount of cash required is known. There is an additional stream
of obligations of payments or what might be described as the city’s
bills payable, that is not registered as yet, that is not in the sys-


49

With a new budget crisis looming, this legislation is urgently needed. The District can ill-afford

to shut down any of its services again--which would unnecessarily waste more District resources.

‘That concludes my statement. Mr. Hill and I will be glad to respond to any questions that you

or other Members of the Subcommittee may have at this time.


78

Mayor Barry. Also in closing, Mr. Chairman, Ms. Norton, our
union leadership has stepped to the table during our financial cri-
sis and made a number of decisions that were very unpopular with
their membership. They have made great sacrifices, almost $70
million last year of pay reductions. None of us wants pay reduc-
tions but they did that.

We have a shutdown, again you have inequities. You have some
D.C. government workers working and others not working, and
then those who want work and eventually get paid for not doing
any work, that is not fair either except that is equitable if the Fed-
eral Government does it. So you have that going on. Some leader-
ship members are working, some not working. So it puts those kind
of pressures on the union leadership to try to manage the best way
they can.

These workers are impatient, as you know, Ms. Norton. They are
probably more pushy than the leadership sometimes may want to
admit. So they are in a bind, too. So this is all together.

And finally, just from a financial planning point of view, we have
a financial management system that once you load the obligations
into the system at very detailed levels, you spend by that and it
is put on that annual basis. But when you have to go month to
month, how can you even anticipate or predict what contracts you
possibly can let? I mean, that is just no way to try to run a city
as tough as it is under the best of circumstances.

And so we support this bill and urge you to look at the modifica-
tions that we suggested in terms of the Federal payment and not

orate the local money on a one-twelfth, one-twelfth basis, but to
let us spend according to our plan which would be a balanced budg-
et.

Mr. Davis. Thank you very much.

Let me just say, as you know, I ran a government across the
river in Fairfax and I’m aware of what these uncertainties do to
running a local government day to day. The Federal Government
can shutdown. It is not pleasant, when people don’t get services
from their local government because every day people are relying
on their local government in a way that many don’t rely on the
Federal Government.

And as I said and Ms. Norton said in her comments, this was an
unintended consequence that we don’t ever want to have to go
through again.

Having said that, I would just like to ask a couple questions, if
I may, and any of you who want to answer is fine.

What criteria did you use to say what was an accepted govern-
ment activity, and what wasn’t? You didn’t have any percentages
that you had to pick from or anything else. Was there anything to
stop you from saying everybody was essential, or do you think that
would have been too cynical?

Mayor Barry. I thought about that. If it had been a different po-
litical climate, I probably would have said everything is essential.
But the reality is, we started with public safety.

Mr. Davis. Something that occurred to me is, if we have trouble
with this, we may want to rewrite the criteria for the city, so can
you go ahead and do that, because, frankly, it struck me, sitting
here, some of the services that were not provided during this period


88

strong point, that ultimately we need a refinancing of this debt as
part of our overall financial recovery.

Ms. Norton. Didn’t I understand that the Authority agrees with
that and believes that, if there is a plan, it would seek to help you?

Mr. WILLIAMS. I think that if you have a deficit financing plan,
coupled with the kind of rethinking transformation the Mayor is
talking about, that’s a strong signal to the markets and to the pub-

IC,

Ms. NorTON. Well, is the city developing a plan to deal with the
rollover debt now?

Mayor Barry. The answer is, as I said earlier, I had spoken with
Mr. Williams and Mr. Rogers and others about us putting together.
It’s in our heads, a lot of us have ideas about it, but to put it down
on paper and present it to the Authority and to the public as to
our plan for repaying this money, or closing this ga)

Ms. Norton. I would urge—I would urge you to do that as quick-
ly as you can, because I can understand the problem it is causing.

Let me ask one final question. It has to do with a point that
Chairman Walsh of our subcommittee has made over and over
again. He has alleged that there has been chronic overobligation in
the District for years and that it caught up with us when, of
course, the District went over the side.

I have a hard time understanding, Mr. Williams, how you can ac-
complish your job consistent with the Financial Authority bill on
short-term—short-term CRs.

Now I may be missing something, but in my own mind, I try to
call up at least some of the obligations I know must be met, and
the ones that occur to me first off are payroll and AFDC. You can’t
say to the AFDC, “Well, you must fund half of the payment; you'll
have to wait until next week.”

Could the District, with a short-term CR, which I take it means
you have to calibrate very carefully how much should be spent ap-
proximately on a daily or at least frequent basis—couldn’t you find
yourself in a position that, with unfunded mandates and other
mandates, that a short-term CFR just wouldn’t work at all without
overobligation? Couldn’t that be possible?

Mr. WILLIAMS. I would distinguish obligation from expenditure.
You know, the Mayor, I think, is taking leadership. He’s working
with the Authority in setting an obligation level at the conference
mark, notwithstanding the fact that we haven’t had the budget.
That’s, I think, leadership on the obligation side.

In terms of expenditures, we have a set of priorities for making
actual disbursements. If we don’t have relief in a month, 2 months,
we're going to go higher and higher up the priority scale.

Ms. Norton. What do you mean—excuse me—higher and high-
er:

Mr. WILLIAMS. More and more triage in terms of what disburse-
ments can actually be made.

Ms. NorTONn. So the way you do it is just drop off as much as
you could in order to meet the things that simply must be met, the
debts that must be met?

Mr. WILLIAMS. I would look at the budget cycle in terms of the
overall control. Ultimately you want to have control in terms of
matching expectations to plan; then control in terms of obligations,


43

DISTRICT OF COLUMBIA
FINANCIAL RESPONSIBILITY AND
MANAGEMENT ASSISTANCE AUTHORITY

STATEMENT OF THE CHAIRMAN

Dr. Andrew F. Brimmer

Before The

Subcommittee on the District of Columbia
Committee on Government Reform and Oversight
U.S. House of Representatives
Washington, D.C.

December 6, 1995


CONTENTS

Hearing held on December 6, 1995 .

Text of H.R. 2

Statement of:

Barry, Marion, Mayor, District of Columbia; Anthony Williams, chief
financial officer, District of Columbia; and Michael Rogers, city admin-
istrator, District of Columbia

Brimmer, Andrew, chairman, District of Columbia Financial Responsibil-
ity and Management ‘Assistance Authority, accompanied by John Hill .

DeSeve, Edward, Controller, Office of Management and Budget ..

Gekas, Hon. George W., a Representative in Congress from the State
of Pennsylvania .

Hicks, Charles, president, American Federation of State, County, and
Municipal Workers; David Schlein, American Federation of Govern-
ment Employees; Diane Duff, director of federal affairs, Greater Wash-
ington Boa rd of Trade; and Marlene Kelley, M.D., deputy commissioner
for public health, District of Columbia ... a

Letters, statements, etc., submitted for the record by:

Barry, Marion, Mayor, District of Columbia, prepared statement of ..

Brimmer, Andrew, chairman, District of Columbia Financial Responsibil-
ity and Management Assistance Authority, prepared statement of

Davis, Hon. Thomas M., Representative in Congress from the Sta’

irginia:

Letter from Mr. Walsh and Bob Livingston on legislation
Letter from the Congressional Budget Office .
Prepared statement of .

DeSeve, Edward, Controller,
statement of

LaTourette, Hon. Steven Representative in Congress from the State
of Ohio, prepared statement of

Norton, Hon. Eleanor Holmes, Representative in Congress from the Dis-
trict of Columbia, articles concerning the shutdown ....

Rogers, Michael, city administrator, District of Columbia, prepared state-
ment o'

Tydings, John R., president, Greater Washington Board of Trade, pre-

jared statement of

Williams, Anthony, chief financial officer, District of Columbia, prepared
statement of ...

ap

57

39
19

7


106

Mr. Hicks. So we certainly welcome your support, your office
support. We welcome the dialog that we will have with them.

We know that, as I said before, that was indeed a tough decision
and a tough call for us. And with any decision, there are con-
sequences.

Mr. Davis. I understand that. As long as you are ready to live
with the consequences, since consequences may be raised.

The only point I want to make is it makes Ms. Norton’s job
tougher, it makes my job tougher. It makes the job of people who
are trying to help the city tougher, because it ends up polarizing.

I understand. I think you have made your point. Let’s continue
the dialog and move on from here. Hopefully, with this legislation,
we can keep people at work doing their job for the city and as the
city faces these tough decisions over the next couple of years as
they continue to downsize and rightsize. We will make sure you’re
a part of that equation.

the same goes with the Board of Trade and certainly with the
Commission on D.C. Health who have their work cut out for them
and a myriad of problems. We want to work with all of you.

We appreciate you being here today, to submit your testimony for
the record. It will help us with this legislation.

Thank you very much.

Before I formally adjourn, I have a letter from Mr. Walsh, the
subcommittee D.C. chairman for appropriations and Bob Livingston
on the legislation.

I would ask that it be put in the record.

Without objection, so ordered.

[The information referred to follows:]


66

caused non-compliance with legally-mandated time frames, delays in parole releases.
Board decisions in almost 300 cases were delayed and, approximately 30 individuals
were not released on parole. Also, 25 parole violation warrants were not issued
because staff were not on hand to process related documents.

More than 300 telephone inquiries were not answered by Board of Parole staff. ‘These
calls are typically made by the public, attorneys and other criminal justice agencies
and representatives concerning the status of offenders’ cases.

Public Works and Consumer Protection Impacts
.

++ © 6 +

+

Because limited trash collections were made during the shutdown week, the increased
volume of trash for the subsequent week required the expenditure of $27,867 in
overtime costs in order to resume routes on the scheduled collection day. This
impacted 100,000 single-family homes in the District.

Litter can collections were not made, as such more than 2,500 public receptacles city-
wide became over-filled and spilled trash throughout our residential and business
districts. Due to the tremendous impact of this trash on our downtown and
commercial centers throughout the District, the Administration exempted litter can
collections from the furlough after the second day.

Construction permits issued by the Department of Consumer and Regulatory Affairs
were not issued and architects, developers, plumbers and building contractors were not
able to obtain customer service at WASUA’s Office of Engineering Services nor at the
Department of Consumer and Regulatory Affairs, One Stop permit center.
‘Additionally, the surveyors office could not issue building plats nor process
subdivision applications. These types of delays cause our citizens, developers and
contractors unnecessary and costly delays. It also denies the District much needed
revenue.

Approximately 100 pieces of equipment were not serviced by our Fleet Management
Administration, including trash trucks, sweepers and water and sewer equipment
District government vehicles (approximately 26) were vandalized because they feil into
disrepair on the street and could not be towed.

‘The shutdown created an eight day delay in the repair of municipal snow equipment
which included 30 trucks.

60 traffic signals were not repaired (@15 p/day) and remained flashing until offices
reopened,

‘The impact on the District's motor vehicle services operations was extreme, Each day
of the shutdown, we were unable to issue 450 titles nor register 420 vehicles~a
significant impact on car dealerships.

In addition, for each day of the shutdown, we were unable to issue 670 driving
permits. Also, 480 licenses were not issued over the four day period and 4,400
vehicles were not inspected.

The Woodrow Wilson Bridge was not staffed for bridge openings, resulting in a
violation of U.S. Coastal Guard regulations requiring the bridge to be staffed for 24
hours a day to accommodate river traffic. The District has been responsible for
bridge openings on the Wilson Bridge since 1962. We were forced to inform the



52

of respect every other city in this country gets and that is to spend
its own locally raised money for its own priorities.

Mr. BRIMMER. Yes.

Mr. Davis. Thank you very much.

Ms. Norton.

Ms. NorTON. Thank you very much, Mr. Chairman.

And may I take this opportunity to thank Mr.—Dr. Brimmer who
has been put really in the most extraordinarily difficult situation
coming to manage the control board between two budgets already
submitted with a very tough Congress looking over your shoulder,
not always giving you the benefit of the doubt, but if I may say so,
having the greatest respect for you and the work you are doing and
I know I speak for both sides of the aisle when I say that.

And let me say the same for Mr. Hill, who has always made him-
self available to me and to the residents of the District and who
has brought great background, knowledge and sensitivity to the
problems of the District. I hope that in light of yesterday’s break-
down in communication, the earlier precedent you had set of good
communication will continue and will heal that quickly.

Your testimony is very helpful to us as we try to sort out how
to do this thing right and to be most helpful to the District.

I can understand Dr. Brimmer’s testimony on page 4 that if we,
as it were, pre—pre-apportion the Federal payment or any part of
it, it might not be appropriated at all. I suppose that is conceivable
when you consider this Congress and you consider that it is the
District we are talking about.

The position I think you understand best of all is that the Dis-
trict, as it turns out, on October Ist of every year, funds itself in
a particularly cash-poor position, so much so that it eats up the
Federal payment right away and almost all for obligations that
must be met as opposed to frivolous things that—assuming it never

id that.

I would very much like your help in figuring out a way to assure
that the District gets a Federal payment without being put in the
same position it was this year. i you had to wait for cash, even
though you could obligate, since you only have the obligation au-
thority, don’t have a lot of cash, you could miss a Metro payment,
you could miss a pension payment, you could mention—the Federal
Government will see that they get theirs. You probably won't miss
a Treasury payment but you could miss some other loan payment.

Given the conceptual difficulty of arranging for a payment in ad-
vance, can you think of any way that we could avoid an unintended
consequence of leaving the District with the ability to obligate? But
as it turns out, because of the period, it becomes nothing to obli-
gate or very little to obligate.

Mr. BRIMMER. The District could do what it did this year. It
would have the capacity to borrow from the Treasury and that
could be secured by the Federal payment when it arrives, and, in
fact, this year it was even secured, some borrowing was secured by
next year’s Federal payment.

Ms. Norton. Borrowing has already taken place during this fis-
cal year?

Mr. BRIMMER. Yes.

Ms. Norton. I see. During this—since October 1st?


101

I wonder if you could speak in greater detail about the effect on
employees and why employees themselves would not desire their
agency to be shut down.

Mr. SCHLEIN. I think that’s a critical question, and I think it’s
true of all government employees, but it’s even especially true in
the District of Columbia.

In the District of Columbia, first of all, if you just look at the last
year, it’s been an incredibly difficult year for D.C. government
workers. Early in the year, D.C. government workers stepped up
to the plate; they took a pay cut, they agreed to certain voluntary
furloughs, or involuntary furloughs, in order to help the city face
its very difficult budget situation. While many others didn’t step up
to the plate, we did.

And then, on top of that, we are asked every day to go to work
and to provide service to the public, which we’re proud to do, but
under also very difficult situations.

So there was a real cost involved with the government closing
down. Our members knew that the work was not going away, it
just meant that the work was being deferred, and they were frus-
trated, having to sit at home, knowing that there was work to do,
that the public needed to be served, that there were real con-
sequences of not being there, and it had really, I think, a very de-
moralizing effect on D.C. government workers. It was another—it
was another unfair shot, in their view, taken at them, as they
struggled to perform the work that the city and the community
needs to have done.

Mr. Hicks. I think that, in addition to that, there were certainly
several other things that happened with D.C. government employ-
ees. No. 1, I think there becomes—not only D.C. government em-
ployees, I think Federal employees, too. One, just the concept that
we don’t like our work or we don’t care about what we do is a mis-
conception, that no way can you work in a place like D.C. Village,
where you're working with impaired individuals, and not begin to
feel sensitivity for them and what’s going to happen to them and
when they need what they need, when employees are working with
a shortage of equipment and supplies. But also for those many em-
ployees who work with the public, that’s a tremendous amount of
stress that you’re faced with.

When a person goes in, and they expect to get their food stamps,
and they say, “Your voucher isn’t ready,” they don’t say, “Oh, I un-
derstand.” They get all type of verbal abuse, from no fault of their
own, for whatever system, whatever the problem has incurred.

So not only are we talking about pile-up of work, but we're talk-
ing about a tremendous amount of stress placed on the employee,
and that we are encouraged to be nice, to accept this abuse, and
it’s hard, it gets very difficult, and that—that’s very, very difficult
for employees to take, and I think that’s a major impact that em-
ployees face, is abuse from the public or not appreciating what the
problem is or what the situation is.

Dr. KELLEY. If I could just add, that from the perspective of those
employees involved with health, many of the employees have devel-
oped sincere relationships, not only with the individuals but within
the communities that they serve, and for them not to be able to de-
liver these vital services, creates a mental problem for the employ-


26

Mr. Davis. Mr. DeSeve, thank you very much for your testimony.

Ill just make a very brief comment. We appreciate your offer of
trying to work with us to form legislation that the President could
sign and that meets the requirements of the Budget Act of 1990.
I think we will do that and hopefully have it ready in the next cou-
ple days.

I know you also have some other requirements on the budget ne-
gotiations coming out of your office as well, but I think this is criti-
cal. We would love to have this in place before December 15th, in
the event a shutdown occurs. I am increasingly optimistic that will
not happen on a global level, but it’s still a possibility, as I said
earlier.

But more importantly, this is important for the city over the long
term if they are to attract and maintain employees; they must let
them know that they’re not going to be subject to the short-term
whims of a Congress and a President not agreeing. So over the long
term, this is important.

Once again I appreciate Ms. Norton’s proactive response in bring-
ing this legislation to the fore.

Let me ask if there are any questions.

Tl start with Mr. Clinger.

Mr. CLINGER. No questions.

Mr. Davis. Ms. Norton, any questions?

Ms. Norton. Thank you very much, Mr. Chairman.

Mr. DeSeve, you have testified, as I read it, or as I heard you,
that during a lapse period the spending should be restricted by a
pro rata cap, which is of course what we’re operating under right
now, and what has tied the hands of the CFO.

Why in the world would you think a pro rata cap was required
when we have a control board, we have a CFO, we have a require-
ment of a financial plan, and we have the Congress up here watch-
ing every move that the District makes? I mean, when will it end?

What good does it do to put another cap on the District when
this hearing is about freeing the District to spend its own money
with a CFO in place, obligated under financial authority statute,
under the obligation statutes of the District of Columbia, and
under the District statutes not to over obligate? Would you please
explain that to me?

Mr. DESEVE. Yes, ma’am. The intent is to be consistent with cur-
rent congressional oversight of spending during such periods of hia-
tus.

We have, in the continuing resolution and elsewhere, and the
District itself engages in the practice of apportionment to its agen-
cies. The notion is to give guidance to the District as to the Con-
gress’ intent.

Ms. Norton. Mr. DeSeve, what is the control board for? I mean,
one of the problems we have up here and we've had up here re-
cently is the control board has been undercut. They were given a
very broad mandate.

It said, look, look at these people every day and don’t let them
move 1 inch to the left or right. Now you’re telling me that this
Congress ought to also do that, in effect?


22

TESTIMONY OF G. EDWARD DESEVE

CONTROLLER, OFFICE OF MANAGEMENT AND BUDGET.

BEFORE THE
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
GOVERNMENT REFORM AND OVERSIGHT COMMITTEE
U.S. HOUSE OF REPRESENTATIVES

ON ELR. 2661

DECEMBER 6, 1995

Thank you Mr Chairman and members of the Committee for the opportunity to testify on
“The District Fiscal Protection Act”, H.R, 2661, introduced by Delegate Norton on November

17, 1995, I welcome the opportunity to speak on behalf of the Administration regarding the bill,
which is aimed at protecting the District government from future “shutdowns” in the event of the

Federal Government's failure to reach agreement on appropriations bills

Although about 85 percent of the District Government's operations are funded by sources
other than the annual Federal Payment, the entire District budget is legally subject to
Congressional approval through the annual appropriations process, Because the 1996 District
appropriations bill had not been enacted, the shutdown of the Federal Government from
November 14 to 19 forced the District Government to suspend many basic services, close many of

its offices, and keep thousands of employees at home.


105

of the process with the control board up until this point, that deci-
sions are being made that directly affect the workers of the city,
that decisions are being made that have real impact on the people
we represent, their lives and their livelihoods. And up until this
point, although now I understand that’s rectified, the control board
has not responded to requests from the city’s unions to meet with
us and to get the side of the story from those people who are doing
the work.

And we certainly hope to be able to use your office’s good graces
to try to remedy that. We appreciate the efforts that have been
made by Congressman—Congresswoman Norton, excuse me, to
remedy that.

Mr. Davis. Please.

Mr. Hicks. I'll wait.

Mr. Davis. The only thing I would say is I appreciate that and
once again, it’s only hardening positions in a way that we don’t
need to do. I hope we have made our point and we are at the table
and at least talking so we can all call it a win.

I appreciate your comments. We have sketched out where we are
on this issue, and I consider the AFGE and AFSCME and these
other groups to be part of the solution in the end. We need to work
together on this.

You can’t run a city without the working people who are out
there every day and, frankly, government has made a lot of deci-
sions that are destroying the morale of the Federal employees and
city employees, and it is unfortunate. That doesn’t help us in the
productivity side of it.

Mr. Hicks. It certainly was a difficult decision that we had to
make in terms of actions that were taken, but it was at a point
that workers felt we were against the wall, that nobody would lis-
ten to us, that we have families. You have no idea the amount of
phone calls I get continuously that in D.C. government nobody
knows anything.

You can’t assure not one person in D.C. government that they're
going to have a job, that they are going to be able to pay their rent,
that they’re going to be able to pay their house note, that they’re
going to be able to send their kids to school, that they're not going
to have to pull their kids out of school.

And on top of that, I think that some of the suggestions that
were made by the control board and even sometimes throughout
the system, we have people will who will simply not listen. And I
believe nobody knows better about how something works better
than people who do it themselves. And if you don’t want to include
them, then we can sit and listen and just see where the mistakes
are coming from, even some of the things that the control board of-

fers.

And I think the thing that disturbed us most was we went to a
hearing with the control board at Howard University and talked
about the many, many problems that we face, and as soon as we
finished testifying, they pulled out a document of decisions that
they had already made and what they were going to do. I mean,
what did it make us feel like?

Mr. Davis. I understand.


REV BY

34

V2 Be ITEM: CHO/NATERAL, RES

Honorable Tom Davis
Page 2

‘Senate-pasted appropriations for fiscal year 1996 ($712 rnillion--$70,000 less than the 1995
appropriation), this bill would provide funding of about $534 million for the remaining nine
months of the year, Enactment of H.R. 2661 also would create direct spending authority
for future years, but the amounts would depend on appropriations action this year and in
the future.

Af you wish further detafls on this estimate, we will be pleased to provide them, The CBO
staff contacts are Deborah Reis and John R, Righter, who can be reached at 226-2860,

Sincerely,

pel Nac
Con

Director

ce: Honorable Eleanor Holmes Norton
Ranking Minority Member

Honorable William F. Clinger, Ir.
Chairman
Committee on Government Reform and Oversight

Honorable Cardiss Collins
Ranking Minority Member
Committee on Government Reform and Oversight

2


58

and children, delivery of home care and food to the elderly, library
service to operate the city’s car impoundment lot.

Local government is largely dedicated to service delivery. We
have very few people who do not engage in direct service delivery
in our entire work force, providing protection, regulation, edu-
cation, services and care on a daily basis to citizens.

Unlike a number of Federal agencies, the D.C. government is re-
sponsible for inspecting and licensing, child care facilities, respond-
ing to child abuse complaints, issuing business and drivers’ li-
censes, parking control, inspecting and approving construction,
overseeing individuals on parole, delivering home care to sick older
citizens, operating playgrounds for children, picking up trash, keep-
ing traffic lights working and even operating a draw-span on the
Woodrow Wilson bridge.

Terminating these services for even a day does not save money.
It compounds problems and adds expenses as well as pain to the
lives of nearly 600,000 Americans who live in our city. It also af-
fects the Congress. It affects 19 million businesses annually, the
diplomatic communities and Americans who do business with the
Federal Government.

It is not reasonable that there is a connection between stopping
public services for only one city in America and the legislative proc-
ess of establishing national economic policy. It simply does not
make sense.

As has been stated by a number of witnesses, we look at our
local revenue, D.C. taxpayers, those who pay property taxes, in-
come taxes, sales taxes and user fees make up about 84 percent of
all our local revenues. The Federal payment is only 16 percent of
that total local revenue. Of course, we get almost $1 billion in Fed-
eral grants like any other State with about half of that coming
from Medicaid reimbursements.

Because the District of Columbia is the economic heart of one of
the Nation’s prime regional markets, our failure to provide services
has a ripple effect beyond the immediate inconvenience. This is
particularly true during the holiday season. A second shutdown
would be devastating.

In addition, the shutdown adds to the District’s already critical
financial outlook. We are currently experiencing serious disruption
in our cash-flow because of the decision to make the Federal pay-
ment to the District in smaller increments instead of the annual
payment as has been traditional.

Let me say to members of the committee, I am really still upset
with Mr. DeSeve’s testimony in terms of how he approached the
budget. The D.C. government does not spend its money in equal
monthly allocations.

If you look at our cash-flow, which we are good at putting out
there so you can look at it, a number of payments come in October
but don’t come in November or December. For instance, we pay the
retirement board on the first of October if the Federal payment has
come in, some $77 million. We don’t pay them in October—I mean,
November and December, pay them again in January.

We pay Metro some $33 million the first of October. Again, that’s
over $100 million of payments that come in October to those two
bodies alone and does not occur in November and December.


76

ONE AGENCY, THE DEPARTMENT OF CONSUMER AND REGULATORY AFFAIRS,
ESTIMATES THAT THE FOUR DAY CLOSURE COST THE DEPARTMENT SOME
$922,000 IN LOST REVENUES (Note: THE AGENCY GENERATED $59.9 MILLION
LAST FISCAL YEAR; APPROXIMATELY $230,500 P/DAY). CLEARLY, THE
IMPACT OF THE FEDERAL CLOSURE WAS A HIT THE DISTRICT SHOULD NEVER
HAVE BEEN REQUIRED TO TAKE. I WILL BE VERY INTERESTED TO HEAR MR.
‘TYDINGS’ TESTIMONY LATER TODAY. I AM SURE THAT IT WILL SHOW THAT
THE DISTRICT TOOK A DOUBLE HIT--NOT ONLY IN TERMS OF REVENUES LOST,
BUT ALSO WITH RESPECT TO THE OVERALL DISTRICT ECONOMY AND THE

LOSS OF SALES TAXES AND TOURIST DOLLARS.

FINALLY, THE IMPACT ON OUR RESIDENTS AND BUSINESSES IS BOTH
UNECESSARY AND UNFAIR. THE DISTRICT HAD NO ABILITY TO MANAGE THE
FEDERAL CLOSURE NOR PREPARE OUR RESIDENTS FOR THE RESULTING
IMPACTS. MANY OF THE IMPACTS ASSOCIATED WITH THE CLOSURE
AFFECTED TRADITIONAL MUNICIPAL SERVICES. BUT THE REALITY OF IT
COMES DOWN TO THIS: HOW DO YOU TELL A 10 YEAR OLD WHO HAS PLAYED
FOOTBALL EVERY WEEKEND FOR THE LAST 8 WEEKS AT HIS NEIGHBORHOOD.
RECREATION CENTER THAT HE WILL NOT BE ABLE TO PARTICIPATE IN THE
PLAYOFF GAMES SCHEDULED FOR THE WEEKEND BECAUSE THE
DEPARTMENT OF RECREATION CANNOT MAKE REFEREES AVAILABLE DUE TO
THE FEDERAL SHUT DOWN? I CAN TELL YOU NOW THAT WE COULD NOT

AND DID NOT ALLOW THIS SITUATION TO HAPPEN.


28

down and hiatus situation in the legislation. We certainly didn’t
contemplate that, and I think to make more explicit the respon-
sibility of the Congress—I’m sorry, the intention of the Congress
and the responsibility of the control board in this situation, is our
suggestion.

Ms. Norton. Well, I respectfully reject your suggestion, because
you have not answered my question. And that is, what does it add
in the way that is not already down there? Either you ought to put
a control board in place and let them do their job, or you ought to
substitute this committee and the Appropriation Committee for the
control board.

And you know what? We haven't calibrated that right yet. And
the effect of it has been to undercut the control board and to tell
them: Watch out what you do, because what you're doing despite
this broad statute, may not be right.

Mr. Davis. Will the gentlelady yield for just a question?

Ms. Norton. Yes, sir.

Mr. Davis. One of the difficulties is that this legislation is not
written just for this time period. This legislation is written for a
period after the control board expires, which we all hope it will ex-
pire as soon as possible because we want to get the city back going.

0 you have to look at the context, not just with the control board,
but even after it expires.

And the comments make a lot of sense if you didn’t have a con-
trol board. I understand the frustration having it, and just want to
clarify. This legislation is written for the post-control board period
as well.

Ms. Norton. Well, the chairman’s comment is a fair comment,
in which case any language of the kind you have ought to, in fact,
indicate that we’re talking about after there’s no control board, in-
stead of piling on.

Mr. DESEVE. That would be fine, we would be delighted to give
the authority the responsibility for apportionment during a control
period and beyond the control period have that in some pro rata
fashion, that would be a very good solution.

Ms. Norton. And let me also say this, that during the control
period, one of the things we're trying to do is help the District get
its legs. We don’t want to put the District in the position where it
has been so controlled so that when, in fact, the control board
leaves, it’s like a cripple that can’t operate because it’s never been
given the latitude to act independently.

I must say, I’m very disappointed that in light of a control board,
you come up here with some kind of pro rata cap.

Now, let me ask you about the notion of installments of the Fed-
eral payment. I can certainly understand the notion of not scoring.
That stops everything cold up here. But I want to—I look at your
testimony, when you say that the administration does not support
automatically appropriating pro rata shares of the Federal pay-
ment.

Are you aware that every Federal agency and the District of Co-
lumbia has been apportioned a pro rata share of its Federal pay-
ment right now?

Are you saying automatic pro rata shares?


94

Second, the Board of Trade feels very strongly that economic de-
velopment is clearly the solution to the District’s long-term fiscal
problems. Economic development will expand the tax base and im-
prove revenues, and Federal shutdowns such as we’ve experienced
earlier this year clearly impede our efforts to improve economic de-
velopment in the city.

Third, as I just noted, we have a range of image problems that
already exist. Shutdowns exacerbate those problems through na-
tional media coverage and so forth.

And my final point is that we spoke with you, Mrs. Norton, last
week about the study that we’re doing on Federal downsizing. The
next phase of that study will be looking at the economic impacts
of continuing resolutions. So we hope to be able to give you some
more information on that as the next phase of our efforts is com-
pleted.

Thank you again for this opportunity to testify, and I’'ll be happy
to try to answer any of your questions.

[The prepared statement of Mr. Tydings follows:]


Cori anaunr WN

NoN ee ee ee ee eS
RRRPBBEBRBSGPeReWIRARESHSHS

SECTION 1, SHORT TITLE.
This Act may be cited as the “District of Columbia
Fiscal Protection Act of 1995”.
SEC. 2, PERMITTING DISTRICT OF COLUMBIA TO EXPEND
DISTRICT FUNDS DURING PERIOD OF DELAY
IN CONGRESSIONAL ENACTMENT OF DIS-
‘TRICT OF COLUMBIA APPROPRIATIONS ACT.
(a) IN GENERAL.—Subpart 1 of part D of title IV
of the District of Columbia Self-Government and Govern-
mental Reorganization Act is amended by inserting after
section 446 (sec. 47-304, D.C. Code) the following new
section:
“EXPENDITURE OF DISTRICT FUNDS DURING DELAY IN
CONGRESSIONAL ENACTMENT OF BUDGET
“Sec. 446A. (a) EXPENDITURE PERMITTED.—
“(1) IN GENERAL.—Notwithstanding section
446, if the District of Columbia Appropriations Act
for a fiscal year has not been enacted by the first
day of the fiscal year, during the period described in
subsection (¢c) an officer or employee of the District
of Columbia government may obligate or expend
amounts out of the general fund, enterprise funds,
and other non-Federal funds of the District of Co-
lumbia for the fiscal year under the authority and
conditions provided in such Act for continuing the
operations of the government of the District of Co-

HR 2661 IH


17

FURTHERMORE, HOW DO YOU SHORE UP AN ALREADY AILING CITY HOSPITAL
TO TREAT PATIENTS WHO WOULD, UNDER NORMAL OPERATING
CIRCUMSTANCES, VISIT ONE OF THE 11 NEIGHBORHOOD HEALTH CENTERS?
BECAUSE THESE CENTERS WERE CLOSED DURING THE SHUTDOWN, MORE
THAN 110 MEDICAL EMERGENCIES TYPICALLY HANDLED AT THE
NEIGHBORHOOD CLINICS WERE REFERRED TO D.C. GENERAL HOSPITAL. AS
SUCH, GENERAL EMERGENCIES SUCH AS TOOTHACHES AND FEVERISH

CHILDREN WERE SENT TO THE EMERGENCY ROOM AT D.C. GENERAL.

THE QUESTION I ASK IS AT WHAT FURTHER COST WILL THE DISTRICT AND ITS
RESIDENTS BE ASKED TO PAY THE NEXT TIME CONGRESS REQUIRES A
FEDERAL CLOSURE? IT IS MY SINCERE HOPE THAT THOSE OF YOU WHO
PROFESS TO HAVE THE DISTRICT'S BEST INTEREST AT HEART, WILL SEE THE
WISDOM AND VALUE IN PROVIDING YOUR UNEQUIVOCAL SUPPORT OF H.R.

661. THANK YOU FOR ATTENTION AND INTEREST ON THIS MATTER.


83

In addition, it appears that this demonstration, which should
have been stopped—it was an obstruction of traffic and a breach
of the peace—hindered an ambulance in taking someone to a hos-
pital. This result is not a surprise. It is a perfect example of why
such activities cannot be justified or permitted. There is a right
way and a wrong way to make your point or protest an action that
you don’t like.

Mr. Mayor, you know that. You go way back. You were very suc-
cessful in making those points during the Civil Rights Movement
and other areas. There is a way to do it and a way not to do it.
This was the wrong way.

I don’t have a problem with legitimate expression of grievances,
but Monday’s actions, went far beyond that and must be dealt
with, or similar actions will occur in the future with worse con-
sequences.

I just hope that the city administrator can assure us that this
matter is being pursued from a personnel standpoint, and that the
Mayor can assure us that the Corporation Council is investigating
any violations of District law. I would assume that if the Inspector
General undertakes an investigation of this matter, that she should
have your full cooperation.

If you can give us that assurance, I think we can put this to rest
and go on with the rest of the questions.

Mayor Barry. Mr. Chairman, a couple things. One is that I can
say, unequivocally, we’re not paying overtime for the trash. It was
picked up by those workers who didn’t do it during the day.

Second, even though you and I may be sympathetic to the work-
ers, there’s a limit as to what I can condone or support, and we re-
ferred this matter to the Inspector General to look at what rules
were broken and not broken and recommend whatever action
would be taken. It’s not clear because, you know, this is an area
that hasn’t happened in a long time.

Mr. Davis. Well, a lot of the information is hearsay at this point.
We only know what we read.

Mayor Barry. But the Inspector General will certainly have my
cooperation and the cooperation of the city administration.

Mr. Davis. OK.

Does anybody else want to comment on that? Otherwise, my 5
minutes is about up now. I am going to turn it over to Ms. Norton.

Ms. Norton. Thank you, Mr. Chairman.

First let me say to all three of my colleagues from the city how
much I appreciate this testimony, because here we hear about this
issue not in abstractions, but it helps us come to grips with what
actually happens.

As to cost, I understand, Mr. Williams, how difficult it is to cal-
culate that, because the Federal Government has said it is very dif-
ficult for it. All we know is that it is very great and that much of
it is not capable of being recouped.

I am particularly concerned at costs that perhaps can hardly be
envisioned. If, for example, you are a Federal employee, and those
are among our most stable taxpayers in this town——

Mr. WILLIAMS. I have one cost, Ms. Norton.

Ms. Norton. Excuse me?


Columbia government during any future federal budget impasse. As you all know, on November
13, the Continuing Resolution funding the District of Columbia and parts of the federal government
expired with no new CR signed by the President. Beginning on November 14 those federal
departments without an FY 1996 appropriation and the District of Columbia were forced to furlough
non-excepted employees.

This situation not only disrupted many regular government services, but, in this time of crisis
in the District of Columbia government, halted almost all ongoing efforts at reform. With the
District's cash and budget shortfalls and the need for herculean reform efforts it seems to me that
‘we cannot allow such a situation to recur. Yet we are rapidly approaching the possibility of another
shutdown. The current Continuing Resolution expires on December 15. The District's appropriation
is still in the Conference Committee and, while I hope that the Committee can reach an agreement
soon, it appears that it may not do so in time for the appropriation process to be completed by
December 15, I hope and believe that we will not have an impasse resulting in a new shutdown on
December 15, but I’m not willing to bet the farm on it. That is why I believe that we should report
legislation to allow the District of Columbia government to obligate and expend its own locally
raised revenues and continue to operate even if there is a federal impasse.

Let me stipulate a number of facts. First, and I have found this to be the most important fact
as I have talked to more people about this issue - the District of Columbia cannot spend one penny
‘without an appropriation passed by Congress and signed by the President. This includes the federal
payment, federal grant money and District tax receipts. Many people are under the impression that
the District is like a state in this regard and that it can spend its own revenues while the appropriation
bill only deals with federal funds - that is not correct. Second, this legislation is very narrowly
focused in its impact and would only apply in a most unusual situation. If the District's
appropriation has been passed this legislation will have no effect. If the District is operating under
a Continuing Resolution this legislation would have no effect. Only in a situation where there was
neither a CR or an approved DC appropriation would this legislation apply. If this legislation had
been on the books on October 1, 1995 it would not have been in effect from October 1 through
November 13 because there was a CR. This legislation would not be in effect today because there
is another CR. This legislation would have been in effect from November 14 through November 20
ifit had been on the books. So this legislation would only be rarely invoked. The point is that there
is now a precedent where legislation such as this could in fact be needed and I do not want to face
that situation again without be prepared to meet it. That is why I support the purpose of this bill.

Third, there is no question that under current law the District was subject to the Anti-
Deficiency Act during the period when it had no authority to obligate spending. Fourth, the Mayor
has the power to designate essential services and except employees from being furloughed. Fifth,
the District was caught in this situation because of unusual budget circumstances in this most
unusual year. With the District in crisis, the Authority legislation being implemented, and the
Authority itself getting up to speed, plus the lengthy delay in getting the city’s budget before the
Appropriations Committee, it was almost inevitable that the District would start FY 1996 under a
Continuing Resolution. Fifth, shutting down the District government was an unintended
consequence of the federal budget impasse between Congress and the President, ‘There was no
willfulness or intention to impact the Dirtrict-— it simply became impossible to exclude the District
from the larger federal deadlock. And sixth, there is no defensible reason to deny the District the
use of its own locally raised revenues during such a situation in the future.

The Authority estimates that the shutdown cost the District more than $7 million in lost


81

revenues. How do you sort that out from the actual disruption to
our revenue flow?

Mr. Davis. Parking garages are closed; Metro is off. The region
gets hit hard. You are the center core of that.

But, you know, I don’t know that we are ever going to be able
to stop, despite Mr. Gekas and others, the situation where Con-
gress and the President can’t agree. But for Heaven’s sakes, allow
the city to go on working, just like Arlington and Fairfax and
Montgomery and Prince George’s can go on and run. If you want
to take the Federal payment out for a while, that is OK.

I mean, it is not great, I understand, but I will live with that if
we can at least spend the rest of the money the way it was in-
tended to be spent and treat you the same. It is just not right and
fair, which is why I am happy to cosponsor this legislation and do
everything we can to move it through.

Once again, I applaud Ms. Norton for bringing this bill forward.
I think we will work with her in the next couple of days, and I
want to get a markup out of here as quickly as we can.

Mayor Barry. Mr. Chairman, also, I was just thinking, if, for
whatever reason—legal, technical reasons—Ms. Norton, the Fed-
eral payment issue is not resolved in that way, you could always
continue—you could still have a continuing resolution that dealt
just with the Federal payment, and not our total appropriation
level. That would be another way of dealing with it where the Con-
gress could say we'll give the District a quarter of its Federal pay-
ment during this continuing resolution period. If you go that—I
suspect that the District would not be the only agency not having
appropriations if it came to that, in that kind of situation.

Mr. Davis. Let me ask two other questions. I am not sure the
District appropriation bill is going to be resolved by December
15th.

Mayor Barry. I don’t think it will be. I don’t think so.

Mr. Davis. Has anyone been talking to you in the last week from
the Appropriations Committees in terms of the holdups and the
city’s view on some of these issues? Particularly education seems
to be the holdup at this point, in terms of working out something
everybody can live with.

Mayor Barry. I had a conversation last week with Congressman
Walsh about what was happening, and I talked to Mrs. Norton al-
most daily about this, talked to you yesterday about this.

It appears as though the Senate is of a different view about the
scholarship fund that Mr. Gunderson and the House has put forth.

Mr. Davis. I think it is fair.

Mayor Barry. And I don’t think that in the present cir-
cumstances it’s going to be resolved. And my understanding, also
that the President, OMB, are opposed to the scholarship fund, and
that’s a fundamental question of whether or not you let the camel’s
nose in the tent. The whole camel will get down there pretty soon
around national vouchers.

Mr. Davis. Well, I'll just-—

Mayor Barry. The other issue, I understand, is the education—
Mrs. Norton, there were two issues.

Ms. Norton. Abortion.


107

Zee Congress of the Wnited States
sorta ‘House of Representatives

Brecon ‘Committee on Appropriations
Sareea Washington, HC 20515-0015

dessea

pear December 5, 1995

Honorable Thomas M. Davis
Chairman

Subcommittee on the District of Columbia
Committee on Government Reform and Oversight
U.S. House of Representatives

Washington, D.C. 20515

Dear Mr. Chairman:

We understand that tomorrow your subcommittee will hold a hearing
on H.R. 2661, a bill to permit the District of Columbia to expend
its own funds during any portion of a fiscal year for which
Congress has not enacted the District's budget.

The Committee on Appropriations is proceeding with a fiscal year
1996 plan of enacting into law 13 separate regular bills as soon
as possible. Since enactment of all 13 bills was not achieved by
October 1, Continuing authority to provide for the temporary
operation’ of the government in the absence of appropriations was
needed. As a general practice, a continuing resolution providing
spending authority should have restrictive funding rates and
should treat all programs the same to provide all parties with
the impetus to act to get the regular bill enacted as soon as
possible

A permanent type continuing resolution eliminates the incentive
to move a regular bill. For example, this year we are trying to
provide an additional $1 million for the D.C. school system to
implement major reform measures. The pressure resulting from not
having a regular annual appropriations bill is necessary to
overcome the status quo, which would be virtually guaranteed by a
permanent continuing resolution, even if it were to cover only
the period for which there is no regular bill

While the District of Columbia is unique in that Congress
appropriates its locally-generated revenues in addition to funds
from the Federal Treasury, it is also unique in that it is the
seat of the Federal government established by the Constitution


92

brary was closed for 6 days because we are open Saturdays and
Sundays.

In conclusion, the citizens of the District of Columbia are done
a great disservice when these above mentioned agencies as well as
other agencies are closed and cannot function through no fault of
their own, on the part of the citizens, because of the political de-
bate of the Congress.

Thank you.

Mr. Davis. Thank you very much.

David Schlein.

Mr. SCHLEIN. Thank you, Chairman Davis and Congresswoman
Norton.

My name is David Schlein. I am a 20-year resident of the District
of Columbia, and I have the honor of serving as national vice presi-
dent of the American Federation of Government Employees, AFL—
CIO. AFGE represents approximately 5,000 D.C. government work-
ers and about 700,000 Federal workers.

With me today, and I’d like to acknowledge, is Mr. Roscoe Ridley,
who is president of AFGE Council 211, which is comprised of our
D.C. government workers’ local unions. If Mr. Ridley could stand.

Mr. Davis. Thank you very much for being here.

Mr. SCHLEIN. And I'd also like to acknowledge that we also have
several other local leaders here, and I'd like them to just stand for
a minute to be acknowledged.

Thank you.

Mr. Davis. Thank you all for being here.

Mr. SCHLEIN. I would like to thank you for this opportunity to
testify.

AFGE strongly supports H.R. 2661. Unfortunately, our members
in the Federal and District government are all too familiar with
budget-impasse-driven lockouts. We strongly oppose such lockouts
or furloughs, whenever they occur.

When government workers, who take pride in the work we pro-
vide to our city and our Nation, are told we cannot come to work,
we are demoralized. When we are branded by the media and others
as nonessential instead of nonemergency, we are humiliated. When
we see the waste of taxpayers’ money caused by the lockout, we are
frustrated.

That is why we applaud H.R. 2661, which we consider a bill to
ensure good government.

The D.C. government should be able to spend the funds that it
generates locally if the D.C. appropriations bill has not been com-
pleted in a timely manner.

During the last furlough, many services provided by D.C. govern-
ment, which our citizens routinely depend on, were suspended or
delayed. Most of these did not fit the emergency criteria of the
Antideficiency Act but are still services that are vital to our citi-
zens,

For example, in the Department of Public Works, license renewal
and traffic adjudication were closed, delaying the receipt of cash
that desperately is needed in the city. Water billing and adjust-
ments of water account sections were closed, also adding to cash-
flow problems in the Water and Sewer Utility Administration.


60

The District operates 17 senior citizens recreational facilities, 13
of which are in public housing developments, and these facilities
are safe havens for our older residents who may not have the re-
sources to feel safe venturing outside their neighborhoods. During
the Federal furlough, each 1 of the 18 senior citizen facilities were
closed as well as one other senior facility located in a nonpublic
housing. Our seniors are suffering from this shutdown.

Lack of program operation or neighborhood-based recreational fa-
cilities, impacted about 11,000 participants. The District operates
83 recreation facilities. All these facilities were closed during the
shutdown, affecting almost 11,000 participants each day, which
meant that our young people who need to go to these facilities have
no place to go after school during this shutdown.

We had to close six indoor pools which means those young people
who use those pools for recreational activities and for swim-meets
had to be closed.

Then the worst tragedy of all that there are a number of our
young people who have special needs. These are the handicapped
with physical and mental disabilities. We operate three therapeutic
recreation facilities for them. All three of those were closed, which
meant that these persons with special needs already got enough
problems already, Mr. Chairman. Then add that to it, they can’t go
get their daily workout in the ls, they can’t get their exercise,
they ‘can't do other special needs kinds of things, they’re impacted

y that.

Then we look at public safety. We operate a board of parole. Dur-
ing the initial part of the shutdown because our guidelines were
similar to the Federal Government’s, we did not allow the parole
board to operate. It became a public safety issue, and Mr. Rogers
and I made the decision to let them operate because during that
period, 525 parolees were not able to report to their parole office,
which meant they couldn’t go check in so the parole office could see
what’s happening with them.

We had to cancel 110 urine tests in terms of our monitoring of
our ex-offenders. And approximately 50 reports of alleged violations
were delayed. Even though our fire, police and corrections were ex-
empted from the shutdown, the parole board was not. Seventy-six
parole hearings couldn’t be held. Board decisions in almost 300
cases were delayed. And approximately 30 individuals were not re-
leased according to their dates.

Then there’s public works. We’ve talked about the trash pickups.
We had to stop all of our essential trash pickups. Over 100,000 sen-
ior family homes were affected by this. But the most egregious
thing about it, that once we got back to work, the District had to
spend $27,000 of overtime to catch up to pick up the trash that had
not been picked up. This is outrageous in terms of being affected
by what happens at national levels.

Litter cans; we have over 2,500 public receptacles on the streets
of Washington. During this period, they were overflowing with
trash making our city look bad and adding to the environmental
concerns about health and the welfare of our people. How terrible
does it look for our Nation’s Capital during this period to have lit-
ter cans overflowing with trash for all visitors and others to see;


56

make your jobs any easier. And we understand you even were vis-
ited by some garbage trucks the other day and we'll have more to
ask about that perhaps later.

I just_want to clarify, though, in my own mind, a couple of
things: First of all, you do have some reservations, and I think you
have articulated them pretty well. Do you think those can all be
resolved and still get this to the President’s desk by the 15th?

Mr. BRIMMER. Yes, I believe so. The suggestions I have made
here can be dealt with by a change of a few phrases in the bill.

Mr. GUTKNECHT. I think there is a commitment on this side to
make certain we can accommodate those and I hope—I don’t want
to speak for Delegate Norton, but would you again emphasize for
us——

Mr. BRIMMER. Excuse me, Mr. Chairman, we have some lan-
guage we have drafted which would accomplish those changes and
we will submit those to the committee.

Mr. GUTKNECHT. That is very helpful, yes.

Thank you.

Mr. BRIMMER. Thank you.

Mr. GUTKNECHT. Also, and just for my own edification here so I
can understand this, would you again emphasize your reasons for
not wanting the bill to include automatic appropriations? I mean,
I’m trying to sort this all out here in my own mind.

Mr. BRIMMER. We are saying that the Federal payments, the two
categories we described, the Federal payment and the grants,
should not be expenditured without the appropriation, because
there is a risk that the amount so expended or allocated to be spent
may not come through. That is the reason, not because of taste or
preferences, but because the city would be taking a risk of spend-
ing money which it ultimately may not get. That is the fundamen-
tal reason.

Mr. GUTKNECHT. So the budget negotiators could meet over the
weekend of the 15th and come back with a package which would
be smaller than you had anticipated.

Mr. BRIMMER. Might be. And thus the city would have gone for-
ward making commitments to spend and then literally have the
limb sawed off from under them. That is the danger.

Mr. GUTKNECHT. And that would be a danger for the whole
Gekas concept that he talked about earlier in his testimony.

Mr. BRIMMER. Yes.

Mr. GUTKNECHT. Any other questions?

Ms. Norton. No, Mr. Chairman.

Thank you.

Mr. GUTKNECHT. We want to thank you again. We hope if you
have other concerns or questions, you know, keep us abreast of
them and feel free to communicate with us freely about your prob-
lems. And again we appreciate the work you’re doing, Dr. Brimmer,
and if we can be of any help, please don’t hesitate to get ahold of

us.

Thank you very much.

Mr. BRIMMER. Thank you.

Mr. GUTKNECHT. I am informed that there is a vote and the
chairman has gone over to vote and he will be back. In the mean-
time, I think we should call the next panel.


18

Mr. Davis. Thank you.

And I thank the gentleman from Pennsylvania for his remarks.

Let me just add that Mr. Gekas has been so proactive in this.
At every chance you’ve had you have worked with the committee
and the leadership, even to the point of going out and looking at
private banks to find ways that employees could get loans without
interest during this time period. I know really of no Member—and
he’s not from this region—who is going out, looking after the wel-
fare of Federal employees. It is because he understands, as we do,
that if government is going to continue to deliver services at the
least expensive cost to our constituents, we need to attract the best
and maintain the brightest in our Federal work force. These shut-
downs do not help that. They don’t help the Federal Government,
and they don’t help the city.

You've labeled a debacle of what happened. It is an embarrass-
ment, when we can’t get an agreement. I hope we can move for-
ward with your legislation at a different level and see what hap-
pens. I will certainly come back and look at the sections you noted
in terms of setting the precedent.

The difficulty we have is with the Congressional Budget Office
scoring it and the overwhelming opposition of appropriations, it
may jeopardize what we could—what we may be able to accomplish
in a realistic fashion. But I very much appreciate your remarks.

Let me also recognize that the chairman of the full committee
has just come in, your colleague from Pennsylvania, Mr. Clinger.

Mr. Chairman, it’s a pleasure to welcome you here today. If you’d
care to make any comments, Mr. Gekas has just testified on this.

Mr. CLINGER. I’m sorry I missed my colleague’s testimony.

Mr. GEKas. I am, too.

Mr. CLINGER. You can be sure I’ll read it with great care.

Mr. GExas. I’ll make sure you will.

Mr. CLINGER. Thank you, Mr. Chairman. I’m looking forward to
hearing some of the witnesses.

Mr. Davis. The gentlelady from Was! n.

Ms. Norton. Actually, I want to thank the chairman for allowing
Mr. Gekas to come forward and offer his testimony. The fact that
Mr. Gekas is not from the region I think emphasizes the nation-
wide impact of this matter. His interest, of course, has been on a
principled basis, but the fact is that Federal employees, far more
than are numbered in this region, are affected all over the country,
with the resonating effects on many local jurisdictions.

The Gekas bill would of course solve everybody’s problem, I
strongly support it. I support it also because while this morning’s
matter is about D.C. government employees, by far the largest em-
ployer in the District of Columbia is the Federal Government and
so the District gets it coming and going. Its own government gets
shutdown so its own employees are affected and services and resi-
dents are tossed overboard, and then our Federal employees must
stay at home. The effect of this on a troubled city with a troubled
economy cannot be overemphasized.

Moreover, Mr. Gekas, your bill is important for another reason.
The Congress in fairness has recognized that we forced people on
administrative leave, and therefore we ought to pay them, just as
if somebody is forced on administrative leave because he is alleged


47

Other-not quite so visible--functions were also not carried out. For example, District
headquarters and agency budget analysts were nearly all deemed non-essential. ‘This delayed
critical work on the development of the District's 1996 and 1997 financial plan and budget--

needed to provide the City’s fiscal recovery.
Concerns About the Legislation

Although the Authority supports the concept of this legislation, we believe some modifications
are necessary to maintain discipline in potential spending and to ensure that the Chief Financial
Officer is the key official making financial management decisions. This legislation would allow
the District to obligate or expend all funds without an appropriation. We agree that the District
should be allowed to obligate or expend an amount equal to all locally generated revenue, such as
local taxes or local fees. However, we believe the District should not be able to obligate or
‘expend amounts equal to the federal payment or federal grants which have not been appropriated.
Under this legislation, it is possible for the District to obligate against funds that it may never
receive if the final appropriation bill reduces the amount of the federal payment or a federal grant
Attachment 1 to our written statement outlines an example that demonstrates how the legislation

might impact the District.

‘We also have other concerns about the draft legislation. Another part of Section 2 requires the
Mayor to notify the Authority of all obligations and expenditures under the provisions of this act.

We strongly support the need for such reporting, but believe it should be clear that the Chief


51

Mr. Davis. Thank you very much.

I am going to just ask a couple questions early on. Let me make
one comment. This is just how one Member feels about the whole
Federal shutdown. I thought the whole thing was dumb, and I
thought shutting down the District, using even its own money, was
dumber. So you can say it is dumb and dumber. They had a movie

r it.

I think that aptly describes what happened up here. But hope-
fully some good evil come out of it all the way through. I mean,
I think there is a silver lining here and if we can get a budget
agreement, if we can get some legislation to help the District in the
future out of this and protect it, some good can come out of it all.

I appreciate seeing the control board up here with the Mayor and
the ‘ite House all supporting the intent of this legislation, and
I think when Ms. Norton put this forward, she put forth the strong-
est legislation she could Tor the city. Obviously, it’s met some re-
sistance if we are going to move this legislation through and we are
going to try to in a very constructive way address the concerns that

ave been raised by other Members of Congress and the adminis-
tration. I think we can do that and still get the job done. So I ap-
preciate you being here.

I had just a couple questions. If the District follows the Federal
example and pays its employees for the 4 days they didn’t work,
isn’t that going to put the District even further behind than they
were before? I am not advocating that the District uses this as an
opportunity to cut costs, but it will have spent $7 million for work
that wasn’t conducted.

Now, I will say the Federal Government is doing the same thing
and we probably are in greater debt than the city, so I want to just
preface this by putting it in appropriate perspective. This is one of
the difficult situations we put the city government in because of
our action up here.

Mr. BRIMMER. Yeah, Mr. Chairman, your characterization is one
I share. I estimated in my statement $7.37 million and thereabouts
the cost of that. But strictly on the basis of equity, I believe it
should be done.

If the Federal Government were not doing it, then I believe it
should not be done for District employees. But given the situation
where it is being done, I think it should be done for the District
employees and thus that’s a part of the unnecessary cost, unneces-
sary burden that is being borne. And it does make the District’s—
the achievement of its long-run goal of improving its finances more
difficult. But again, I think it should be done.

Mr. Davis. It is ironic that we are up here trying to help the city
balance its budget, trying to balance our own and these actions
over the short term have increased our deficit at the Federal level
and the city’s. So you lose track of that sometimes in the heat of
the battles and I think there’s a blame on both sides of Pennsylva-
nia Avenue and hopefully we can avert that December 15th.

But in the future, I think enacting legislation of the type intro-
duced here can, at least from the city’s perspective, allow it to go
on and conduct its business. They were clearly, you know, unin-
tended victims of this and we are just trying to make sure that the
next time around the city’s going to get treated with the same kind


80

It is not going to be perfect. I don’t think you are going to get
everything you want at this stage, but we must make sure this
doesn’t happen again during this impasse—nothing is worse for the
city—than to go through one of these at the holidays.

T had one other question. At the Federal level, Federal workers
are prohibited from going out and getting other jobs. They can’t
even go out to McDonald’s or be store detectives or anything else,
because you have ethical prohibitions on outside employment. Does
that apply to the city employees, or some city employees?

Mayor Barry. Mr. Chairman, I don’t know.

Mr. Davis. OK. If you could find out, I’m sure there are some city
employees, at least-——

Mr. ROGERS. There are some that would probably be.

Mr. Davis [continuing]. That that applies to. Basically you have
taken away any livelihood they have.

The third question is, how much do you estimate this cost the
city? Seven million was what we heard from Dr. Brimmer, and he
admitted that he would be willing to relook and readjust the num-

ers.

Mr. RocErs. Well, $7 million was the productivity loss that was
estimated. But in terms of lost revenue, revenue not collected dur-
ing that time——

Mr. Davis. That is what I am after.

Mr. RoGers. Mr. Williams may want to answer too, but the re-
port that I have, it’s about $18.5 million. When we looked at our
cash reports, that’s about the loss of revenue or deferred collection
of revenue that would have been collected had we been open during
that time. So that impacts our cash-flow.

Mr. Davis. What about—and this doesn’t even count the business
loss, the fact that the Federal Government shut down, effected the
shops, the people buying, and sales tax, all those kind of things?

Mayor Barry. It should show up in our sales tax revenue. I sus-
pect it will be down.

First of all, you had less people in Washington during the shut-
down, and, too, I’m sure they weren’t purchasing goods and serv-
ices that weren't here.

Mr. Davis. Let me ask Mr. Williams if he has any specifics.

Have you had a chance to analyze that, yet? And, by the way,
welcome. I didn’t get to welcome you in your opening statement. I
had heard you in your previous role testify before us and com-
mented you made an impressive showing. We are happy to have
you aboard.

Any thoughts on that? If there is any way you can work some
numbers up for us, that would be very helpful.

Mr. WILLIAMS. We'll be very happy do that for you, Mr. Chair-
man. We are, in fact, analyzing all of our revenues as part of our
revised 1996 and 1997 financial plan and budget.

I think it is important, while I would underscore what Michael
said with regard to some lost revenue, in addition to the productiv-
ity decreases, it is important, though, to distinguish between the
Federal shutdown from the impact of the Federal—the impact of
the District shutdown. It is somewhat difficult. I mean the Wash-
ington Monument’s closed, Smithsonian’s closed; that impacts our


Ce YN DAH RF WN

Bons

19

13

6

this title and for which there has not been enacted Iegisla-
tion appropriating the payment by the first day of the fis-
eal year, there is hercby appropriated to the District of
Columbia on the first day of each month which occurs dur-
ing the period described in subsection (b) an amount equal

to “42 of the lesser of —

“(1) the amount proposed to be appropriated as
the annual Federal payment under this title in the
District of Columbia Appropriations Act for the fis-
cal year, as passed by the House of Representatives;

“(2) the amount proposed to be appropriated as
the annual Federal payment under this title in the
District of Columbia Appropriations Act for the fis-
eal year, as passed by the Senate; or

“(3) the amount appropriated as the annual
Federal payment under this title in the District of
Columbia Appropriations Act for the previous fiscal
year.

“(b) PERIOD DESCRIBED.—The period described in

20 this subsection with respect to a fiscal year is the period

21 which begins on the first day of the fiscal year and ends

22 on the date of enactment of the District of Columbia Ap-

23 propriations Act for the fiscal year.”.


55

would be automatically taken care of because Federal grants come
through Federal agencies and either they have had their appropria-
tions passed or they have had to themselves let it—let localities
spend only in relation to what they have and that grants might not
therefore be necessary to mention in this legislation. Could I have
your comments on that?

Mr. BRIMMER. Well, Ms. Norton, in the attachment one, you will
notice I set forth a table which shows the estimates. Save out of
a $5 billion budget, notice that the Federal payment not appro-
priated, would be $660 million. But we estimate that grants not ap-
propriated, not appropriated, would be about $100 million. And so
we are suggesting that those amounts be set aside and not subject
to expenditure without the appropriation, and that means that the
amount available would be $4.240 million. You see what that says
is that that could be obligated, $4.2 billion could be obligated, but
$760 million could not, and that $760 million consists of the Fed-
eral payment plus our estimate of the grants. That is what we had
in mind.

Ms. Norton. I think this committee will have to look into, I
think, how the Federal Government deals with localities and local
jurisdictions when they are caught in a squeeze through the Fed-
eral grant process, because I don’t understand that is something
that we should be independently dealing with given what may al-
ready be in place.

Mr. Hamm. Ms. Norton, it’s more a case of how the States and
cities deal with the problem, not how the Federal Government
deals with them because if they are able to proceed through fund-
ing sources of their own in anticipation, they are still on the hook
if that grant allocation gets reduced in the final agreement.

I was going to try to make sure, though, that Dr. Brimmer’s
point—your point is that these would be grants not yet appro-
priated; right?

Mr. BRIMMER. That’s right.

Mr. Hamm. Because the President has now signed the majority
of the appropriations bills and you took that into account, correct?

Mr. BRIMMER. Yes. But not appropriated.

Mr. Ham. Not yet appropriated.

Ms. Norton. Not yet appropriated. But I did not assume that in
the way in which we allowed agencies to proceed with partial ap-
propriations we were into that level of detail as to which nts
could be considered unappropriated and which grants could be ap-
propriated.

I thought it was “X” amount of money is there, you got that
amount of money, and then the agency decides how to—how to
spread that money. In any case, I see the point and it’s a good
point. I think we have to look further into it.

Thank you very much.

Thank you, Mr. Chairman.

Mr. GUTKNECHT presiding]. Thank you.

I have a couple of questions that I am trying to sort all this out
and maybe one of them is a procedural question. But before I ask
any questions, I just want to congratulate you on the work you’ve
done. We admire the job that you’re doing. We understand how dif-
ficult it is and many times we on this side of these desks don’t


2

process to be completed by December 15th. I hope and believe that
we will not have an impasse resulting in a new shutdown on De-
cember 15th, but I’m not willing to bet the farm on it. That’s why
I believe that we should report legislation to allow the D.C. govern-
ment to obligate and expand its own locally raised revenues and
continue to operate even if there is a Federal impasse.

Let me stipulate a number of facts. First, there’s no question
that under current law the District was subject to the
Antideficiency Act during the period when it had no authority to
obligate spending.

Second, the Mayor has the power to designate essential services
and exempt employees from being furloughed.

Third, the District was caught in this situation because of un-
usual budget circumstances in this most unusual year. With the
District in crisis, the authority legislation being implemented and
the authority itself getting up to speed, plus the lengthy delay in
getting the city’s budget before the Appropriations Committee, it
was almost inevitable that the District would start fiscal year 1996
under a continuing resolution.

Fourth, shutting down the District government was an unin-
tended consequence of the Federal budget impasse between Con-
gress and the President. There was no willfulness or intention to
impact the District. It simply became impossible to exclude the Dis-
trict from the larger Federal deadlock.

And fifth, there is no defensible reason to deny the District the
pse of its own locally raised revenues during such situations in the
future.

The authority estimates the shutdown cost the District more
than $7 million in lost productivity. In this city at this time, that
is unacceptable cost. Private companies around the region are

‘oing bankrupt almost every day because they haven’t been paid
y the District. Important services are shutting down as contrac-
tors refuse to provide further goods and services without payment.
Vital services are threatened and the very District officials who
should be reinventing this government from top to bottom, are
forced to spend inordinate amounts of time simply trying to keep
the government working from day to day.

This city simply cannot afford to shut down and this Congress
has a responsibility to see that it is not shutdown again.

The goals of H.R. 2661 are of vital importance not only for the
people of Washington, but for the entire metropolitan region. With-
out a strong, well-functioning government in the District, the sub-
urbs suffer. Many of the small businesses throughout the region
are dependent on their contracts with the District government.
Many employees of the District live in the suburbs. Washington,
DC is the Capital City of this Nation. The thought of forcing large

arts of the Capital City’s government to shut down because of a

‘ederal budget Reht is unacceptable.

I have some serious question about the provision of H.R. 2661.
Section 3, in effect, provides a permanent automatic appropriation
of Federal funds to the District. I don’t believe that it’s appropriate
in this legislation to include such guaranteed payment, and I think
we're going to be willing to talk about that as we move forward to
marking up this bill and making it viable.


72

participate in the 10-day furlough plan. So we had to make tough
operating decisions.

House bill 2661 is an important step in recognizing that the Dis-
trict of Columbia, among other things, is in fact a municipality, a
direct-service provider. It also will recognize that citizens here pay
for services and they expect those services and would allow we, the
officials of the District, to fulfill our obligation to provide for the
citizens with services they pay for. We support this bill.

{The prepared statement of Mr. Rogers follows:]


27

Is that really what you want? You want two cops rather than one
cop, and God knows how many other cops are running around look-
ing at the District?

Mr. DESEVE. No, ma’am.

Ms. Norton. You really think this committee has time? Would
you like to also be a cop, would you like the OMB also to calibrate
this and to watch them every day?

Mr. DESEVE. No, ma’am, that certainly is constitutionally re-
served for the Congress. Our hope here is that the control board
and the city could ‘be informed and noticed of the intent of Con-
gress as to the overall pace of District spending.

Not to be a cop, but to provide guidance and guidelines so that
the authority and the District as they work to put a spending plan
together would recognize the fact that it was Congress’ intention
that this be done in a normal, routine way during the year.

Ms. Norton. With all due respect, I think that is a complete in-
sult to the control board. The control board has been given pre-
cisely that mandate. Now you're saying, hey, Congress, in your
piece of legislation, to make sure that the control board does what
you have told it to do, you put your own pro rata cap on them.

We have just had a big fight up here about whether or not the
control board was to monitor the District and make sure it s
by appropriation cap or whether the Congress was to do it, and the
way we settled that fight was to say, look, control board, you do
it.

Now you are saying that the Congress in addition ought to, with-
out the kind of information that the control board has, without the
kind of close surveillance that it does, ought to come up with a fig-
ure on its own to superimpose on the control board as to a pro rata
cap. Understand we're talking about pro rata cap.

I want to know why that is necessary in light of the bill that you
helped us to draw and which you were very clear that there was
ample—there was ample oversight by the control board of the Dis-
trict, in light of the District’s own officers who have that obligation,
I want to know why you would superimpose the Congress on top
of all of that?

Mr. DESEVE. At this point, the financial responsibility authority
does not have apportionment responsibility, and might not be
asked by the Mayor to approve apportionment during a hiatus pe-
riod.

Ms. Norton. So it is your position that the Financial Control
Board, which has daily oversight of the District, if it desires, could
not intervene and say on its own: In light of the fact that you have
a partial appropriation, we say to you should only spend at a cer-
tain rate to make sure you don’t run out?

Because I want to tell you something, they’re already doing that,
they’re already doing that, they're already holding the District’s
money in light of the rationing that is taking place.

They’re being extremely cautious and conservative. So I submit
to you that what you’re saying, that we ought to do to make sure
they do their job, they’re already doing and they have already in-
terpreted to be their responsibility.

Mr. DESEVE. They may have done that, Madam Norton, but my
real question is whether we gave them any guidance on a shut-


70

Effect of Legislation

The benefits of this legislation are found in the costs it allows the District to avoid. First,

local shut-downs exacerbate the District's already tenuous financial condition. Many of our financial
personnel were furloughed during the shutdown, suspending critical work on the Districts roadmap for

its financial recovery: its multi-year financial plans and budgets. Moreover, at time when all of us,

are exploring every avenue to increase productivity, we lose substantial productivity with 33% of our
employees forced to remain from work. Furthermore, while my staff is analyzing the economic impact of
the shutdown, itis clear that the local shutdown has aggravated the downtum in revenues resulting

from the Federal shutdown in general. Most important, the Federal undermines reliable budget plans,
and consequently, frustrates attempts at accurate cash forecasting,

‘Obligations and Expenditures

My concems with the legislation relate to the level of obligations and expenditures and the
process used to arrive at these marks. I do not believe that financial integrity is jeopardized or the
appropriations process thwarted by allowing the District to obligate or expend against locally
generated revenue. I do believe that the principle of conservatism otherwise prevalent in the
legislation is contradicted in the provisions allowing the District to obligate or expend against
grant revenue -- most specifically the federal grant. Agencies are put at risk of overspending if the
Congress eventually reduces the amount of the federal payment or federal grants.

The legislation should also specify that the Chief Financial Officer prepares the notification

of obligations and expenses for the Mayor's submission to the Authority. The District of Columbia
Financial Responsibility and Management Assistance Act of 1995 (Public Law 104-8) grants the CFO not
only key responsibility for the District's fiscal affairs, but also the explicit charge to set the

District's budget apportionment and to manage obligations and expenditures in a budget year. Adding
this language would harmonizes this legislation with the Authority Act (Public Law 104-8).

Finally, Section 3, by releasing the federal payment in monthly installments appears to
authorize such monthly appropriations while not ensuring such appropriations would actually be made.
In fact, it allows for an expenditure against an authorization. As in the case of the federal grant as

a whole, there is no guarantee that after passage of time the Congress wil! support a federal grant in

an amount greater or equal to the amount the District as already included as revenue, Modifications
should be made to legislation to serve the valid and critical goal of providing the District with
operating cash while keeping funds under necessary control..

In conclusion, while supporting the legislation, I would recommend changes as they relate to
funds control issues and a specified role for the CFO consistent with Public Law 104-8. J thank you Mr.
Chairman for your co-sponsorship and I would be happy to answer any of your questions.


63

Testimony of
Mayor Marion Barry, Jr.
Before The
U.S. House of Representatives
December 6, 1995

In Support Of The
DC Fiscal Protection Act
Sponsored By
Congresswoman Eleanor Holmes Norton


20

I want to thank you and Delegate Norton, Mr. Clinger and others
for the work that we have all done together to try to resolve the
problems of the District.

Mr. Davis. If you resolve the problems of the microphones now,
we'll be doing real well.

Mr. DESEVE. Does this happen to all Democrats?

Mr. Davis. Keep trying.

Mr. DESEvE. OK.

Is that better?

Mr. Davis. Yes.

Mr. DESEVE. Good, thank you very much.

I want to begin by indicating the administration’s support for the
principles and concepts embodied in 2661, and a willingness to
work to perfect any language that needs to be altered in order to
bring it into effect.

Mr. Chairman, Members of the committee, I welcome the oppor-
tunity to speak on behalf of the administration regarding the bill,
which is aimed at protecting the District government from future
shutdowns in the event of the Federal Government's failure to
reach agreement on appropriations bills.

Although about 85 percent of the District government’s oper-
ations are funded by sources other than the annual Federal pay-
ment, the entire District budget is legally subjected to congres-
sional approval through the annual a ropriations process. Be-
cause the 1996 District appropriation bill ha not been enacted, the
shutdown of the Federal Government from November 14th to 19th,
forced the District to suspend many basic services, close many of
its offices, and keep thousands of employees at home.

The impact of a Federal funding hiatus upon the District of Co-
lumbia was not analogous to the situation faced by States during
a Federal budget impasse. States were mostly affected by non-
disbursement of Federal grant moneys, while the District govern-
ment faced partial shutdown because the Congress must approve
its entire budget.

Although the District’s police, fire and other emergency services
continued operating and schools remained open, many other Dis-
trict agencies funded with local tax receipts were unable to provide
vital services to the public. For example, the city stopped most of
its routine trash pickup. Eleven neighborhood health clinics that
provided routine medical services to low-income District residents
were closed, as were recreation centers.

The partial closure of the Government, induced by a lack of ap-
propriated funds, was a unique event for the District. In the past,
either the District’s appropriation bill had passed before a Federal
funding hiatus occurred, or a continuing resolution had been en-
acted permitting the District government to continue operating
until the differences over the appropriation bill were resolved.

Without the precedent—precedent of a shutdown, a legislative
proposal such as the District Fiscal Protection Act may not have
seemed necessary. But now a precedent has been established. A
shutdown has indeed occurred. Phe administration believes legisla-
tion is needed to prevent its recurrence.

H.R. 2661 would do essentially two things: First, it would author-
ize the District to spend its own funds under a continuing resolu-


A26_Satunoay, Novenven 18, 1995

The Washington Post

AN

INDEPENDENT NEWSPAPER

=
“Get D.C. Out of the Shutdown

HE DISTRICT of Columbia—cash-

strapped and financially distressed long

before the federal government shutdown
began—is now trapped in the middle of this
battle and is being pointlessly punished. The city
can’t even spend its own funds to keep itself
running properly because D.C. budget money has
to be appropriated by Congress. Roughly 85
percent of the city’s purely local budget comes
from locally raised taxes and fees; yet, without
specific action by Congress signed by the presi-
dent, the city is unable to put employees to
work—even though it will probably be stuck
paying them eventually for not working, How's
that for congressional oversight of the District’s
finances?

Even the control board that was established by
Congress and the White House earlier this year
is calling for relief, noting that the local financial
freeze is now compounding the city's financial
mess. The chief financial officer—as set forth in
the control board legislation approved by this
Congress without dissent—is right now in an
untenable position, with no orderly way to make
payments such as the local shares of welfare
checks. How does the city pay without knowing
how much it has for what fraction of a month or
week? How do local officials avoid over-obligat-
ing, which is precisely what got the city in big
trouble before?

There's a way out. Congressional approval of a
special continuing resolution—covering the por-
tion of the District budget that is raised locally
and a prorated share of the annual federal pay-

ment as previously agreed to—would allow city
officials to put employees back on the job and
would permit critical financial decisions such as
completion of a multi-year plan to move on
schedule. D.C. Del, Norton has been meeting
with leaders in both houses of Congress and with
White House officials to generate support. If a
resolution can be moved along promptly, it could
be approved today, which would allow the city to
open for business on Monday. While the House
and Senate have not reconciled their versions of
the full D.C. budget, the continuing resolution
could be based on the lower budget total in the
House-passed version,

To avoid this kind of calamity in the future,
Ms, Norton is proposing separate, permanent
legislation that would apply in the absence of a
signed appropriation at the beginning of a fiscal
year. It would allow the District to obligate its
own revenues equal to the lowest existing autho-
rized spending level, and would authorize an
automatic apportionment of the annual federal
payment. .

House Speaker Gingrich, D.C. appropriations
subcommittee Chairman Jim Walsh and other
congressional leaders who seek to bring financial
order to this city should see the importance of
separating the local functions as well as the
responsibilities of the control board and chief
financial officer from federal stalemates. If their
concern for the District's financial stability is
genuine, they should press for immediate enact-
ment of a continuing resolution as well as for
protections against any more situations like this,



57

OK, now I am pleased to call our panel of local officials, the Hon-
orable Mayor Marion Barry, and I am not sure who will be joining
him; Mr. Williams, Mr. Rogers.

As you know, this committee has a policy that before anybody
testifies they have to take the oath.

If you would please rise and respond.

[Witnesses sworn.]

Mr. GUTKNECHT. Thank you very much.

Let the record show that the witnesses took the oath.

I would also mention that the subcommittee will carefully review
any written testimony that you would like to submit.

Mayor Barry, if you would like to talk to us.

STATEMENTS OF MARION BARRY, MAYOR, DISTRICT OF CO-
LUMBIA; ANTHONY WILLIAMS, CHIEF FINANCIAL OFFICER,
DISTRICT OF COLUMBIA; AND MICHAEL ROGERS, CITY AD-
MINISTRATOR, DISTRICT OF COLUMBIA

Mayor Barry. Thank you very much.

To members of the committee, I would like to ask that my entire
statement be entered into the record. I probably won't read all of
it.

Mr. GUTKNECHT. Without objection, so ordered.

Mayor BarRY. Joining me is Mr. Michael Rogers, city adminis-
trator for the District of Columbia government. And Mr. Anthony
Williams, Chief Financial Officer for the District of Columbia gov-
ernment.

Let me thank Congresswoman Norton and Congressman Davis
for their leadership in holding this hearing, for a commitment to
expeditiously move this bill out of subcommittee to the full commit-
tee and hopefully to the House and then to the Senate and to the
President. This would demonstrate once and for all that Congress
understands the unique circumstances of the Nation’s Capital.

I am here to emphatically endorse the D.C. Fiscal Protection Act
sponsored, cosponsored by Congresswoman Norton and Davis. We
all know that there are a great many inequities and imbalances in
the relationship between District citizens and the Federal Govern-
ment, and most of these issues spark intense debate and philo-
sophical controversy. But here is an issue today that should not be
controversial and should provide a good opportunity for every
Member to demonstrate that they sincerely care about the people
who live and work in Washington.

It is not the conscious intention of anyone to purposely shut
down the Federal Government, but this, of course, is a natural con-
sequence of failure to craft legislative agreement on Federal spend-
ing policy. This bill is not about the natural consequences. It is
about unintended consequences. The consequences in shutting
down the Federal Government in application of the Antideficiency
Act are dramatically different for local government functions, even
though the Federal Government performs some direct services but
not nearly as many as does the District government.

The District government, however, must use these same guide-
lines to alter or stop trash collections, issuance of licenses, permits,
perform health and safety inspections, providing care to families


23

‘The impact of a Federal funding hiatus upon the District of Columbia was not analogous
to the situation faced by states during a Federal budget impasse. States were mostly affected by
non-disbursement of Federal grant monies, while the District Government faced partial shutdown
because the Congress must approve its entire budget. Although the District’s police, fire and
other emergency services continued operating and schools remained open, many other District
agencies funded with local tax receipts were unable to provide vital services to the public. For
example, the city stopped most of its routine trash pickup services. Eleven neighborhood health

clinics that provide routine medical services to low-income District residents were closed

‘The partial closure of the District Government, induced by a lack of appropriated funds,
‘was a unique event for the District of Columbia, In the past, either the District's appropriations
bill had been passed before a Federal funding hiatus occurred, or a Continuing Resolution had
been enacted, permitting the District Government to continue operating until differences over the
appropriations bill were resolved, Without the precedent of a shutdown, a legislative proposal
such as the “District Fiscal Protection Act” may not have seemed necessary. But now, a
precedent has been established. A shutdown has, indeed, occurred. The Administration believes

legislation is needed to prevent its recurrence.

HR. 2661 would do essentially two things. First, it would authorize the District to spend
its own funds under a typical Continuing Resolution formula to continue operations in the event

its appropriations had not been enacted by that time, Second, the bill would also provide, on a


90

I just have one question in light of the testimonies received here
earlier, and that is for Mr. Williams.

Do you believe you need any further guidance from the Congress
in order to avoid overspending should this authority—should the
authority in this bill be granted for the District to obligate its own
‘unds?

Mr. WILLIAMS. Mrs. Norton, I heard the exchange between you
and Mr. DeSeve, and I think that the—for our purposes, during a
control year, the language in the bill, I think, imposes on the Dis-
trict adequate controls.

You’ve got the oversight not only of this Congress but through
the authority of the Congress, the Mayor, the CFO, a number of
parties I think are going to be very, very diligent in erring on the
conservative side in terms of expenditure control.

I think what the Mayor said, taking this conference mark, for ex-
ample, and setting spending limits on that mark, is a conservative
gesture. There are going to be real program cuts that the Mayor
is deliberating on right now that have to be made to do that.

So I think there’s no lack of willingness on the part of the Dis-
trict or all the different parties to do what has to be done.

Ms. Norton. And I think that no lack of controls. I just—I hate
to spend—see people spending time on controls when we have al-
ready put them in place, seeking more controls.

I want to thank all of you for your testimony. I wanted to thank
the chairman for his indulgence.

Mr. Davis. Thank you very much. Your 5 minutes just expired.

We appreciate the panel. Thank you very much.

Mr. Davis. I’m now pleased to call our last panel: Mr. Charles
Hicks, the executive director of the American Federation of State,
County, and Municipal Employees; David Schlein, the national vice
president of the American Federation of Government Employees;
John Tydings, the president of the Greater Washington Board of
Trade; and Dr. Marlene Kelley, the deputy commissioner for public
health of the District of Columbia.

Mr. Hicks, I apologize. You are the president, the staff just cor-
rected me, you are not the executive director, you are the guy who
makes the decisions, not the guy who does the work. Isn’t that the
difference between the president——

Mr. Hicks. That’s not totally how it is.

Mr. Davis. As you know, it is the policy of this committee to
swear all witnesses before they testify. If you would rise with me
and please raise your right hands.

{Witnesses sworn.]

Mr. Davis. Thank you.

All right. Why don’t we start—Mr. Hicks, why don’t we start
with you and then go to Mr. Schlein and then the president of the
Board of Trade—I see John was here earlier and had to leave—and
then Dr. Kelley. Please.


44

Mr. Chairman and Members of the Subcommittee:

Thank you for inviting me to testify today on H.R. 2661, the District of Columbia Fiscal
Protection Act of 1995, that would permit the District to spend its own funds when the Congress
has not enacted a budget for the District of Columbia. ‘The recent closure of large portions of the
District government because of the Federal budget impasse resulted in furloughs which cost the
District millions of dollars in lost productivity. ‘The City’s critical fiscal condition would be

aggravated by any more such actions

The Authority supports the concept of this legislation. However, we do have concerns about

the broad nature of the spending authority provided for in the present draft.

Before I discuss the legislation, our views on its benefits, and some of our concerns, I wanted
briefly to outline the District's sources of revenue and the relatively small portion comprising the
federal payment. Just 13.5 per cent of the District's $4.9 billion in revenue comes from the $660
million federal payment. The District's local taxes and fees for services generate $3.3 billion in
revenue, of 67.3 per cent of the total. ‘The remaining $960 million (19.6 per cent) stems from
federal grants--moneys that all jurisdictions receive. Nearly half of the District’s federal grants
comes from the federal portion of Medicaid payments. ‘The figure below depicts the District’s

primary revenue sources.


85

The problem I have on the Federal payment, that I need all the
help from you I can get on, is that the Congress would, I think,
take its time to appropriate any amount of money for the District,
even in a CR that was only a Federal payment CR.

Given what your testimony has been and what the testimony of
the Financial Authority representatives has been, we are still left
with a cash-poor city. And I say that even if this cash rollover prob-
lem is solved, given how your money comes in, when it comes in
and when it doesn’t come, which is like any business, like any city,
I am still trying to figure that out, recognizing that at least you
would be better off if you got your own, your own money.

And I would ask that, if not now, certainly before we go to mark-
up, if we can find any way to speak to the Federal payment so
that—and here the Mayor put it on the line. You are talking pen-
sion, you are talking $100 million of pension payment and Metro
payment, and anybody who thinks that the District is going to, for
some years now, be able to reach into whatever money it has on
October 1st when you have said that is due and say, “Here, we’re
going to start paying that and we're going to stop paying this,”
doesn’t understand what the competing obligations of a complicated
city are.

So I think we are cutting off our own face—if we don’t find some-
thing to do about the Federal payment as well, we are cutting off
our nose to spite our face.

It may take some creative deep thinking, and we may not, as you
say, get all we need, but the notion that, well, if you have a certain
minimum amount, maybe they won’t give you any more, because
they will say you have a minimum amount, and I accept that that
might probably be the case.

tt I say on the other side is that if you have nothing, you may
have nothing, for a very long time you may have nothing, given the
way in which the Congress operates.

A lot of that would have nothing to do with venality. It would
have to do with the fact that the District is the smallest appropria-
tion; who cares? Haven’t gotten around to it, don’t want to take the
time, then you are left there without any money.

I think that is irresponsible as well and ask for your thoughts
on that. If you have any thoughts now, fine, but we can go forward
later on when you work with staff.

Mayor Barry. We'll confer this afternoon and talk to you and
others and see if we can’t figure out a realistic approach to how
this could be resolved.

I think the other problem, Ms. Norton, is expectations if this bill
passes and the expectation that we’re going to be able to operate
at an efficient level, and we'll be able to pay vendors, and all of a
sudden we find out it really doesn’t do what we want it to do; then
you got another problem of raising expectations. In other words, a
reality that you don’t have the money to pay the pension fund or
the Metro.

And, again, I underscore the fact that when you don’t pay these
people, we’re paying interest on their money and add to our budget
problems. That’s just two. Not to mention some others, Medicaid
and some other payments we need to be making. Our Medicaid


62

trict and not, as you said, Ms. Norton, put nooses around our neck
and more strictures and structures around us to get this job. It’s
tough as it is now.

So your approach, my suggestion would be to look and see if
there’s any way to modify the Federal payment portion of this to
make it a quarterly upfront, lump sum, with the Treasury getting
its money out of the total at the end, and also the Congress can
make the adjustment when it gives us the final appropriation.

It seems to me that if you did the quarterly upfront and there
is not a bill by January, you could then go back to the one-twelfth
of what’s left, or one-ninth of what’s left would be more equitable
approach for the Federal payment, if we had to do it that way. And
so we would not like to have any one-twelfth restriction on our
local appropriation. That ought to be spent in line with our finan-
cial plan which basically is a monthly plan as well as a yearly plan.

And that’s my testimony. I appreciate your support of this, Mr.
Davis, and your vigilance in trying to help the District. We cer-
tainly support your efforts in that regard.

And Mr. Williams, do you have any comments on this?

[The prepared statement of Mr. Barry follows:]


86

payments average $65 million a month, both Federal and local
share. So you can see, again, that’s a—that’s a big number.

Ms. Norton. I'd like to ask any of you—Mr. Williams may be
closer in touch with the figures—again, going back to the Federal
payment point, is there enough cash—was there enough cash on
October 1st to pay the competing debts of the District of Columbia?

Mr. WILLIAMS. I wasn’t here, Ms. Norton, on October Ist, but I
can assure you there wasn’t enough cash to pay all the debts, for
the simple reason that we inherited from last year alone $342 mil-
lion to begin with in obligations. As Mr. Hill reported, $200 million
in various deferred outlays to vendors.

Ms. Norton. Were you able to use, or did you use, any part of
the Federal payment to pay the rollover debt?

Mr. WILLIAMS. As it’s been recounted in testimony earlier, as the
Federal payment came to us, an amount to repay last year’s ad-
vances on the Federal payment was deducted immediately.

Ms. Norton. So how much cold hard cash did that leave the Dis-
trict with?

Mayor Barry. Ms. Norton, let me speak to that. We had $115
million of Medicaid vendor payments due as of September 30th
that weren’t paid on October 1st, and we had over $130-some mil-
lion on regular vendor payments that were in the queue to be paid
that have not been able to be paid. So you are talking about over
$200 million on October Ist.

Ms. Norton. How much money did you get on October Ist?

Mayor Barry. The Authority, as you know, had $70 million for
vendor payments and $53 million for our pro rata share. We didn’t
get it on the Ist until we started paying down out of our own
money these vendor payments. They kept it until last week, I
think, some portion of it.

Mr. RocErs. Then we also had as part of the Federal payment
a drawdown, $147 million that we had to repay Treasury. So that
was—that was gone before we saw it.

Mayor Barry. So we needed, I guess, in summary, Ms. Norton—
on October 1st, we needed at least $200 million.

Ms. Norton. And you got? In terms of cash you could spend, I
understand you got $147 million for Treasury. They got that. I’m
trying to find out, in light of what you needed and what you got,
how short you were.

Mr. WILLIAMS. Well, as the Mayor recounted, the original
amount after the deduction for last year’s advance was around
$150 million. But then that flowed through the Authority, subject
to a demonstration of criteria for making these payments.

I think—I think everyone agrees there was a shortage.

Mayor Barry. Also, Mrs. Norton, since the Authority and the city
were working at this for the first time, we have had, in my view,
refined and rediscussed how we get the money from the Authority.

For at least 2 or 3 weeks the Authority had over $100 million
of the Federal payment that we hadn't been able to draw down be-
cause they thought our balances were too high. But I think that’s
been resolved now, where they know what our balances are at the
end of each day and our cash-flow, and so therefore the money will
come instantly. But it shouldn’t have been held that long, but it
was.


31

Let me just add, that this would only kick in if Congress and the
President were not able to agree. If you have a pro rata and Con-
gress couldn’t agree, there would be no incentive for us to kick in
more money.

The point is we’re all trying to work this problem out and work
in the city’s interest.

ir. DeSeve, we're looking forward to the administration working
with us to draft language that the President can sign and that we
can get through both bodies i in a timely manner. We will continue
this discussion to make sure that the city’s interests are met.

I understand Ms. Norton’s frustration about the city getting its
money on time, but I really believe, as I hear his comments, that
a strict pro rata basis, and this may not be the intent of the legisla-
tion, doesn’t give Congress the incentive to give the city more
money upfront and——

Mr. DESEVE. That’s exactly my point, Mr. Davis.

Mr. Davis [continuing]. Under a strict pro rata the city would
not have the same amount of money as they’ve already gotten this
year.

Mr. DESEVE. That is correct. That’s exactly our intent, Mr.
Davis.

Mr. Davis. I think we’re all on the same team. We may be talk-
ing differently to get there. At least that’s the Chair’s impression.

Ms. Norton. Mr. Chairman, I just want to clarify.

Is the problem the scorin; problem or the problem that we want
to make sure there’s enoug! th money, and incentive to give enough
money? Which is the problem?

Mr. DESEVE. The way the bill is structured, the problem is being
able to give the District enough cash upfront “if the proration is in-
deed an equal monthly proration, which is suggested in the bill.

Ms. Norton. Yeah, that certainly was——

Mr. DESEVE. We want to make sure that the District has enough
cash to operate. That’s why last year we encouraged the clarifica-
tion of the principles of lending from the Treasury. That’s why the
administration worked hard to get $147.5 million of cash from the
Treasury into the District.

We're currently in those same kinds of lending discussions so
that we can keep the liquidity of the District such that they can
meet Pp t payroll and pay their obligations.

‘ORTON. Just could I ask Mr. DeSeve before he leaves, do
you eas any suggestions then as to how this might be worded so
as to meet the point you raise?

Mr. DESEVE. Yes, we do. We’d like to sit down and work on lan-
guage with the committee staff for the markup.

Ms. Norton. I just want to clarify, the problem is not scoring,
the problem i is to make sure we don’t shortchange the District.

DESEVE. We have not taken any position on scoring of the
bill. We don’t think the bill scores at all. We think that the contin-
ual appropriation history that the District payment has had would
alleviate any scoring concerns that anyone would have.

Ms. Norton. Thank you, Mr. DeSeve.

Mr. Davis. Thank you.

Before I let you go, I would ask unanimous consent to enter into
the record a letter from the Congressional Budget Office to the sub-


Statement of Honorable Steven C. LaTourette
H.R. 2661, District of Columbia Self-Government Reorganization Act
December 6, 1995

Mr. Chairman:

I want to congratulate Delegate Norton for her efforts in crafting this
legislation and also Chairman Davis for scheduling this hearing so quickly, in light
of the time constraints under which we find ourselves. As we all know, the
December 15 deadline for the latest Continuing Resolution is rapidly approaching

Because of its unique status as the “federal city,” the District of Columbia
sometimes finds itself caught in the crossfire from opposite ends of Pennsylvania
Avenue. When the Congress and the White House cannot reach agreement on
appropriations and budget matters, thus forcing a government shutdown, the
District, unfortunately, bears a disproportionate share of the burden. District area
residents who work for the federal government are furloughed, thus costing the city
much needed revenue generated by these workers on a day to day basis. More
important, however, because the city receives a large portion of its budget through a
federal government appropriation, if that appropriation has not been approved, vital
city services are forced to be temporarily suspended.

Delegate Norton’s legislation is an important attempt to help soften that blow.
While | agree with the intent of this bill, [ am concemed that H.R. 2661 would
create, in essence, a permanent continuing resolution for the District of Columbia by
allowing the city government to continue its normal operations by using its own
resources, but mandates the city must spend at the lowest level approved by
Congress. The lowest level could include either the previous year’s spending level,
the House passed level, or the Senate level.

I would also like to take a moment to thank our panel of witnesses for taking.
time from their hectic schedules to be with us this morning. As those most closely
associated with the day-to-day finances and working conditions in the city, I know
they have much to say about the impact our budget impasses have on the District. I
look forward to their testimony,


46

Specifically, Section 2 would allow the District to obligate or expend general funds and other
revenues at a rate no greater than what was spent in the previous fiscal year. If the House and or
Senate has passed an appropriation bill for the fiscal year, then the District may expend funds at a
rate which is the lesser of the House bill, the Senate bill, or the previous fiscal year. ‘The section
also would require that the Mayor notify the District of Columbia Financial Responsibility and
Management Assistance Authority (in a control year) of any obligations and expenditures under

the provisions of this act,

Section 3 calls for an automatic monthly appropriation of the District's federal payment during
a period in which the District does not have an appropriation. ‘The monthly automatic
appropriation would be one-twelfth of the lesser of the amount approved by the House, approved

by the Senate, or amount appropriated in the previous fiscal year.

This legislation would allow the District to continue to function even though an appropriation
hhas not been approved. Last month, many City functions ground to a halt as the federal budget

impasse continued. Nearly 15,000 employees were furloughed, resulting in at least $7.3 million
in lost productivity. Trash in the City piled up, business licenses were not issued, motor vehicle

services were suspended, and other so-called “non-essential” functions were not carried out.


productivity. In this city at this time that is an unacceptable cost. Private companies around the
region are going bankrupt almost every day because they haven’t been paid by the District.
Important services are shutting down as contractors refuse to provide further goods and services
without payment. Vital services are threatened and the very District officials who should be
reinventing this government from top to bottom are forced to spend inordinate amounts of time
simply trying to keep the government working from day-to-day. This city simply cannot afford to
shut down and this Congress has a responsibility to see that it does not shut down again.

The goals of HR 2661 are of vital importance not only for the people of Washington, DC but
also for the entire metropolitan region. Without a strong, well functioning government in the
District, the suburbs suffer. Many of the small businesses throughout the region are dependent on
their contracts with the District government. Many employees of the District live in the suburbs.
‘Washington, DC is the capital city of our country. The thought of forcing large parts of capital city’s
government to shut down because of a federal budget fight is unacceptable.

Thave some serious question about the provisions of HR 2661. Section 3, in effect, provides
4 permanent, automatic appropriation of federal funds to the District. I do not believe that it is
proper in this legislation to include such guaranteed payment. In addition, the Congressional
Budget Office has determined that this provision would “score” under the Budget Act of 1990 and
there is no provision offsetting that “scoring” as required. The OMB testimony also opposes Section
3 of the bill

If we allow the District to obligate its own revenues even without an appropriation bill then
the federal payment is the only leverage we will retain over the District. The federal payment,
because of its size and the fact that itis a cash payment, is important to the District and I believe that
it should constitute sufficient leverage to encourage cooperation by the District government. At the
same time I am very reluctant to give away that leverage.

Section 2 of 1IR 2661 seems to be very broadly worded and ill defined. 1 hope that our
witnesses can give us some help and advice in narrowing the focus of this section to do what is
necessary without going too far and allowing the District to obligate funds it doesn’t have or doesn't
get when an impasse is finally settled.

While we need to act quickly, we also need to act wisely. This effort to allow the District
to obligate its own revenues is supported, in principle, by the House leadership. 1 believe that itis
not opposed by the Appropriations Committee as long as it does not include a permanent
appropriation. Compliance with the Budget Act will require us to delete Section 3 in any case. The
Office of Management and Budget testimony states that this effort is also supported by the
President. Ihave tentatively scheduled a meeting to markup this legislation for Friday, December
8 so that we may take it up at the full Committee meeting on Tuesday, December 12. This is a very
tight schedule, but it is important to be ready before the December 15 deadline. If everyone is
willing to work together [ am certain that we can ensure that whatever happens on the federal level,
the District of Columbia government will not have to shut down again.


40

The Authority supports the concept of this legislation. However,
we do have concerns about the broad nature of the spending au-
thority provided for in the present draft.

Before I discuss the legislation, our views on its benefits and
some of our concerns, I want briefly to outline the District’s sources
of revenue and the relatively small portion comprising the Federal
payment.

Just 13.5 percent of the District’s $4.9 billion in revenue comes
from the $660 million of Federal payment. The District’s local taxes
and fees for services generate $3.3 billion in revenue or 67.3 per-
cent of the total.

The remaining $960 million, or 19.6 percent, stems from Federal
grants, money that all jurisdictions receive. Nearly half of the Dis-
trict’s Federal grants come from the Federal portion of Medicaid
payments.

The figure below, which is in my prepared text, depicts the Dis-
trict’s primary revenue sources. This bill contains two major provi-
sions that authorize certain actions when the Congress has not ap-
proved a budget for the District after the fiscal year has begun.

First, Section 2 would allow the District to obligate and expend
its funds without an appropriation subject to certain limitations.
And Section 3 would authorize the automatic monthly apportion-
ment of the Federal payment. Specifically, Section 2 would allow
the District to obligate or expend general funds and other revenues
at a rate no greater than what were spent in the previous fiscal
year.

If the House or Senate has passed an appropriation bill for the
fiscal year, then the District may spend funds at a rate which is
the lesser of the House bill, the Senate bill or the previous fiscal
year. The section also would require that the Mayor notify the Dis-
trict of Columbia Financial Responsibility and Management Assist-
ance Authority in a control year of any obligations and expendi-
tures under the provisions of this act.

Section 3 calls for an automatic monthly appropriation of the
District’s Federal payment during a period in which the District
does not have an appropriation. The monthly automatic appropria-
tion would be one twelfth of the lesser of the amount approved by
the House, approved by the Senate, or the amount appropriated in
the previous fiscal year. This legislation would allow the District to
continue to function even though an appropriation has not been ap-
proved.

Last month, many city functions ground to a halt as the Federal
budget impasse continued. Nearly 15,000 employees were fur-
loughed, resulting in at least $7.3 million in lost productivity.
Trash in the city piled up. Business licenses were not issued. Motor
vehicle services were suspended and other so-called nonessential
functions were not carried out. Other not quite so visible functions
were also not carried out.

For example, District headquarters and agency budget analysts
were nearly deemed nonessential. This delayed critical work on the
development of the District’s 1996 and 1997 financial plan and
budget; both needed to provide the city’s fiscal recovery.

Although the Authority supports the concept of this legislation,
we believe some modifications are necessary to maintain discipline


19

to have stole some money, we can’t take him off the payroll until
we prove it. So we say at least when it comes to Federal employees
forced to stay at home, out of fairness, we have to pay them. But
if the truth be told, we don’t have to pay them. And so they sit at
home not knowing if, in fact, they will be paid.

Nobody who works for anybody ought to be subject to that kind
of uncertainty, especially at a time when for two decades the Amer-
ican standard of living has been going down, not up. At a time
when we are reinventing the Federal Government, trying to make
it more efficient, leave aside the District government for the mo-
ment, we ought to be reinventing this procedure within the Federal
Government as well.

And I believe your bill would do just that and would have the
effect also of rescuing the District from these shutdowns and from
these stops and starts, which, in any case, would destabilize a com-
plicated city.

I thank you for offering your bill and for taking the time to come
here this morning.

Mr. Davis. I would just note one other thing.

Federal employees, and I’m not sure with the District employees
if this applies, but they cannot legally go out and work other jobs
while they’re being furloughed. There is a statutory bar to that.
They can’t even go out and work at a 7-11 or work at a McDonald’s
or get part-time jobs during that period. There are conflicts in
doing that. So we basically deprive them of doing anything, which
is why we pay them.

Let me just ask if Mr. Gutknecht has any questions?

Mr. Clinger, any additional comments?

Thank you very much, George. We appreciate you coming by.

Mr. Gexas. I thank you.

Mr. Davis. I’m now pleased to call our first scheduled witness,
the Honorable Edward DeSeve, Controller of the United States.

This is the first time, Ed, that you’ve been asked to testify before
this subcommittee, and I’m delighted by your presence and am
grateful for the assistance that you have already provided.

For those in the audience who do not know, Ed was the adminis-
tration’s point person working with us on the authority legislation.
I can honestly say that the legislation would not have been half as
complete as it is without his invaluable knowledge and existence.
It may not have happened at all. He was very, very critical.

As you know, Ed, it’s the policy of this committee that all wit-
nesses be sworn before they testify.

Would you please rise with me and raise your right hand?

[Witness sworn.]

Mr. DESEVvE. I do.

Mr. Davis. Thank you.

You can be seated and the subcommittee will carefully review
any written statements you may care to submit.

STATEMENT OF EDWARD DeSEVE, CONTROLLER, OFFICE OF
MANAGEMENT AND BUDGET

Mr. DESEVE. Thank you, Mr. Chairman.


1

14

7
(b) CLERICAL AMENDMENT.—The table of contents
for title V of such Act is amended by inserting after the

item relating to section 503 the following new item:

“See, 504. Pro-rated appropriation of Federal payment during period of
delay in congressional enactment.”.

SEC. 4, EFFECTIVE DATE.
The amendments made by this Act shall apply with

respect to fiscal years beginning with fiscal year 1996,
°


3

In addition, the Congressional Budget Office has determined that
this provision would score under the Budget Act of 1990 and there
is no provision for offsetting that scoring as required. If we allow
the District to obligate its own revenues even without an appro-
priation bill, then the Federal payment is the only leverage we will
retain over the District.

The Federal payment because of its size and the fact that it’s a
cash payment, is important to the District, and I believe that it
should constitute sufficient leverage to encourage cooperation by
the District government. At the same time, I’m very reluctant to
give away that leverage.

Section 2 of H.R. 2661 seems to be very broadly worded and ill-
defined. I hope that our witnesses can give us some help and ad-
vice in narrowing the focus of this section to do what is necessary,
without going too far and allowing the District to obligate funds it
doesn’t have or doesn’t get when an impasse is finally settled.

While we need to act quickly, we also need to act wisely. This
effort to allow the District to obligate its own revenues is supported
in principle by the House Leadership. I believe that it’s not opposed
by the Appropriations Committee, as long as it doesn’t include a
permanent appropriation. Compliance with the Budget Act will re-
quire us to delete Section 3, in any case.

OMB testimony states that the effort is also supported by the
President. I have tentatively scheduled a meeting to mark up this
legislation for Friday, December 8th, so that we can take it to the
full committee meeting on Tuesday, December 12th.

This is a very tight schedule, but it’s important to be ready for
the December 15th deadline. If everyone is willing to work to-
gether, I am certain that we can ensure that, whatever happens on
the Federal level, the District of Columbia government will not
have a shutdown again.

And I would now yield to Ms. Norton, the ranking member of the
subcommittee who has really I think performed yeoman’s task in
getting this bill ready for public hearing.

[The g ‘epared statements of Hon. Thomas M. Davis and Hon.
Steven C. LaTourette, and the text of H.R. 2661 follow:]


69

Testimony
Anthony A. Williams
Before The
Subcommittee on the District of Columbia
‘Committee on Government Reform and Oversight
U.S. House of Representatives
On The
D.C. Fiscal Protection Act, HR 2661
December 6, 1995

Tam Anthony A. Williams, who as Chief Financial Officer for the District of Columbia. Thank
you for inviting me to testify on H.R. 2661, the District of Columbia Fiscal Protection Act of 1995,

allowing the District to spend against its own revenues in the absence of an appropriation for the
District.

Today marks my 41st day as Chief Financial Officer for the District. This has been more than
‘enough time to witness first hand the many fiscal challenges facing this City, and certainly more than
enough time to reinforce my conviction that the financial and fiscal integrity for our government must
bbe paramount. I believe that my experience as a Chief Financial Officer of both a major Federal
department and of the District gives me a unique perspective on the normal application of Federal
Appropriations law to District operations. In fact, arriving for work in the District -- and from the
Federal sub-cabinet -- 1 thought I had seen the last of contingency plans for a federal shutdown, Alas,
not only did the normal rules for federal shutdown apply to the District, they hit with particular
disruption and force.

As this Committee well knows, the District receives only a fraction of its revenues from the
$660 million federal payment. Sixty-seven percent -- $3.3 billion -- of our revenues are received
from local taxes and fees; 19.6 percent, or $960 million originate as federal grants. Furthermore, a
number of enterprise and trust accounts support a wide-range of District activities. As I analyzed

the financial and fiscal impact of shutdown plans for the Department of Agriculture, I was reminded of
the original purpose of the Appropriations Law and its important feature, the Anti-Deficiency Act,
itself a codification of Constitutional provisions against overspending.

The Appropriations process holds an important lesson for the District: all of us should be held
accountable for spending and to the maximum extent practicable obligations and expenditures should be
held to the bright light of legislative oversight and scrutiny. A large motivation behind our
Appropsiations process is the preservation of the public's resources and the efficien: and effective

use of these resources in achieving designated missions. Unfortunately, significant resources are put

in jeopardy by the effect of Federal shutdowns on the District. Efficiency and effectiveness, the

basis for the appropriations process, is greatly reduced by foregone revenue, increased costs, and
reduced productivity, the impacts of Federal shutdowns on District finances,


24

monthly basis, an automatic appropriation of a pro-rated share of the Federal payment to the

District if the enactment of the appropriations bill had been delayed.

‘The Administration has assessed the bill in light of two perspectives, both legitimate: the
first, allowing the District Government to deliver services to the residents who pay for them in
the event of a shutdown; the second, preserving Congressional authority to review and approve
the District’s annual budget. The Administration supports the District having the authority to
spend its own funds in the event its appropriations bill has not been enacted and a Continuing
Resolution has not been passed. This support contemplates the provision of a pro rata formula to
control the District’s rate of operations during a Federal funding hiatus. OMB would be pleased
to assist in the drafting of such language. However, the Administration does not support
automatically appropriating pro rated shares of the Federal payment because this would diminish
Congressional oversight and review of direct Federal funds to the District, as well as potentially

impair the repayment of advances to the Department of the Treasury.

Specifically, Section 2 of the bill would authorize the District to spend its own funds under

a typical Continuing Resolution formula to continue operations in the event its appropriations had

not been enacted by that time. Although the Administration supports the underlying intent of
Section 2, some care should be taken regarding the rate of obligation. Under the current bill, total
obligations for individual projects and activities could not exceed the prior fiscal year funding
level. In cases in which the pending House-passed and Senate-passed versions differ, total

obligations would be based on the lesser of the House, Senate, or prior fiscal year. The bill does


10

3

lumbia and other activities chargeable in whole or in

part against the revenues of the District that were
condueted in the previous fiscal year and for which
appropriations, funds, or other authority would be
available in such Act,

“(2) NOTIFICATION OF FINANCIAL RESPON-
SIBILITY AND MANAGEMENT ASSISTANCE AUTHOR-

1Ty.—In the case of a fiscal year which is a control

Cort AU Aa wD

year (as defined in section 305(4) of the District of

Ss

Columbia Financial Responsibility and Management

Assistance Act of 1995), no obligations or expendi-

Nn

tures may be made pursuant to this subsection until
13 the Mayor of the District of Columbia has provided
14 to the District of Columbia Financial Responsibility
15 and Management Assistance Authority prior written
16 notification regarding such obligations and expendi-
17 tures.

18 “(b) APPLICABLE RATE OF OBLIGATIONS AND Ex-

19 PENDITURES.—

20 “(1) COMPARISON TO PREVIOUS FISCAL
21 YEAR.—No amount made available for obligation or
22 expenditure for a project or activity under subsection
23 (a) for a fiscal year may be greater than the amount
24 or authority provided in the previous fiscal year for

25 such project or activity.


29

Mr. DESEVE. That is correct, automatic. It is done under the con-
tinuing resolution at this point.

Ms. Norton. OK, so you don’t oppose at least putting us in the
same position as a Federal agency?

Mr. DESEVE. Not at all. In fact, we think it might be other than
pro rata. This year the District’s payment was front loaded to un-
derstand the obligations that it had to undertake.

Ms. Norton. Which brings to mind the latter part of the state-
ment, because this would diminish congressional oversight and re-
view of direct Federal funds to the District, as well as potentially
impair the repayment of advances to the Federal Treasury.

‘irst, let me say that once the Federal payment is apportioned,
there is no direct oversight, and should not be. That’s not what ap-
portionment is about, Mr. DeSeve. Apportionment is about the fact
that the full appropriation will not be handed out until the full ap-
propriation is handed out.

We do not apportion on a basis of a certain percentage in order
for the Federal Government to increase its oversight over the State
Department, so we certainly don’t do that in order to increase its
oversight over the District. So I reject that as a basis for doing it.

It looks like this part of the testimony was simply meant to find
as many reasons to throw in as you could. And it says as well as
potentially impair the repayment of advances to the Department of
Treasury.

Well, that makes me—I don’t know whether to cry or laugh. Be-
cause most of the District’s appropriated Federal payment went to
pay you folks, rather than to pay for services in the District of Co-
lumbia, because you made it so. So the Congress, in apportioning
the Federal payment, said, look, $147 million, that’s going to go
straight to the Treasury, and then it went down a list of other
things it had to pay in terms of vendors and straightjacketed how
the Congress would use its own—how the Federal payment, I’m
sorry, would be used.

So I don’t—I cannot take seriously your notion that the reason
you are against a pro rata apportionment of the Federal payment
is to make sure you get your money. Because you know good and
well that the first thing the Congress is going to do is to make sure
you get your money. You, of course, are the Treasury of the United

tates.

And what I am challenging you to do is to help us with the fol-
lowing problem. The District is cash poor at the time of the begin-
ning of the fiscal year, and so it eats up its Federal payment very
early. And what eats it up is not handing out money to District em-
ployees or to District residents.

What eats it out is repayment of loans, payment to Metro, pay-
ment to the pension fund, so that we will not then have interest
and penalties for not meeting our debts. So that what I challenge
you to do is to help us so that we don’t have the following situation
arise.

The District, you can spend your own money, of course that’s
really an obligation authority, and you don’t have any money now.
So what you really need is your full Federal payment, which you
usually spend very quickly in perhaps that first month. So if we
do not in advance pro rata some portion ever the Federal payment,


98

detrimental impact that might result from what may yet tum into another federal shutdown
‘on December 15.
Thank you again for this opportunity to testify, and | will be happy to answer any

questions you may have.


91

STATEMENTS OF CHARLES HICKS, PRESIDENT, AMERICAN
FEDERATION OF STATE, COUNTY, AND MUNICIPAL WORK-
ERS; DAVID SCHLEIN, AMERICAN FEDERATION OF GOVERN-
MENT EMPLOYEES; DIANE DUFF, DIRECTOR OF FEDERAL
AFFAIRS, GREATER WASHINGTON BOARD OF TRADE; AND
MARLENE KELLEY, M.D., DEPUTY COMMISSIONER FOR PUB-
LIC HEALTH, DISTRICT OF COLUMBIA

Mr. Hicks. Good morning. My name is Chuck Hicks. I’m presi-
dent of AFSCME District Council 20, representing approximately
7,000 employees.

Congressman Davis and committee members, I wish to thank
you for the opportunity to speak in support of bill H.R. 2661. We
feel, first, that this bill supports the concept of self-preservation to
conform with home rule. We believe that since the majority of our
moneys are from our citizens, we should not be held hostage when
Congress is in a political debate over the budget.

Td like to focus on three agencies in D.C. government to show
the effects of the shutdown on the D.C. government upon the citi-
zens of the District of Columbia. Those agencies are the Depart-
ment of Human Services, Consumer and Regulatory Affairs, and
the D.C. Public Library.

The Department of Human Resources includes such agencies as
income maintenance, which encompasses aid to families with de-
pendent children, Medicaid, food stamps, child support services. It
is also an agency that sometimes generates revenue.

Because of the limitation placed by the court system on certain
agencies, they are required to meet certain deadlines. If certain
procedures are not implemented in a timely fashion, the city could

e fined. To avoid these repercussions, overtime money would be
necessary.

Also, the citizens suffer, those who receive food stamps. An aver-
age of over 1,600 food stamps must be processed weekly for people
to get them by the first of the month. If the agency is closed for
4 days, that means either the person’s stamps will be late or the
staff will have to work overtime, which will cost the city money to
get them out.

In the area of consumer and regulatory affairs, in the Depart-
ment of Consumer and Regulatory Affairs, which is a revenue-gen-
erating agency for the District, where permits such as housing,
electrical, and professional licenses are issued, along with the in-
spection of such establishments as food, hospitals, and housing,
which is sometimes vital for the establishments to open. When this
department is closed, the city loses revenue.

For an example, if a man needs a permit for a certain date to
open his business, and if we’re not open, he can’t open. Therefore,
he loses money, as well as his staff may not be paid.

With the D.C. Public Library, at the D.C. Public Library we had
to cancel at least 100 children’s programs that offered preschool
and elementary classes. In addition to this, over 137 civic group
meetings were canceled, with a little over 3,000 in attendance over-
all. Libraries typically also provide reference services for over 50
percent of the homework assignments given to school kids. Al-
though schools remained open, many assignments went undone.
Unlike many other agencies that were only closed 4 days, the li-


n

4
“(2) DIFFERENCES IN AMOUNTS PROVIDED IN
HOUSE AND SENATE LEGISLATION.—If an amount
or authority made available for obligation or expend-

iture for a project or activity for a fiscal year under

1
2
3
4
5 the District of Columbia Appropriations Act for the
6 fiscal year as passed by the House of Representa-
7 tives is different from the amount made available
8 under such Act as passed by the Senate, the amount
9

made available for obligation or expenditure for the

10 project or activity under subsection (a) shall be the
ll lesser of —

12 “(A) the amount or authority made avail-
13 able as permitted by the action of the House;
14 “(B) the amount or authority made avail-
15 able as permitted by the action of the Senate;
16 or

17 “(C) the amount or authority provided in
18 the previous fiscal year.

19 “(¢) PERIOD DESCRIBED.—The period described in

20 this subsection with respect to a fiseal year is the period
21 which begins on the first day of the fiscal year and ends
22 on the date of enactment of the District of Columbia Ap-
23 propriations Act for the fiscal year.”.


97

the region’s suburban jurisdictions. However, cutting off essential municipal services for
businesses and residents because of national politics undermines our efforts and gives
‘one more reason for the erosion to continue. Shutdowns also attract national media
coverage automatically reinforcing unfavorable perceptions about the Nation's capital. |
know that the members of this subcommittee would agree that this is no way to begin
efforts to revitalize Washington, DC.

Finally, | understand that some Members of Congress are concemed that should
the District be exempted from the larger federal budget debate, there no longer would be
a distinction between which other federal agencies deserve the exemption and which do
not. No matter how individual Members of Congress may view their constitutional
oversight responsibilities for the District of Columbia, we cannot forget that this is a living
and breathing City, with residents and commerce and municipal responsibilities of its own.
Itis a unique federal entity and one that cannot and should not be compared to any other
federal department or agency.

in summary, the Greater Washington Board of Trade fully supports this
subcommittees efforts to allow the District of Columbia government to remain open
during a federal shutdown under the spending parameters outlined within Mrs. Norton's
proposal. The City’s critical municipal responsibilities should not cease to function
because of the national debate over the method and the means of balancing the federal
budget, | commend you, Mrs. Norton and Chairman Davis for your leadership on this

issue, and | urge this subcommittee to act quickly on this issue to preclude any further


102

ees. That’s very, very stressful for them knowing how much needed
these services are and yet they are unable to deliver those services.
So it’s a problem.

Ms. Norton. Dr. Kelly, I can particularly see that in your area.
I was astonished to find that, again, recognizing that they had to
abide by the law, the District actually closed down the clinics, onl
gradually opened them up and closed down clinics dealing wit
communicable diseases as well. Nothing I think points up how poor
a fit the governing statute is to a city as opposed to a Federal agen-

cy.

As I—if a patient could not—of course, I should preface this by
saying we have these clinics in part because they save us money.
Not only do they serve people better, but it means that people don’t
end up going to our city hospital or elsewhere where it costs more
to serve them.

Now, when these clinics were shut down, if a person needed serv-
ice, medical service and were used to getting that medical service
from a clinic, what was the alternative during the—any period that
a particular clinic may have been shut down?

r. KELLEY. Well, the citizenry were given emergency numbers
that they could call and there were many of us who were at the
Commission of Public Health and tried to work with the numerous
telephone calls that we got, and then we had to direct the patients,
those that had emergencies that needed to be taken care of, could
have been taken care of in the clinic but since they weren’t open,
we had to refer them to the hospitals and many times talk to them
about what they could do in terms of trying to get their medica-
tions and keep their prescriptions filled. This kind of information
we gave to the best of our ability and then had to refer them to
D.C. General, for the most part, for assistance in that area.

Ms. Norton. And I just want to note that emphatically for the
record. Here is a hospital that is under most severe stress, where
the District has been trying to keep people from going to the hos-
pital and you are left with no alternative but to increase costs to
the District by actually referring people who do not require emer-
gency room service to essentially the emergency room.

One more question about the effect on the District. I’m very, very
pleased to have the testimony of the Board of Trade here, because
again by necessity we of course have been focusing on services to
District residents. Anyone who does business in the District of Co-
lumbia of course does business to many people who live in the re-
gion—does business because many people live in the region come
into this city.

With the District government closed down and the Federal Gov-
ernment closed down, what kind of—what component does that
take out of normal business receipts, some of which would flow in
taxes to the District of Columbia?

Ms. Durr. Well, it tends to be industry-specific. I mean, certainly
Tm sure that you would hear restaurants were hurt more than
many other types of businesses. But across the board, our mem-
bers, small and large, were regaling us with stories of how their
inventory problems arose, servicing customers was more difficult
and receiving basic services were unavailable. Simply having the
problem of not having your trash picked up, not being able to get


65

receipts taxes, user fees, fines, licenses, and lottery proceeds.

Because DC is the economic heart of one of the nation's prime regional markets, our
failure to provide services has a ripple effect far beyond the immediate inconvenience. This is
particularly true during the holiday season. A second shutdown this season would be
particularly devastating.

During this particular period, shutdowns add to the District's already critica! financial
‘outlook. We are currently experiencing serious disruption in our cash flow because of the
decision to make the federal payment to the District in small increments instead of the annual
payment as has been traditional. This Federal payment covers our expenses dedicated to the
role of the Nation's Capitol as host to the Federal Government.

During shutdown, these expenses ~ of course -- continue, And the incremental
payment of this Federal share further chokes our cash flow and impedes our financial
renewal,

I would like to share with you a few examples of actual service hardships which
District citizens experienced during the shutdown, November 14 to 19.

Recreation and Senior Citizen Impacts

© The District operates 17 senior citizen recreational facilities, 13 of which are in public
housing developments. These facilities are safe havens for our older residents who
may not have the resources or feel safe venturing outside of their neighborhoods for
leisure activities. During the federal furlough, each one of the 13 senior centers were
closed as well as one other senior facility located in a non-public housing residential

area,

Three of the 17 senior citizen recreational facilities, however, were exempt from the
furlough because they serve as feeding centers for the elderly. Unfortunately, many
of our seniors were without transportation services to receive the nutritional meals
provided at the 3 centers because the Department of Recreation and Parks drivers
were furloughed. As a result, our most neediest senior citizens were not afforded the
benefit of our meals program. 1,200 senior citizen transportation trips were not
provided.

© The lack of programs and operations at neighborhood-based recreational facilities
impacted approximately 11,035 participants each day as a result of the federal
shutdown. Six indoor pools could not open, 83 recreation centers were inaccessible to
youth, 3 therapeutic recreational facilities were unable to treat clients and 15
‘cooperative play programs for youth 3 to five years old could not operate.

Public Safety Impacts

A total of 525 parolees were not able to report to their parole officers to discuss their
Progress or maintain compliance with parole conditions. 110 urine tests were canceled
and approximately 50 Reports of Alleged Violations (RAV"s) on parolees were
delayed.

Although our police, fire and corrections functions were exempted from the shutdown,
the Board of Parole was not. As a consequence: 76 parole hearings and 15 parole
revocation hearings were canceled. The Board’s inability to conduct these hearings


71

Mayor Barry. Also, Mr. Chairman, Mr. Rogers has a brief state-
ment.

Ms. Norton, the question about this cash, this problem is not
going to go away. We know what caused it. In 1994, the District
government overspent its budget by $322 million. We take $322
million out of 1995 cash and pay 1994 bills, which left us short in
1995 for $322 million. So now we are having to take 1996 cash to
pay 1995 bills.

d so until we solve—we are coming forth with a plan, I talked
to Mr. Williams and Mr. Rogers about this yesterday. We are going
to have to, Ms. Norton, find a way to deal with this $322 million,
either refinance it or some other combination of how we get it.
Until that happens, you are going to have Mr. Williams on a daily
basis having to try to decide who you pay when you don’t have
enough money to pay all the people.

But if we have $322 either from long-term loans or some other
financing, that would solve our immediate cash problem as long as
we continue to try to balance our current budget as to not to exac-
erbate the problem.

So, Ms. Norton, until we do that, you are going to hear about
these vendors not getting paid, you’re going to hear people scream-
ing and yelling, you’re going to hear people picketing Mr. Williams’
office because he won’t pay them their money. And that’s the prob-
lem with that.

Mr. Rogers.

Mr. ROGERS. Good afternoon, Mr. Chairman, Ms. Norton. I would
like to have my full statement entered into the record.

Mr. Davis [presiding]. Without objection.

Mr. RoGers. The Mayor has certainly identified the impact of
this shutdown on the District government. From an operations
standpoint, day to day, we have to assure that citizens get the serv-
ices they pay for. They expect to get those services.

In the course of the week of the shutdown, we had to make deci-
sions each day about what we should open. For instance, we made
the decision initially not to open the 11 health clinics. But as we
began to assess the impact, we had to open those health clinics.

‘e made the decision early on not to open motor vehicles. As the
day went on, the week went on and the shutdown went on, we
made the decision that citizens pay to—their taxes to have those
services, they have licenses that they have to renew and that there
is a safety issue on the street if they did not have an opportunity
to come in and renew those licenses.

So we are very different, as you know, from the Federal Govern-
ment. We provide many frontline services. And in the real operat-
ing environment, we had to make those decisions. For instance, in
some prior shutdown plans, draft shutdown plans we saw, public
schools were not included on the shutdown plan. But we made the
decision that public schools should remain open, the school facili-
ties, not administration buildings, because we felt it was unfair for
kids not to have an opportunity for their education during the
phudewn while our leaders figure out how to balance the Federal
udget.

And there is another impact of that and that’s last year the
schools were closed early 10 days so that the school board could


16

backs and furlough days that have been required of them by the
Congress.

In addition to H.R. 2661, I’ve introduced H.J. Res. 128, in case
of another shutdown on December 15th, or as seems more likely,
another short-term continuing resolution. A limited CR allows the
D.C. government to operate in a straightjacket, fraught with peril.

The CFO, already besieged with competing debts he cannot meet,
would be required to calibrate what can be obligated in limited
amounts set by the timeframe of the CR. How is he to avoid over-
obligation, for which the District has been severely criticized, and
at the same time meet unfunded Federal mandates that must be
paid on time, such as AFDC, other drop-dead obligations such as
payroll and debts to vendors, desperate after months of not being
paid by the chronically cash-short district?

In the midst of an insolvency crisis, the only thing that hadn’t
happened to destabilize and set back D.C.’s economic recovery, has
now happened. A shutdown of a troubled city means costs that can
never be recovered.

A shutdown treats the District like Federal agencies whose funds
come entirely from the Federal Government, not like the very high
taxpaying jurisdiction that the District is. Caught in the middle of
other people’s fights, the District is not merely squeezed, but
crushed. Across party lines, this is not the intent of this body. The
Congress has nothing to lose under H.R. 2661, and everything to
gain in the stabilization and recovery of the District government
this body now seeks.

H.R. 2661 sets no precedent, because the District of Columbia is
the only 1 of the 13 appropriations that is composed chiefly of lo-
cally raised funds and the only one that is not a Federal agency.

This year, the Congress has determined that it will not help the
District of Columbia by allowing it to spend its full appropriation
free of cuts. If you cannot help, we ask that at least you do no
harm. Free our own money so that we can keep our own city oper-
ating without tying both hands behind us and hurting the innocent
bystanders, D.C. residents and employees.

Thank you, Mr. Chairman.

Mr. Davis. Ms. Norton, thank you very much.

Just recognize that the subcommittee vice chairman, Mr.
Gutknecht, is in the room—and I think, Gil, you’re not going to
make any statement at this time but reserve the right to put it in
the record later.

Mr. GUTKNECHT. Yes, Mr. Chairman. I would like to ask some
questions later on, but no opening statement.

Mr. Davis. Thank you.

I will move to our first witness. We have a surprise witness who
doesn’t appear on the published list, but George Gekas, who is a
senior Member of the Republican Conference, a distinguished mem-
ber of the Judiciary Committee, asked to testify.

I would just like to say that on Mr. Gekas’ behalf, I think when
it comes to Federal shutdowns and being proactive in legislation to
try to remedy that situation, Mr. Gekas has taken a lead in this
Congress and we’re pleased to have you here today.


99

Mr. FLANAGAN [presiding]. Thank you very much.

Dr. Kelley.

Dr. KELLEY. Good morning, Mr. Chairman and Congresswoman
Norton and other members of the subcommittee.

Tm Dr. Marlene Kelley, deputy commissioner of public health for
the District of Columbia, and I want to thank you for the oppor-
tunity to personally communicate my concern for the health and
safety of District residents and the critical need to enact legislation
that would enable the District of Columbia to continue normal op-
erations in the face of the possibility of yet another Federal shut-

lown.

Tm not only responding to this opportunity as a government rep-
resentative but as a practicing physician who regularly delivers
health care services to families in the city’s neighborhood health
clinics.

The District of Columbia Commission of Public Health assures
equitable access to comprehensive primary and preventive health
care programs and services for District residents. The public health
programs directly administered by the Commission of Public
Health include the surveillance and control of infectious and com-
municable diseases, including HIV and AIDS, sexually transmitted
diseases, tuberculosis, and vaccine preventable diseases; the provi-
sion of primary and preventive health care services at 11 commu-
nity-based neighborhood health centers located throughout the Dis-
trict of Columbia. They’re school-based health services; health care
services to adjudicated youth and long-term care services.

We also provide services for the identification, treatment, and
prevention of substance abuse; programs that provide comprehen-
sive maternal and child health care, and nutrition services for
women, infants, and children; and the Commodity Supplemental
Food Program for children and the elderly.

In addition, the Commission registers, maintains, and provides
access to birth and death records and assures the readiness of an
effective and coordinated system of emergency health and medical
services.

The Commission of Public Health provides a vital link to critical
and essential health care services for the District’s many uninsured
and medically underserved residents. We provide services to indi-
viduals and families with both acute and chronic illnesses. I myself
continue to see patients in the Walker-Jones Neighborhood Health
Clinic, delivering care to patients to whom I have delivered health
care services for the past 25 years.

There are many patients like mine whose only source of health
care are the neighborhood health clinics operated by the Commis-
sion of Public Health. There are approximately 200,000 patient vis-
its annually in the District’s neighborhood health centers. These
families depend solely on the District centers for primary and pre-
ventive health care as well as any emergent medical needs. There
are prescription and pharmaceutical services, social work, and nu-
trition support.

Interruptions in these critically needed services impact the
health of thousands of District residents, especially those suffering
with diabetes and hypertension, and pregnant women needing pre-


21

tion formula, continuing operations in the event its appropriation
had not been enacted by that time.

Second, the bill would also provide on a monthly basis, an auto-
matic appropriation of a prorated share of the Federal payment to
the District if enactment of the appropriation bill had been delayed.
The administration has assessed the bill in light of two perspec-
tives, both legitimate.

The first, allowing the Government to deliver services to resi-
dents who pay for them in the event of a shutdown. The second,
preserving congressional authority to review and approve the Dis-
trict’s annual budget and Federal payment. The administration
supports the District having the authority to spend its own funds
in the event its appropriation bill has not been enacted by Con-
gress and a continuing resolution has not been passed.

This support contemplates the revision—the provision of a pro
rata formula to control the District’s rate of operations during a
Federal hiatus. OMB would be pleased to assist in drafting of such
language.

However, the administration does not support automatically ap-
propriating prorated shares of the Federal payment, because this
would diminish congressional oversight and review of direct Fed-
eral funds to the District, as well as potentially impair the repay-
ment of advances to the Department of the Treasury. Specifically,
Section 2 of the bill would authorize the District to spend its own
funds, and although the administration supports the intent, some
care should be taken regarding the rate of obligation.

Section 3 of the bill appropriates prorated monthly shares of the
Federal payment in cases of a funding hiatus. The amount would
be based on the lower of the House- or Senate-passed versions or
the previous year’s enacted. This could constitute a permanent and
definite appropriation of the Federal payment, and as I indicated
earlier, would diminish congressional oversight of direct Federal
funding to the District.

Moreover, an automatic disbursement of the Federal payment
could impair the mechanism established for repayment to the Dis-
trict of Treasury advances made pursuant to the Financial Respon-
sibility and Management Assistance Act of 1995. The administra-
tion is opposed to this provision.

This concludes my testimony, and I would be glad to respond to
any other questions you or members of the subcommittee may

ave.

(The prepared statement of Mr. DeSeve follows:]


Attachment 1

Example Illustrating How Legislation Might Work

This example assumes the following:

‘© The District begins a fiscal year without a federal appropriation
‘© The House approved a $5 billion budget

‘© The Senate approved a $5.2 billion budget

* The previous year’s appropriated budget totaled $5.1 billion
Estimated District revenue is $5 billion

‘+ Federal payment not appropriated equals $660 million,

‘© Federal grants not appropriated equal $100 miltion.

This legislation, as currently drafted, would allow the District to obligate or expend $5 billion, the
lower of the House approved, Senate approved, or the previous year’s appropriated budget. We
believe the amount that could be obligated is $4,240 million, and the amount that should not be
obligated is $760 million. The latter figure consists of the amount of the federal payment and
‘grants not yet appropriated

‘The following table illustrates the amounts that could be obligated--and the amounts that should
not be obligated--under adjustments to H.R. 2661

Description Amount]
Revenue $ 5,000]
Federal payment not appropriated $660)
|Grants not appropriated (estimated) $100}
Revenue available $ 4,240
Expenditures approved by the House $ 5,000)
‘(Amount that could be obligated $ 4.240)
|Amount that could not be obligated $ 760)

‘Thus, 15 percent of the budget could not be obligated


95

De cene  Board
of Trade

‘A Regional Chamber of Commerce
{forthe Drinctof Columba. Northern Virgina and Suburban Maryland

Board of Trae ueing
1120 20th Stret, NW
Washington OC. 20086
2028575900

‘FAK: 202223-2648 TESTIMONY OF JOHN R. TYDINGS, PRESIDENT
THE GREATER WASHINGTON BOARD OF TRADE

before the

SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
U.S. HOUSE OF REPRESENTATIVES

December 6, 1995

Thank you, Mr. Chairman and the members of this subcommittee, for the
opportunity to testify before you today. My name is John Tydings, and | am the
President of the Greater Washington Board of Trade. The Board of Trade is a regional
chamber of commerce representing over 1,000 companies and over 350,000 private
sector employees in Northern Virginia, suburban Maryland, and the District of Columbia.
Mrs, Norton's legislation, H.R. 2661, which would exempt the District's budget from
the highly politicized national budget debate, would provide a certain stability so critical
during this time of financial crisis. By preventing future federally-initiated, unscheduled
government shutdowns, the Congress can limit complications to efforts already underway
aimed at restoring fiscal stability in the District of Columbia. Mrs. Norton's bill would also
provide some assurances to City businesses and residents that their services will not be a

victim of national politics.


33

‘kev By: 12+ GH 17:37. CBO/NATURAL RES
CONGRESSIONAL BUDGET OFFICE June E, O'Ned!
U8. CONGRESS Director
WASHINGTON, D.C, 20815
December 5, 1995

Honorable Tom Davis
Chairman
Subcommittee on the

District of Columbia
Committee on Government
Reform and Oversight

USS. House of Representatives
Washington, D.C. 20515

‘Dear Mr. Chairman;

‘As you requested, the Congressional Budget Office has reviewed H.R. 2661, the District of
Columbia Fiscal Protection Act of 1995, as introduced in the House of Representatives on
November 17, 1995. Based on our preliminary analysis, we estimate the hill would increase
direct spending by about $534 million in fiscal year 1996, assuming enactment of H.R. 2661
by January 1, 1996. The budgetary effect of this legislation on subsequent fiscal years is
cea, CBO expects that HER. 2561 would be Interpreted as proving dct pening in
future fiscal years as well, but the amounts are uncertain, Because the bill would increase
direct spending, pay-as-you-go procedures would apply.

HLR. 2661 would provide for funding to the District of Columbia in the event that a new
fiscal year begins and funds have not been provided to the District in its regular
appropriations bill. Section 2 would permit the mayor of the District, with prior written
notification (0 the District of Columbia Control Board, to obligate or spend nonfederal
funds on the continuing operations of the District government. Section 3 would provide
federal funds to the District for any year for which the annual federal payment (if
authorized) bas not been appropriated by the first day of the fiscal year. At the beginning
of each month for which the regular appropriation has not been enacted, the bill would
appropriate one-twelfth of the lower of the ansval payment proposed in the House-passed
appropriations bill, the amount proposed in the Senate-passed appropriations bill, or the
amount appropriated in the previous fiscal year,

Under H.R. 2661, the appropriation to the District would effectively become @ permanent
appropriation. Thus, even though the bill to make appropriations for the District in fiscal
year 1996 has not been enacted, the federal government would sill be required to fund the
District for the remainder of the year. Based on the amount proposed in the House- and


17

STATEMENT OF HON. GEORGE W. GEKAS, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. GEKAS. I thank the chairman, and the members of the com-
mittee. I offer my support for the legislation which Delegate Norton
has just described and which the chairman has endorsed.

I do so with three sets of credentials: The first set of credentials
that I offer to the committee is the fact that I’m a Member of the
Congress and this hearing, like many others, accords every Mem-
ber a chance to voice his positions, even though he or she may not
be a member of that committee. That’s excellent, I thank you for
that.

Second set of credentials that I want to spread on the record is
that in times past, I have voted for D.C. appropriations at a time
when it was not the popular thing to do, neither at home nor with-
in the halls of the Congress.

Specifically, I want to mention one aspect of what I’ve been relat-
ing here, and that is when Mayor Kelly first was inaugurated and
took office as Mayor, there was a great issue about additional funds
required for the District of Columbia to get going under the new
administration. And I’m proud to say that I spoke in favor of it, to
give the new administration a chance and was one of the few again
who voted in favor of it. That substantiates my saying to you that
I have an extra set of credentials for involving myself in a D.C.
matter.

And third, what has been alluded to by the chairman is my third
set of credentials. Namely, for several terms now, I have been try-
ing to avoid the government shutdown that haunts us every fiscal
year, by calling for what I have termed “instant replay legislation.”
That is to say that on October Ist or September 30th, when the fis-
cal year ends, if the Government, the Congress and the President,
have not enacted appropriations legislation, to the extent that they
have not done so, on October Ist, it would go into effect by instant
replay, automatically, last year’s budget or the House numbers or
the Senate numbers, just as this legislation requires for one of the
portions of the proposed bill.

And the reason it hasn’t passed all these years is because it
makes sense. And if it makes sense, we’re up against a horrible ob-
stacle, it seems.

What your legislation here does is open the window a little bit
to show the efficacy of such legislation, and despite the chairman’s
reservations about what it would do to segregate the District of Co-
lumbia for a continuing resolution instant replay like I’m con-
templating, I would hope he could set aside only for the selfish rea-
sons that I advance, this would set a precedent, perhaps then we
could finally enact instant replay for all future government shut-
downs, for all purposes, so that there are no Federal employees
who would ever have to go unworking and furloughed and termed
nonessential or essential, and all that debacle that occurs when fis-
cally we can’t agree on a future budget.

T intend to go before the Rules Committee when your legislation
reaches that body to try to make in order not only my support for
your legislation, but to open the window a little wider and make
government shutdowns forever a thing of the past.

I thank the Chair and the members of the committee.


61

but more importantly, no place to put your litter except on the
streets of the District of Columbia.

We also issue construction permits. We are trying desperately to
get businesses to locate in the District of Columbia, stay here and
to build here, but during this period, developers, plumbers, build-
ing contractors, architects were not able to obtain building permits
during this period which meant we delayed construction of a num-
ber of projects, and as we all know, construction delays cost money.
So again, it doesn’t make a lot of sense here. We also were not able
to service our own fleet, our own pieces of equipment.

The other thing that happened was we had about 26 of our vehi-
cles on the street could not be towed because they were—they
weren’t working and they were vandalized while they were on the
streets.

The other one is traffic signals. There were over 60 traffic signals
that went on the blink during this period and we could not repair
those, so you had flashing yellow lights when you should have had
red lights or green lights, and again, this shutdown affected that.

Our motor vehicles were shut down, we couldn’t issue drivers’ li-
cense. We lost the ability to issue over 670 driving permits, which
meant that if a person’s driver’s license expired during this period,
and they waited, as some people do, till the last day or so to get
their driver’s license, the place was closed, which meant technically
they were driving without a license, expired license. The cops
stopped them, they may say, well, the place is closed. The cop may
understand that, but he may not understand that and give him a
ticket and arrest him for not having a valid drivers’ license. The
same thing is true with tag renewals, you might not have your
proper sticker.

The Woodrow Wilson Bridge is part of our responsibility to staff.
During this period we couldn’t staff it and therefore we endangered
the possibility of river traffic being able to come up the river during
that period.

Not to mention human services. Eleven public health clinics
closed, people’s health was affected by it, couldn’t go get their medi-
cine, couldn’t get their health concerns taken care of. Most of the
people who use our clinics are low-income persons whose only ac-
cess to health care are our clinics and we needed them to be going
there.

The tragedy, Mr. Chairman, was the committee’s—a number of
our pediatric visits. These are children who have scheduled visits
to go see their physician at these neighborhood clinics, couldn’t go.
Which meant if a youngster had a sore throat or some other prob-
lem, couldn’t get it taken care of at our clinics, had to find some
other place to g0, didn’t have any money.

The District's tuberculosis clinic was closed during this period
which meant that those in need of medication, treatment and mon-
itoring could not go.

So we think this is an appropriate approach to this. We—our
local moneys, yearly Federal payment is about $3.3 billion. We
ought to be able to spend that money in line with our plan as ap-
proved by the Council and the Authority, and if it’s before the Con-
gress, the Congress can make the adjustments once it finally
makes appropriations. But we ought to trying to help the Dis-


‘ONE HUNDRED FOURTH CONGRESS

Congress of the United States
Wouse of Representatives

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
2157 Ravaunn House OFFICE BuLONG
Wasvineton, DC 20515-6143,

OPENING STATEMENT OF

REPRESENTATIVE TOM DAVIS
CHAIRMAN, DISTRICT OF COLUMBIA
SUBCOMMITTEE

GOVERNMENT REFORM AND OVERSIGHT
COMMITTEE

DECEMBER 6, 1995

HEARING ON H. R. 2661
THE DISTRICT OF COLUMBIA FISCAL PROTECTION
ACT OF 1995

Good morning and welcome. The hearing on HR 2661 will come to order. I strongly support
the purpose of this bill, and commend my friend and colleague Del. Norton for her sponsorship and
the effort she has put into trying to find ways to keep the District of Columbia government moving
forward. The situation that caused this bill to be introduced has hurt the District of Columbia at a
time when it needs held from the federal government, not additional problems

We are here today to look for ways to ensure the ongoing operation of the District of


93

At the Department of Employment Services, Workers’ Compensa-
tion and disability claims processing came to a halt, even though
the funds to pay the claims have already been paid and allocated
by private firms and the D.C. government.

The Wage and Hour Division closed, forcing delays in payments
due to citizens.

The Parole Board was closed for the first several days, although
the parole officers were asked to report on Friday, November 17,
1995. This was in recognition of the fact that the public safety,
while not threatened immediately, became a threat when parole of-
ficers could not maintain contacts with parolees.

At the Department of Recreation, after-school programs were
canceled, forcing working parents to find alternative arrangements.

At the Department of Human Services, neighborhood clinics were
closed, forcing citizens to seek treatment in costly emergency rooms
or to delay medical treatment entirely. And I see one of the panel-
ists here will talk about that in much more detail.

These are but a few examples of the programs that could have
been continued with the use of local funds. We believe it was unfair
to the city’s workers and the public to shut down the D.C. govern-
ment because of the budget dispute taking place in the Federal
arena. H.R. 2661 provides a fair solution to this problem.

Before I close, I want to thank Congresswoman Norton for offer-
ing this bill and to thank you, Mr. Chairman, for your efforts to
see that D.C. and Federal workers are treated fairly during a budg-
et crisis. Your efforts and other Members’, and those of other mem-
bers of this subcommittee, are greatly appreciated.

I of course am available to answer questions.

Thank you.

Mr. Davis. Thank you very much.

John Tydings isn’t here. We have Diane Duff from the Board of
Trade.

Ms. Durr. Thank you, Mr. Chairman.

My name is Diane Duff, and I am the director of Federal affairs
for the Greater Washington Board of Trade. I am going to do my
best to fill in for John Tydings, who apologizes for having to leave
early due to a constituent service demand, something I’m sure that
you all can appreciate.

a regional organization representing over 1,000 businesses lo-
cated in Northern Virginia, suburban Maryland, and the District of
Columbia, I’d like to associate the Board’s comments with your
comments earlier, Mr. Chairman, about characterizing the shut-
down as something that might not have been particularly wise.

Since our formal testimony echoes many of the points that you
have heard over and over again today, I’ll not bore you by simply
reading our statement, but I would like to highlight just a few
points of our testimony.

First of all, we are clearly in need of stability here in the District
of Columbia. The District is a city in turmoil, and anything that
can be done to improve the stability in the District is something
that needs to be pursued immediately and quickly. So we thank
you, Mrs. Norton, and Mr. Chairman, for your leadership on this
issue.


38

IVIYOLIGY

(O81 SONIS VORISWV NOV 1 1 SION SAL

S061 'SCUTENEAON NVOMANV-ORaV NOLONIASVA SIT Vv


100

natal care, where the timely availability of medical care does make
a difference in the outcome of their illness or pregnancy.

The lack of availability of food supplements for women and for-
mula for infants creates a critical situation for families that depend
on the Commission’s nutrition support teams for these services.
Many infectious and communicable diseases like tuberculosis and
sexually transmitted diseases such as syphilis and gonorrhea, were
untreated and may have resulted in the spread of disease to other
people in our community and, in the case of tuberculosis, may lead
to the development of drug-resistant organisms.

In addition, there were persons who had been tested for HIV and
AIDS and were awaiting test results and were unable to obtain
them in a timely manner. It’s not hard to imagine that any delay
in the receipt of test results provides patients with cause for in-
creased anxiety and may have contributed to the spread of the dis-
ease to other persons.

Interruptions in access to these outpatient services encourages
the inappropriate use of the city’s public and private emergency de-
partments, already overburdened. This may not only result in the
excessive and inappropriate use of emergency medical resources
but ultimately will result in higher costs for more intensive serv-
ices being billed to Medicaid.

Emergency action by the city was required to make available
support personnel such as transportation and security staff to en-
sure the many necessary items and pharmaceuticals required by
our 24-hour facilities and substance abuse clinics and other pro-
grams.

We strongly support Congresswoman Norton and the efforts of
this committee to create a permanent continuing resolution for the
District of Columbia to permit the District to use its own resources
to continue municipal operations that provide vital services to resi-
dents and visitors to the Nation’s Capital.

Thank you for the opportunity to provide testimony before this
committee on H.R. 2661, the District of Columbia Fiscal Protection
Act of 1995, and I would be pleased to answer any questions also.

Mr. FLANAGAN. Terrific.

First, without objection, I’d like to permit any member to place
a statement in the record at the beginning of this hearing, and
without further eloquence, I just will yield to Ms. Norton to begin
the questioning first until Mr. Davis returns and resumes.

Ms. Norton. Thank you very much, Mr. Chairman.

First let me say how much I appreciate all four of you coming
to testify. I know this hearing was held on short notice. Mr. Davis
certainly did not want to proceed without getting a real life sense
of what a shutdown means, and I appreciate the fact that all of you
have focused on the effect of the shutdown on services and on resi-
dents, and I'd like to ask a question, since we had two representa-
tives from our major unions here, about the impact on employees.

I know that you have focused, and I commend you for focusing,
on the services that these employees deliver. But occasionally we
read statements, perhaps you read some of them in the paper, that
while these employees got paid for not coming to work, what are
they crying about?


41

in potential spending and to ensure that the Chief Financial Officer
is the key official making financial management decisions.

This legislation would allow the District to obligate or expend all
funds without an appropriation. We agree that the District should
be allowed to obligate or expend an amount equal to all locally gen-
erated revenue, such as local taxes or local fees. However, we be-
lieve the District should not be able to obligate or expend amounts
equal to the Federal payment or Federal grants which have not
been appropriated.

Under this legislation, it is possible for the District to obligate
against funds that it may never receive if the financial appropria-
tion bills—if the financial appropriation bill reduces the amount of
the Federal payment or a Federal grant.

Attachment 1 to my statement, Mr. Chairman, outlines an exam-
ple that demonstrates how the District might be—the legislation
might impact the District.

I would hope I could file that for the record, I will go over it if
you wish, Mr. Chairman.

Mr. Davis. Without objection so ordered. If you want to take a
minute, that would be fine.

Mr. BRIMMER. Thank you.

We also have other concerns about the draft legislation. Another
part of Section 2 requires the Mayor to notify the Authority of all
obligations and expenditures under the provisions of this act. We
strongly support the need for such reporting but believe it should
be clear that the Chief Financial Officer should prepare the notifi-
cation that the Mayor submits to the Authority.

The District of Columbia Financial Responsibility and Manage-
ment Assistance Act of 1995 and as Public Law 104-8 clearly stipu-
lated that the CFO is to be a key official in the District responsible
for the fiscal affairs of the District. Requiring that the reporting of
our obligations and expenses be prepared by the CFO and _ then
submitted by the Mayor ensures consistency with intent of Public
Law 104-8.

We also have concerns about Section 3 which would automati-
cally release the Federal payment in monthly increments when
there is no appropriation. Allowing expenditure of Federal funds
without an appropriation raises several fundamental questions.

First, there does not seem to be sufficient justification to alter
the historical practice of expending Federal funds only when they
have been appro riated. In addition, although the legislation sets
forth a formula for determining these monthly allocations, there is
no guarantee that any of these amounts will be finally congression-
ally approved Federal payments. As a result, we do not support
this section as currently drafted.

In summary, the Authority supports the broad intent of this leg-
islation. However, we believe the legislation should be amended:
One, to prohibit the obligation or expenditure of funds equal to the
Federal payment or Federal grant without appropriation; and two,
to make it clear that the CFO should prepare the report to the Au-
thority of planned obligations and expenditures under this act.

With the new budget crisis looming, this legislation is urgently
needed. I want to repeat that. With the new budget crisis looming,
this legislation is urgently needed. The District can ill-afford to