U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

55–750 PDF 2010

H.R. 733, D.C. BUDGET AUTONOMY AND H.R.

1054, D.C. LEGISLATIVE AUTONOMY ACT

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

POSTAL SERVICE, AND THE DISTRICT

OF COLUMBIA

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

ON

H.R. 733

TO AMEND THE DISTRICT OF COLUMBIA HOME RULE ACT TO ELIMINATE ALL FEDERALLY-IMPOSED MANDATES OVER THE LOCAL BUDGET PROCESS AND FINANCIAL MANAGEMENT OF THE DISTRICT OF

COLUMBIA AND THE BORROWING OF MONEY BY THE DISTRICT OF

COLUMBIA

AND ON

H.R. 1054

TO AMEND THE DISTRICT OF COLUMBIA HOME RULE ACT TO ELIMINATE CONGRESSIONAL REVIEW OF NEWLY-PASSED DISTRICT LAWS

JUNE 7, 2007

Serial No. 110–205

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

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

TOM LANTOS, California

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL SERVICE, AND THE DISTRICT OF

COLUMBIA

DANNY K. DAVIS, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JOHN P. SARBANES, Maryland

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio, Chairman

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

KENNY MARCHANT, Texas

JOHN M. MCHUGH, NEW YORK

JOHN L. MICA, Florida

DARRELL E. ISSA, California

JIM JORDAN, Ohio

TANIA SHAND, Staff Director

(III)

C O N T E N T S

Page

Hearing held on June 7, 2007 ................................................................................. 1

Text of H.R. 733 ....................................................................................................... 3

Text of H.R. 1054 ..................................................................................................... 10

Statement of:

Fenty, Adrian M., mayor of Washington, DC; and Vincent Gray, chairman

of District of Columbia’s City Council, accompanied by Eric Goulet,

budget director, District of Columbia City Council .................................... 21

Fenty, Adrian M. ....................................................................................... 21

Gray, Vincent ............................................................................................. 21

Gandhi, Natwar, chief financial officer, Government of District of Columbia; Brian Flowers, general counsel, District of Columbia’s City Council;

and John Hill, chief executive officer, Federal City Council ..................... 34

Flowers, Brian ........................................................................................... 36

Gandhi, Natwar ......................................................................................... 34

Hill, John ................................................................................................... 38

Smith, Walter, executive director, D.C. Appleseed Center for Law and

Justice, Inc.; and Theodore Trabue, executive director, District Economics Empowerment Coalition ......................................................................... 53

Smith, Walter ............................................................................................ 53

Trabue, Theodore ...................................................................................... 55

(1)

H.R. 733, D.C. BUDGET AUTONOMY AND H.R.

1054, D.C. LEGISLATIVE AUTONOMY ACT

THURSDAY, JUNE 7, 2007

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERAL WORKFORCE, POSTAL

SERVICE, AND THE DISTRICT OF COLUMBIA,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:14 p.m. in room

2247, Rayburn House Office Building, Hon. Danny K. Davis (chairman of the subcommittee) presiding.

Present: Representatives Davis of Illinois, Norton, Marchant,

McHugh, Jordan, and Davis of Virginia [ex officio].

Staff present: Howie Denis, senior professional staff member;

Alex Cooper, professional staff member; Tania Shand, minority

staff director; Caleb Gilchrist, minority professional staff member;

Lori Hayman, minority counsel; and Cecelia Morton, minority

clerk.

Mr. DAVIS OF ILLINOIS. The subcommittee will come to order.

I want to note that we have a new member of the subcommittee

with us today, Representative Jim Jordan from Ohio. Mr. Jordan

served for over a decade in the Ohio State Legislature before his

election to Congress last fall. Mr. Jordan is not here at the moment, but I certainly want to welcome him to the subcommittee

and look forward to working with him.

Welcome Ranking Member Marchant, members of the subcommittee, hearing witnesses, and all of those in attendance. We

welcome you to the Federal Workforce, Postal Service, and the District of Columbia Subcommittee’s legislative hearing on H.R. 733,

the D.C. Budget Autonomy, and H.R. 1055, D.C. Legislative Autonomy Act.

Hearing no objection, the Chair, ranking member, and subcommittee members will each have 5 minutes to make opening

statements, and all Members will have 3 days to submit statements for the record.

I will begin.

Good afternoon, ladies and gentlemen. I would like to welcome

everyone to today’s hearing.

The purpose of this hearing is to examine two bills in Delegate

Eleanor Holmes Norton’s Free and Equal D.C. Legislative Series.

Ms. Norton introduced these proposals to eliminate anti-home-rule

measures that deprive the District of Columbia of equal treatments

and recognition as an independent, self-governing jurisdiction.

2

The legislative proposals we are considering today are H.R. 733,

the District of Columbia Budget Autonomy Act of 2007, and H.R.

1054, the District of Columbia Legislative Autonomy Act. These

bills will eliminate congressional review and approval of the District’s operating and capital budget and review of newly passed

District laws.

However, as part of her Free and Equal D.C. Legislative Series,

Delegate Norton has introduced bills that would establish an Office

of the District Attorney that would be headed by a District Attorney elected by the residents of D.C., to one that would permit statues honoring the residents of the District of Columbia in Statutory

Hall.

It is unfortunate that such bills are necessary. While District

residents pay Federal and local taxes and serve in the military,

they have no voting representation in the U.S. Congress to represent their interests, and they do not have full autonomy over

their budget and local laws.

All 572,000 District residents, including the two-thirds that are

African American, are being disenfranchised because the District of

Columbia is subject to the budgetary and legislative whims of Congress.

I support Delegate Norton’s efforts to end the disenfranchisement

of District residents and to provide the District with greater equality and flexibility over its budgetary and legislative affairs.

Again I want to thank you for coming to this hearing. I also want

to note that very supportive and being a real part of this effort is

Ranking Member Tom Davis of the full Committee on Oversight

and Government Reform. Of course, he hails from the State of Virginia, which is a suburb of Washington, DC. [Laughter.]

Mr. DAVIS OF VIRGINIA. More like it is a suburb of Fairfax.

Mr. DAVIS OF ILLINOIS. All right. Either way we put it, we are

delighted to have Ranking Member Tom Davis with us, and I

would now yield to the ranking member of this subcommittee for

an opening statement, and then we will hear from Delegate Norton

and Ranking Member Tom Davis.

[The texts of H.R. 733 and H.R. 1054 follow:]

3

4

5

6

7

8

9

10

11

12

13

14

15

16

Mr. MARCHANT. Thank you, Mr. Chairman.

I would ask permission to put my remarks into the record and

welcome all of you today. I am sure this will be a very interesting

hearing. I am very interested in Ms. Norton’s proposal. I will leave

the rest of my time for the witnesses and Mr. Davis.

Mr. DAVIS OF ILLINOIS. Well, thank you very much, Mr.

Marchant.

We will now proceed to Delegate Eleanor Holmes Norton.

Ms. NORTON. Thank you, Mr. Chairman.

Mr. Chairman, I particularly want to thank you for this hearing,

Mr. Chairman. In the 17 years that I have been in Congress, there

has never been a hearing on budget or legislative autonomy, although next to voting rights I can think of no matters that would

be of greater importance to the District.

I want to thank the ranking member for co-sponsoring the Budget Autonomy Act, the more important of these two acts, although

both are of immense importance to the city.

Mr. Chairman, if you were to ask somebody how you define selfgovernment, I think they would begin by saying that the very definition of self-government is the ability to enact your own laws and

your own budget. If you do not have that, you do not have self-government.

The District of Columbia Council and Mayor do not enact the

budget and laws of the District of Columbia. Enactment is a word

that is technically possible to be used and, in fact, the way the

Congress uses it, only after Congress either reviews or passes legislation for the District of Columbia. That is as bad as it gets, Mr.

Chairman, when you consider that all 50 States of the Union and

all of their local jurisdictions and all four of the territories have

complete and total legislative and budget autonomy. In our country, only the District of Columbia is treated as a colony that must

bring its budget, raised totally from taxpayers here, to be enacted

before it can be spent.

I appreciate that you have begun the process of moving us to full

membership in the Body known as the United States of America.

I want to say that thanks are due, as well, to the Senate, because, even when I was in the minority, the Senate did enact a

modified budget autonomy bill where our budget would have had

to come here but stay so few days that, in effect, it was budget autonomy. Tom and I worked together on that matter, and we could

not get it through the House.

Today we seek full budget autonomy. Thirty-three years late, but

we seek it this year.

Senator Thomas Eagleton included in the original Home Rule

Act full budget autonomy for the District of Columbia, but, again,

we are dealing with the bad House, the House of Representatives,

and we were not able to get that through the House. We have the

bifurcated process we have today.

That means that this city brings more than $5 billion in taxpayer-raised funds to this Body, which contains some States that

do not raise that much money, and asks those States to vote on

that budget and on those laws, when the Member from this city

has no vote on that money or on those laws.

17

You have alluded to the Free and Equal D.C. Series and a couple

of the bills in there. Essentially, what the series does is to give the

city control over its core functions—its budget, its legislation, its

criminal justice—and it transfers to the District of Columbia those

Home Rule Act Provisions that prescribe the city’s structure, and

others that make it necessary to come to Congress, as well as many

others that have just been dumped into the charter provision.

Let me give you two recent examples so you can understand why

we are here today. It is more than about structure and broad principles.

Here are two examples:

The Mayor just did a school restructure bill. It was delayed, even

though school opens in September, while it went to the House. I

so appreciate, Mr. Chairman, how quickly you passed that bill

through subcommittee and committee and how quickly our leadership got here. Then it had to go to the Senate, and there was some

shenanigans there. But the fact that it had to go to two houses

after the Council had 70 hearings is a case study in stupidity and

redundancy in government.

We have another matter. The CFO has not had a raise since he

has been CFO, but the minority was able to stop a raise here because they deemed it too much. First of all, CFO shouldn’t be in

the charter. He is a D.C. official. He is no more than the Mayor

and the City Council, and he should be right there with other officials. But because we dumped him in the charter, we are still waiting to get his raise.

I appreciate how the authorizers are working with me to see

what we can do. I can tell you this much: somebody suggested it

go in our budget. It is not going there, because if they held it up,

if they used it to hold up the bill, all it would do is to hold up our

budget. So we have to be very creative, and instead of Eleanor

working on the next thing we do on the Iraq war, on the hunger,

on the bill we had a press conference on to raise Federal hunger

allotments for poor people, I have to try to strategize how to get

out a raise for a D.C. official that most Members of Congress—and

I think even most D.C. residents—don’t know a lot about and certainly don’t care much about up here.

This bill recognizes that until we get statehood—and that is not

in the cards any time soon—under Article 1, Section 8 of the Constitution, Congress can step in at any point. So this is redundancy

at large. Instead of holding things, the Congress can step in and

grab things at will.

In 2006, however, first I want to give Congress some credit. Congress has seen, because we have kept at them, what they are doing

to the city government that they want to see become more efficient.

This happened. Two important changes happened while I was in

the minority, and I want to give the minority credit for working

with me to effect these changes.

One is mid-year budget autonomy. If you think it is demeaning

to have to bring your budget here, consider, Mr. Chairman, what

it means to raise taxpayer funds between September 30th and let

us say the next 6 months and not be able to spend that money

until we pass the supplemental, the supplemental like the Iraq

supplemental. Well, the minority did grant us mid-year budget auVerDate 11-MAY-2000 14:45 Apr 30, 2010 Jkt 000000 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 U:\DOCS\55750.TXT KATIE PsN: KATIE
18

tonomy, and so we do not have to come every twice a year; we now

only have to come once a year. That was the most important structural change since the Home Rule Act was passed 33 years ago.

I want to give the minority credit for another important change.

Our budget has sometimes been held up here 3, 4, and 5 months

because of the way people go at attachments or because we were

included in an omnibus bill. The minority I give credit for working

with me so that our budget always gets out on time on September

30th, and instead of getting out the way it did before so you spend

last year’s funds, it gets out so you can spend your own money at

the next fiscal year’s funds.

So that mid-year budget autonomy and on-time passage of the

budget is something we got when I was in the minority, and I want

to give credit to the minority for working with me to do that.

I want to say, Mr. Chairman, that budget autonomy and legislative autonomy both affect the bond rating of the District of Columbia, because Wall Street looks at finality, the shadow of the Congress and might do something that no one can anticipate hanging

over our budget affects our bond rating. Until Congress has gone

through that process, we will not have the bond rating that the city

deserves and has earned by the way in which it has managed

money.

It can’t do accurate revenue forecasts. Once our budget was held

up—and I want to put this in the record so it is clear why this is

necessary. When your budget is held up, this is what it does to

your D.C. public schools. One year it was held up and, as a result

of not having the budget out, all the contracts you made are either

null and void or you can’t proceed on them. Textbooks had to be

returned to publishers under contract provisions written into those

contracts. School supplies were returned. School buses under bus

lease contract were reduced, creating longer rides for disabled children, and tuition payments for special education students went unpaid. That is so unnecessary that one has to ask why it has lasted

this long.

Mr. Chairman, I will say a word about legislative autonomy, not

because it is not important, but because it is even more ridiculous.

The 30 days and 60 days for criminal manners, 30 days in civil

matters is not only obsolete and demeaning and cumbersome; Congress no longer uses it.

So the whole purpose was to see if there was something that

really shouldn’t be enacted, and if you, in fact, enact a law that affects the Federal presence or the Federal Government then you

ought to be overturned. If you were from Chicago or New York, you

would be overturned then, too.

Again, remember, we can get in to the District under Article 1,

Section 8, and change anything we want to. This process of review

isn’t used any more, because when Congress wants to overturn

something it simply does it through the appropriation process.

What does the District have to do? Meanwhile, the District has to

act as if we still use the layover process, and so it still hasn’t

passed these crazy things, the temporary, it calls them various

things—emergency, temporary, permanent.

19

Some laws go out of existence because it is 30 legislative days,

60 legislative days, and we are not here straight for legislative

days that way.

Particularly because it isn’t used, particularly because it is tortuous and byzantine to put anybody through that process, especially

a city that raises its own funds, it is time to just throw legislative

autonomy out of the window.

All of these may have made some sense 33 years ago when people didn’t have any experience. The experience has long indicated

that this stranglehold on District legislation, this idiotic way of

dealing with our budget demeans not only us, it demeans the Congress.

It is so important, what you are doing here, Mr. Chairman, that,

like the Voting Rights Act of 2007, if we pass the Legislative Autonomy Act of 2007 and the Budget Autonomy Act of 2007, they

will rank the 110th Congress as doing yet another historic measure.

Thank you very much.

Mr. DAVIS OF ILLINOIS. Thank you very much, Ms. Norton. Of

course, nobody represents their areas with more passion than Ms.

Norton.

We will now proceed to the ranking member of the full Committee on Oversight and Government Reform, Representative Davis.

Mr. DAVIS OF VIRGINIA. Thank you very much, Chairman Davis.

Back in 1995, when I became chairman of the D.C. Subcommittee, the Nation’s capital faced a spending and financial crisis of

epic proportions. Congress, in passing our Control Board legislation

that I sponsored with Delegate Norton, embarked on a critically

important journey to address this crisis. With patience and perseverance, the Control Board Congress created had its intended effect

and eventually worked itself out of a job. Much needed fiscal discipline was instilled in the city’s budget process. The District’s return to the private financial markets helped to produce more credible numbers and better performance.

We then moved to the next level in 1997, with passage of the National Capital Revitalization and Self-Government Improvement

Act. The economic recovery of the Nation’s capital, which has continued to pace ever since, has benefited the entire Washington region.

There is no doubt in my mind that we are now ready to continue

our progress by enacting H.R. 733, the D.C. Budget Autonomy Act,

which we enable the city to implement its own local budget based

on its locally generated funds. It in no way changes nor could it

change the District Clause of the Constitution, which establishes

and maintains congressional legislative authority, but it does address the unfair delays in service delivery caused by the present

congressional appropriations system. The city has too often been

held hostage to totally unrelated disputes. Meanwhile, D.C.’s

schools, public safety, and the entire range of city services have

often hung suspended as Congress dawdled and delayed.

As the old saying goes, when elephants fight the grass suffers.

A lot of District grass suffers as a result of the archaic budgetary

process now required.

20

The city has sometimes had to be part of a continuing resolution

and was subject to unrelated Presidential vetoes of omnibus or

mini-bus appropriations bills. Then there was the Government

shutdown and others that were threatened. I remember getting

calls over the years about whether or not local police, teachers, and

sanitation workers could report to duty, and, if they did, whether

or not they would be paid.

It is really quite simple: The District should not be held hostage

by needless delays in the congressional budget process that cost the

city money. This bill will remove the uncertainty that has plagued

the past D.C. budgets and give the city greater control over its own

funds. Remember, we are only talking about the District of Columbia’s own money here.

It is time to make sure the District can begin utilizing the next

fiscal year’s funds when the fiscal year begins. Short of voting

rights, budget autonomy is the most important change Congress

could make for the District.

I have some reservations about the other bill before the subcommittee, H.R. 1054. This bill, dubbed legislative autonomy,

would eliminate the congressional review period. I don’t find the

present system to be unnecessarily burdensome for either the District or Congress. While I am well aware of the work required to

keep track of the layover provisions in the Home Rule Act, I think

it is a useful mechanism that exercises for the Washington region

and the Federal Government, especially given the many instances

of beneficial local interaction and the collegial way the provision

has been administered over the years.

Unlike the local budget, affirmative congressional approval of

local legislation isn’t required in the form of an act of Congress. To

the contrary, it would take literally an act of Congress, known as

a resolution of disapproval, to prevent local enactments from going

forward, and there is a very short timeframe for such an action,

and Congress has historically exercised appropriate standards.

Since the Home Rule Act was enacted in 1973, only three enactments have been adversely affected by Congress out of around

4,000 submitted, so the Federal interest in the Nation’s capital has

been exercised in a non-obtrusive and effective way.

Still, keeping an open mind, I look forward to the hearing today,

hearing more about why the present system should not simply proceed as it is.

Thank you very much.

Mr. DAVIS OF ILLINOIS. Thank you very much, Representative

Davis.

Of course, again, we welcome Mr. Jordan. Thank you very much

for joining this committee, as a matter of fact. If you have any

opening comments at the moment, we would be delighted to entertain them.

Mr. JORDAN. Thank you very much, Mr. Chairman. I look forward to working with you on this committee.

Mr. DAVIS OF ILLINOIS. Thank you very much.

If we would then ask our first panel of witnesses if they would

come. You might just remain standing for the moment. Of course,

it is committee policy that all witnesses are sworn in.

[Witnesses sworn.]

21

Mr. DAVIS OF ILLINOIS. The record will show that each witness

answered in the affirmative.

Gentlemen, you may be seated.

Let me just briefly introduce our distinguished panel of witnesses.

We have the Honorable Adrian M. Fenty. Before becoming Mayor

of the District of Columbia, Mayor Fenty waged a vigorous campaign in which he emphasized the need for government to serve the

priorities of its people. In keeping with his mission, Mayor Fenty

has successfully received congressional approval to provide the

city’s children with hope and opportunity through an education reform initiative that places the responsibility for managing D.C.

public schools under the auspices of the Mayor.

We also have the Honorable Vincent C. Gray, who is a native of

Washington, DC, and a proud product of the District of Columbia

public school system. With a longstanding commitment to children,

he has a solid reputation as a champion for young people and their

families. His career in social services spans over 30 years, beginning with his service as executive director of the D.C. Association

for Retarded Citizens, where he successfully advocated public policy initiatives on behalf of persons living with mental retardation

in the Washington metropolitan area.

Gentlemen, we thank you both for coming. Of course, the green

light indicates that you have 5 minutes in which to summarize

your statement. The yellow light means your time is running down

and you have 1 minute remaining to complete your statement. And

the red light means that your time has expired.

We will first go to Mayor Fenty.

Mr. Mayor.

STATEMENTS OF ADRIAN M. FENTY, MAYOR OF WASHINGTON,

DC; AND VINCENT GRAY, CHAIRMAN OF DISTRICT OF COLUMBIA’S CITY COUNCIL, ACCOMPANIED BY ERIC GOULET,

BUDGET DIRECTOR, DISTRICT OF COLUMBIA CITY COUNCIL

STATEMENT OF ADRIAN M. FENTY

Mayor FENTY. Thank you very much, Mr. Chairman and Ranking Member Marchant, Congresswoman Norton, Congressman

Davis, Congressman Jordan. It is my pleasure to be here today to

speak to you about H.R. 733, the District of Columbia Budget Autonomy Act, and H.R. 1054, the District of Columbia Legislative

Autonomy Act.

For the record, my name is Adrian Fenty and I took office this

past January as the fifth elected Mayor of the District of Columbia.

I plan to say a few words about why budget and legislative autonomy are crucial to the future of the government I lead, but first,

Mr. Chairman, I would like to thank you for your partnership and

the work that you and the other members of this committee have

done on the District’s behalf.

I should also acknowledge the role of the U.S. Constitution in

framing the relationship between the District and Congress.

Everyone in this room is well aware that, under the District

Clause, Congress reserves exclusive legislative authority in all

cases whatsoever. Congresswoman Norton’s proposals for budgVerDate 11-MAY-2000 14:45 Apr 30, 2010 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 U:\DOCS\55750.TXT KATIE PsN: KATIE
22

etary and legislative autonomy do nothing to diminish this Constitutional authority. They simply re-interpret this authority to

give the District’s duly elected government more autonomy in managing its own affairs so that Members of Congress may remain focused on issues of national importance.

In the 34 years since the District of Columbia has had a locally

elected government, that government has evolved and grown. First

as chief financial officer and then in 8 years as Mayor, my predecessor, Anthony Williams, put the District’s fiscal house in order.

His successor, CFO Natwar Gandhi, has continued this work. You

will hear from Dr. Gandhi shortly.

We have come a long way since the congressionally mandated

Control Board in the 1990’s, a long way since the District government couldn’t pay its bills or pick up its garbage. Indeed, we are

at this very moment prepared to send to the President our 12th

consecutive balanced budget. Our bonds are A+ and A–1 at all

three rating agencies for the first time in the history of the District

of Columbia, to the envy of most other major cities. And even

though the Control Board era is over, many of its controls are permanently enshrined in our laws.

In short, we are running a tight ship. If Congress had in the past

intervened to restrict the powers of the locally elected government

in times of financial distress, we think then that Congress should

support our present-day tradition of fiscal discipline by granting

the enhanced budget autonomy we have earned.

At the same time, we remain unique among cities and States in

this country in having our local property sales and income taxes

subject to the Federal appropriations process. This means our

agencies must plan their budgets almost a year in advance. It

means we must rely on continuing resolutions to fund our operations as we wait an average of 21⁄2 extra months for Congress to

approve our budget. And it means we need acts of Congress to reallocate funds mid-year to meet the changing needs of our residents.

At the same time, neither Congress nor the White House typically makes any change to the local funds expenditures in our

budget. for all these reasons, we are simply asking for the ability

to spend locally collected dollars without congressional approval.

This will mean better and more efficient government for my constituents and less work for the Federal staff who must review our

budgets every year.

The Constitution declares Congress to be the supreme legislative

authority for the District of Columbia. Depending on the nature of

the bill in question, we must wait 30 to 60 legislative days for passive congressional approval before our legislation becomes law.

This makes me the only chief executive of a city or a State in this

country for whom the act of signing legislation does not make the

legislation final. It also means the Council of the District of Columbia passes and I sign hundreds of bills every year that must await

congressional approval. The vast and overwhelming majority of

these bills are of no interest to Congress whatsoever.

And, as I mentioned in my discussion of our budget, it is extremely rare that Congress intervenes. To properly acknowledge

that reality would be to put the District government in the driver’s

23

seat and hand us the keys, while keeping your Constitutional mandate to watch how well we are driving.

I urge you to take action on these two pieces of important legislation as soon as possible.

Thank you again for the opportunity to testify. I am happy to answer any questions.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Mayor.

Let me just indicate that the gentleman to the left of Mr. Gray

is Mr. Goulet, who is the D.C. Council’s budget director. We welcome you also, sir.

Mr. GOULET. Thank you.

Mr. DAVIS OF ILLINOIS. We will now proceed to Mr. Gray.

STATEMENT OF VINCENT GRAY

Mr. GRAY. Thank you, Chairman Davis. I am delighted to be

here, Ranking Member Marchant; our Congresswoman who represents so ably the District of Columbia, Congresswoman Norton;

Congressman Tom Davis; and Congressman Jordan. Thank you

very much for having me here today to speak on these two important pieces of legislation.

The District must develop its budget in a timeframe that complies with the complicated and lengthy Federal appropriations

process. The congressional appropriations schedule prevents the

District from using more current revenue estimates and expenditure needs that would lead to a budget based on better and more

complete data. Because an affirmative congressional approval is required, the District’s appropriation is often caught in national policy disputes that typically delay our local budget enactment and

that do not have anything to do with the District of Columbia.

Complying with the Federal appropriations process disrupts service delivery in several troublesome ways. It lengthens the time period between identifying a service need and implementing a solution, service improvements are further hindered by Federal delays

in the budget approval process, and program managers must use

or lose funding at the end of each fiscal year.

In the 30 years since the enactment of Home Rule, the District

has made many changes and many reforms and improved its financial operations, which you have already heard substantially about

today. The city has even overcome its financial difficulties of the

late 1990’s and removed the Financial Control Board. Moreover, we

are very proud at this stage that our bond rating with Moody’s is

an A–1, A+ with Standard and Poors, and A+ with Fitch, thus indicating our strong financial position.

Over the past several years, Congress has not changed the District’s allocation of local funds in its budget. The approval of H.R.

733 would, however, provide the guarantee by removing the approval of the District’s local budget by the Congress. Under the proposed legislation, Congress would still maintain its oversight authority as provided for in the Constitution.

One example of how the District suffered from the delays in the

appropriation process occurred in fiscal year 2007. The District enacted the Community Access to Health Care Omnibus Amendment

Act of 2007, which would fund both operating and capital expenditures to improve health care in the District. The District had to

24

wait for congressional action to an amendment to the continuing

resolution in order to be able to move forward.

Granting the District budget autonomy would provide the following benefits: Allow for better budgeting by not having to start the

process 4 months earlier than would be required if the District

managed its own budget; provide increased financial flexibility that

would allow the city to react quickly to changes in program and financial conditions; and, remove the uncertainties of the current

budget process that the bond rating agencies take into account

when assessing the District’s finances.

No local government can operate effectively without the ability to

respond quickly to changing public needs. The local government entity can better assess the needs of its jurisdiction and how to allocate the cost of programs and services provided by the city than

anyone else.

It is a fact that the majority of our total budget is funded by local

dollars. For fiscal year 2008, the total budget is $9.8 billion, of

which $6 billion is the local budget. The local budget is funded by

locally earned revenue, not by Federal dollars.

I believe the District has clearly demonstrated that we have

earned the right to budget autonomy. We have come from under

the authority of the Financial Control Board. We have maintained

a strong financial position with substantial cash reserves. We have

received clean audits for the last 10 years. The bond agencies have

continually increased our ratings. And we have established internal

financial controls that maintain balanced budgets.

Legislative autonomy is another concept whose time has come.

The District of Columbia has operated under the current legislative

process since the implementation of Home Rule in 1974. Most

things in life should periodically be reviewed and updated. After 33

years, the process for enacting laws in the District needs to be revised. The current process involves a review period of 30 legislative

days for civil laws and 60 legislative days for criminal laws.

In order to address the needs of government under the current

approach, the Council must use a Byzantine process of passing

laws on an emergency, temporary, and permanent basis. A bill

passed on an emergency basis is enacted for only 90 calendar days.

Because many pieces of legislation passed by the Council do not

complete their congressional review during the emergency enactment period, the Council then must pass temporary laws in effect

for 225 days. So, in effect, the Council is passing three pieces of

legislation on one issue.

The inability to implement laws at the time of passage by the

Council may increase implementation costs, as well. The role of the

Council is to identify and address the needs of the city that require

legislative action. Once the necessary research and evaluation of

legislation is complete, the Council votes to approve the law. As

has been indicated already, in the years since the enactment of the

Home Rule Act, there have been only three resolutions of disapproval by the Congress. Congresswoman Norton’s legislative autonomy bill would eliminate a formal review system. Obviously,

Congress would still have the right, per its Constitutional authority, to enact laws that impact the District.

25

In conclusion, Mr. Chairman, the fundamental right of a representative democracy is self-determination. Indeed, to be governed

by the consent of the governed is the founding principle of the

United States. Now is the time to grant the District its right to

self-determination, budget autonomy, legislative autonomy, and the

supreme right of voting representation.

I thank you for your support, Chairman Davis, and we look forward to working with you to enact these pieces of legislation.

I would be happy to answer any questions that you or the other

Members may have.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Gray.

I think I will go to you, Mr. Marchant, first, and ask if you have

questions of this panel.

Mr. MARCHANT. Thank you. Thank you, Mr. Chairman.

I think my major questions at this time will be, Mayor, do you

feel like these restrictions prohibit you from running the city day

by day and doing a long-term play, or are these restrictions that

are placed on you by law, are they manageable insofar as planning

ahead for the various triggers that take place? Or do you think it

is just something that is just untenable now?

Mayor FENTY. Well, I would never make any excuses for why we

can’t manage the government, but, as we tried to point out in testimony, the biggest problem I think would come in making sure that

the budget is passed in a timely fashion. I think it is difficult to

run a budget on last year’s numbers, and that is what happens

every year in the District of Columbia, and so I would submit that

as a very real and perhaps the most significant impediment toward

trying to make sure that we serve the citizens of the District of Columbia.

There are legislative issues that come up, as well, as the Congresswoman noted, with our own school reform legislation, but I

would put the budget at the top of that list.

Mr. MARCHANT. Thinking about it from more of a long-term perspective, would you acknowledge that this Congress could remove

these impediments, this Congress could pass the law, but a subsequent Congress could come back and put them back in? And would

there be any interest in—and I would address this also to the author—in putting some triggers into the legislation that said, based

on this past performance, those restrictions are lifted in the event

that there is any kind of a crisis or any kind of an event that would

re-trigger the necessity to come back and visit some of this stuff?

That way you would have the freedom to operate that you are

looking for, yet you would not always and the city would not always have this future political partisan problem that might revisit

every time Congress changes hands one way or the other. You

might have the law put back in and taken out and put back in.

That seems to be more than the concern about how well the city

is doing, how well it is managed. It seems to me that by leaving

it there and having Congress rarely exercise it, I understand

makes it difficult.

What I would be looking for would be something that would

allow you to function like a normal city unless a crisis arose, and

then Congress would re-enter with the same powers it had, but

26

only because some threshold had been reached or some crisis had

arisen.

Mayor FENTY. Let me just say first of all I think the current

leadership of the city, including the Chair of the Council and the

CFO, do understand that the District of Columbia can never revert

back to how the city was managed some 10 to 15 years ago. It is

an embarrassment to the citizens and really to the country. So our

commitment to make sure that never happens is as strong as possible.

I do, of course, note for the record that the legislation that established the Financial Control Board does actually state that if the

city would ever go back into the red, that the Control Board would

return. So in some way what you just referenced related to budget

and legislative autonomy does exist, and the leadership of the city

is well aware of it.

Just looking forward, if you look at the past 35 years I think

there is a consistent trend toward more autonomy for the city, so,

although Congress does have exclusive jurisdiction, it does look like

both sides of the aisle are comfortable moving in that direction, as

long as they have the assurances from the city that we will continue to manage the city properly. You have those assurances.

Mr. MARCHANT. In your visiting with the rating agencies, as you

do every year, have the rating agencies indicated a concern about

the process you have to go through? And have they indicated one

way or the other whether the rating could be upgraded if this process didn’t have to take place? Or has it become an impediment to

your bond rating?

Mayor FENTY. Yes. I think the biggest hardship on the city, when

it comes to bond rating agencies, is our responsibility for borrowing

to pay for what are essentially State-level costs in other places. We

have the same functions as a normal city, but then we have to absorb all kind of debt to pay for other costs. That is the difference

in our borrowing ratio and a place like Chicago or Boston.

I think, to the extent we can resolve that issue—much of it may

be the subject of another hearing—I think we can actually continue

to increase our bond rating.

That being said, I think the reason for the most recent two upgrades that happened within the past month were actually just

based on our commitment that if anything does take a down-turn,

we are going to make the tough decisions to keep the budget balanced.

Mr. MARCHANT. Well, I would like to say for the record that I

congratulate you and the city in the incredible job that you are

doing. My comments are not against the city in any way. My comments are about the potential of this law being changed back and

forth——

Mayor FENTY. Yes.

Mr. MARCHANT [continuing]. Not next year or the next year, but

over a decadal period of time, and disrupting again, being very disruptive in the future, even though this solution is being sought.

Mayor FENTY. Thank you, Mr. Ranking Member.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Marchant.

If I could, Mr. Mayor, let’s revisit a little bit more. I think those

of us who pay attention to things and remember the budget crisis

27

during the 1990’s and institution of, I guess, safeguards that Congress felt that it was enacting, what is so different today about the

Washington, DC, government as opposed to what it was then?

Mayor FENTY. Well, beyond, I think, a real philosophical change

in the leadership, which can’t be discounted, by the way, a feeling

that, no matter what, the last thing that will ever happen is that

the budget will be unbalanced, there are some safeguards that I

think both the Council and Mayor really do respect and appreciate.

One is the independent CFO. We have a CFO that has to sign

off on our budget being balanced, and we have to balance our budget in 5-year increments. We have a 5-year balanced budget plan,

so, as we sit here today, we have not only had 11 straight balanced

budgets, but the way we have projected spending going forth for 5

more budget years is balanced.

Then there are significant legislative reserves, and Congress has

legislated those. Above those, we have reserves that the Council

and Mayor have protected to the point that our reserves have

grown to about $1.4 billion, as you can see from Dr. Gandhi’s chart

there.

And then, last, each and every piece of legislation that passes the

Council of the District of Columbia is signed by me, has to have

a fiscal impact statement that the chief financial officer and the

budget director of the Council sign.

So these are all institutionalized financial safeguards to go along

with, I think, a much better appreciation for running the city in a

financially responsibility way.

Mr. DAVIS OF ILLINOIS. Mr. Gray, how would you characterize

the differences in the role that the Council plays today versus the

role that the Council may have been playing during the 1990’s?

Mr. GRAY. Well, I think that the Council has certainly increased

its recognition of the importance of the fiscal integrity of the city

and fiscal responsibility. The fiscal impact statement, for example,

that the Mayor mentioned in his comments, is an important, inherent part of any enactment of any legislation.

Before any legislation is enacted by the Council, we are required

and we do look quite diligently at what the fiscal impact is of any

bill that we may pass, and not only for the year that ensues immediately thereafter, but for the 4-years thereafter. So there is no action that the Council would take, first of all, without knowing that

it fits within the fiscal plan for the city.

I think also the Council, this city has certainly been one that has

paid very sensitive attention to the social needs in the city. Over

the last 8 to 10 years, we have worked with the Congress, in particular, to look at how we meet some of those needs. One of the

most important examples is the Medicaid program.

In the Revitalization Act of 1997, the District’s Federal reimbursement rate was changed from 50 percent to 70 percent, which

recognized the demographics of the District of Columbia and provided the city with what at the time was an additional $120 to

$120 million in resources, which really has helped us move rapidly

toward the kind of fiscal solvency that we have today.

So I think you have a very responsible Council at this stage. You

have people there who came through this period and you have people who have been in the city for, in many instances, their lifetime,

28

and recognize this awful period that the Council experienced, and

they are not prepared to go back there again.

Mr. DAVIS OF ILLINOIS. Thank you.

Mr. Mayor, you indicated in your testimony that passage of this

legislation would make the process more efficient and effective,

both from a budgetary as well as from a legislative vantage point.

What would be the difference, say, in doing next year’s budget as

opposed to doing this year’s budget if the new authority is provided

at that time?

Mayor FENTY. Well, one example is in the police officers. We

have in the current fiscal year appropriated enough dollars to hire

300 new officers for the District of Columbia. That will become effective as soon as the budget is passed. In prior years, that has

been sometimes into the next calendar year, and that means that

our chief of police cannot begin the hiring of those new officers for

maybe up to 3 months after the beginning of the fiscal year.

I think that is significant in a city where we put the money

aside, where there are great public safety needs. I think that is one

real example of the inability to implement a stated priority and a

past priority of the Council and the Mayor in a timely fashion.

There are numerous examples, from building recreation centers

and schools in a timely fashion, to making sure that you pay people

at the current rates that they should be getting as employees of the

government.

Mr. DAVIS OF ILLINOIS. Finally, let me ask, the city operates on

an October-September fiscal year, while the School Board has a

June-July fiscal year. Do you anticipate any problem or difficulty

as a result of those different fiscal year operations?

Mayor FENTY. Well, in the past there have been discussions

about changing that. As we go forward in preparation to have the

school system report to my administration next week—and thank

you all for your support on that—I think that is something that immediately needs to be looked at.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Delegate Norton.

Ms. NORTON. Mayor Fenty, you say in your testimony on page 2,

you indicate that our bond rating is now A+ and A–1 at all three

rating agencies. Could you or Mr. Gray spell out what that means

in dollars? When people hear bond rating, I don’t think they understand that is not just saying hey, you are good guys. Its importance

is in millions of dollars. Do you have any idea what?

Mayor FENTY. If my recollection serves me right, I believe there

was about $10 million for each additional upgrade in savings for

the District of Columbia.

Ms. NORTON. About $10 million an upgrade?

Mayor FENTY. That is my understanding.

Ms. NORTON. And neither of you were on the Council at our low

point. Perhaps I will ask this question of the CFO, but I know that

we have gone from B or something of that kind, where in essence

what this means, of course, is that taxpayers pay more for everything, because they have to pay more to borrow money.

I am not sure what the highest rating a city can attain is.

Mayor FENTY. I believe it is in the AAA category, yes AAA category.

29

Ms. NORTON. It is getting there.

Mayor FENTY. I think what is significant for this city is this is

the highest that it has ever been in the District of Columbia, and

I think——

Ms. NORTON. I wouldn’t say that. I am sure it has been pretty

high before. I mean, the District of Columbia has been here a long

time. It once had 800,000 people. I think it probably has had pretty

good bond ratings when it had a lot of population. What has hurt

us is we lost population, and then you all had to struggle with bond

ratings because you didn’t have the tax base. I am not sure.

We have to watch out. There was a District of Columbia of here

before me. I was just to honor Walter Fauntroy. The District of Columbia, in the early days of Home Rule, did pretty darned well. It

inherited a terrible budget mess, and the first Mayor and second

Mayor straightened it out. But there is no question that over the

last 10 years you have seen this huge escalation——

Mayor FENTY. That is right.

Ms. NORTON [continuing]. For which all of the city deserves credit.

While the ranking member is here, who got assurance from the

Mayor about whether or not there would be the need to reach in,

just let me say, Mr. Marchant, he gave you the assurance, but you

have the power.

The point is that at any point that the District slipped back in

some way, or maybe it didn’t slip back, maybe it was just the whim

of a Member, that Member can come forward, put a bill in, and/

or attach something to our appropriation, which is how it has been

done, and there goes something the District wants to do. There is

nothing we can do about that under Article 1, Section 8 of the Constitution. So you have an automatic trigger here, trigger of any

Member of Congress and a trigger of the appropriation process

which it goes through twice a year.

I would like to ask you about a hypothetical, so that the legislative autonomy matter, which the ranking member, who has always

been very sympathetic to our issues here, Ranking Member Davis

of the full committee, I would like to give us a real, live hypothetical that isn’t here yet. It could get to be urgent.

I am like everybody else in the Congress. All I am doing is reading the newspaper. I was distressed to hear about Greater Southeast once again. I have been here and in the Congress we did something literally that was necessary to save Greater Southeast from

closing and has had many, many problems, and everybody has to

be concerned about Greater Southeast Hospital, because that is

where not only huge numbers of Washingtonians live, on the other

side of the Anacostia, it is the only hospital over there.

Now, I would like you to——

Mr. DAVIS OF ILLINOIS. Ms. Norton, can I suggest that, if you

would, you just take the Chair. Mr. Marchant and I do have to go

and vote.

Ms. NORTON. Yes, sir.

Mr. DAVIS OF ILLINOIS. If you would just assume the Chair until

I return.

Ms. NORTON [presiding]. I will, until you return.

30

I would really like to put on the record what a situation would

do to you, because a lot of what we have talked about you have inherited. You are both new to the office. Now you have inherited

Greater Southeast Hospital, too.

Suppose you were to need to do something fairly radical with

Greater Southeast so that you would need to restructure the hospital in ways that required a number of legislative changes, and

you were put to this process of temporary, permanent—and what’s

the other one?

Mayor FENTY. Emergency.

Ms. NORTON. Emergency, temporary, permanent. I don’t think

Members or even I have no real up-close understanding of what

that means to the Mayor and the Council who, you pass a bill.

What’s the first thing you would do if you pass what I would

take it would be a fairly complicated bill on Southeast Hospital and

you had to wait for the whatever period of time it took us to get

to legislative days? How would you handle that, and what would

an emergency mean, how many days? If we hadn’t gotten to it yet

because we were in recess for months, what would it mean for temporary? And how could you get to permanent? And what would it

mean for the hospital, itself?

Mayor FENTY. Well, the days that are available to us, first of all,

the limit on an emergency is 90 days, and the scenario——

Ms. NORTON. But 90 days you go and you do what?

Mayor FENTY. Ninety days would enable us to take a piece of legislation where we have to take immediate action and implement it

ourselves.

In effect I think what you would have, Congresswoman Norton,

is by the time the Congress acted we would have done what we

needed to do anyway in order to save the hospital. We don’t have

the number of days available to us in a situation like that to be

able to wait for the Congress to act, and I don’t think we should

have to, because that is a local issue affecting the residents of the

District of Columbia, and the Mayor and the Council should be able

to act where we have to in those situations.

The emergency and temporary would respectively give us 90

days——

Ms. NORTON. Ninety days emergency. The temporary is for how

long?

Mr. GRAY. For 225 days. So we would have close to a year that

we would have available to ourselves.

Ms. NORTON. Just to show you how complicated this can be, since

people can intervene into your business any time they get ready,

somebody might take umbrage at a particular section of the bill.

Remember, for example, Greater Southeast borders Prince George’s

County. Any Member can get up here, I don’t care if you are going

to your 90 and your 220 or whatever, as long as we have not gotten

to the point where we have approved it, provisions could be

changed involving a hospital now on a wing and a prayer, it sounds

like.

Mr. GRAY. I think that is absolutely right, and the scenario that

we have before us could require the District of Columbia to go in

and exercise eminent domain or other extraordinary actions to take

over running the hospital. Given the nature of health care, we can’t

31

operate that in a whimsical fashion, so if we take extraordinary

measures we would need to be able to continue on that path.

Again, as you have pointed out, and as part of your legislation,

those need to be prerogatives that we are able to exercise, and exercise quickly, ourselves in the District of Columbia. But the system that we have now is when the permanent legislation comes

here it could in some fashion be changed, which could conflict with

the emergency and temporary legislation that not only would have

been passed by the city, but we are already in stages of implementation because of the emergency we have before us.

What is really interesting, too, is that there are times when the

Council is criticized for the number of emergency pieces of legislation that we enact, without those who are criticizing recognizing

the set of circumstances that we have to deal with every day. If we

were not to enact emergency legislation in many instances it could

bring the city’s operations to a halt because of the need to wait for

the Congress to act for 30 or 60 legislative days, which——

Ms. NORTON. You don’t have any choice.

Mr. GRAY. We don’t have a choice. We absolutely don’t. If the

Council passes a bill in November, it is likely to be the following

March before the 30 legislative days have been completed, because

of the need to have legislative days and the fact that the Congress

is in recess so often during that period. So 30 legislative days becomes 5 months.

Ms. NORTON. I chose the hospital only because I am trying to

find something that is complicated and might need to happen soon.

It is important what you say: by the time you got through the second period, you are almost through a year, so it is done anyway.

Mr. GRAY. Right.

Ms. NORTON. So what is the point of having the layover? And the

notion that we all tout that we have only done three bills—by the

way, two of those were bills involving the Federal presence. So we

just don’t use it, and so why make you use it? Why should Greater

Southeast have to wait?

The fiscal implications of that are very interesting, too——

Mr. GRAY. Yes.

Ms. NORTON [continuing]. If you are borrowing money on it. And

Congress hasn’t said finally what it is going to do.

Mr. GRAY. One of the examples I used in my testimony was the

Community Health Care Access Act, which creates money, which

provides money as a result of the tobacco settlement. It is over

$200 million. That money would have been the first pool we would

have looked to, to use your example with Greater Southeast Hospital, but under the scenario that faced us we had to send the action up to the Congress, which did substantially delay our ability

to use the funds that were available to us as a result of the tobacco

settlement. We should have been able to use those funds right

away from the negotiated settlement. We have extraordinary

health care needs, and in this instance, to use your example, we

would have had to use those funds immediately.

Mr. DAVIS OF ILLINOIS. Mayor Fenty, you just have been baptized

by fire with your school restructure bill and how the situation

works up here. So you are left now with, what, 3 months or so to

somehow get the whole school system under your authority, every

32

part of it, from buildings to the health care of children in the system. I don’t envy you, and I know you are up to it, but we have

certainly made it harder for you.

I wanted to pursue the chairman’s question about the fiscal year,

especially since Chairman Gray, in his testimony, cited ‘‘allow for

better budgeting by not having to start the process 4 months earlier than would be required of the District manager’s own budget.’’

Could you tell us something about how your fiscal year works, as

opposed to maybe how across the river their fiscal years work, and

when your budget goes into effect relative to theirs?

Mayor FENTY. If you want to, I will just start out, if Dr. Gandhi

would chime in. I think, just very briefly, when the budget year

starts on October 1st, if that is the date it is across the river, then

that is the date that they have new money available.

Ms. NORTON. I think across the river it would be——

Mayor FENTY. Well, whatever the date is.

Ms. NORTON. States seem to have their fiscal year beginning——

Mr. GANDHI. It is a July June cycle. If, for example, you have to

have budget autonomy, my request to the Council and the Mayor

would be to follow July June cycle rather than October-September

cycle, for two reasons. In particular, as you pointed out, Ms. Norton, our school system academic year, the school year, and university, both of them are on academic year that would more be in line

with July June, because most of the expenditure is done early before the school year starts.

The second problem we have, which is a far more fundamental

problem, is that our cash inflows, particularly because the real

property collections that happen in March and in September, as

well as our income tax collection, are not in sync with the Federal

October-September, so what happens, Ms. Norton, strangely, if we

do not do the so-called temporary borrowing, roughly 9 months out

of 12 months our operating cash-flows are in negative.

In other words, we are spending more money than what we are

taking in for nine out of the twelve months. So we have to go and

borrow money. On an average we have been borrowing about $250

million every year on a temporary basis, in addition to the $400

million or so that we borrow on our capital projects. So this really

puts——

Ms. NORTON. But for the way in which the fiscal years align, you

would not have to pay interest on millions of dollars?

Mr. GANDHI. Yes, ma’am. That is true.

Ms. NORTON. And this would take only a change in the fiscal

year?

Mr. GANDHI. Absolutely.

Ms. NORTON. But to change the fiscal year we have to do budget

autonomy. It all comes back to as long as your budget has to be

enacted by the Congress of the United States, you must be on our

fiscal year, and I don’t know of any State that is on our fiscal year.

Members are not aware of this. The reason they are not aware

of this is because they are aware of things that affect their Districts, and we are going to have to make Members, probably

through talking points, aware of what the real effect is. I am not

sure that our residents, who have lived only with this system, recognize how much it costs them to live with this system.

33

I am particularly interested, Mayor Fenty, because of your new

authority with the schools, that it not be handicapped by the fiscal

year, itself.

I believe you all have already had kind of the gradualism that

the Congress might require, because you now get your budget out

on time through the CR that allows you to spend next year’s

money, and the sky has not fallen in the few years we have had

that, so this is a very important change between everybody else.

Everybody at HHS, essentially we were treated as a Government

agency. There are CRs spending last year’s funds. I don’t need you

to lay out the terrible holocaust that brought on us. But for us we

at least spend. Last year you spent at next year’s budget, even

though we had a CR.

Mid-year autonomy gradualism has worked, and your examples,

Mr. Gray, of foster care, children going from foster care to adoption, that which there can be nothing the city would want most

being held up because of the budget, and your health care example

were particularly searing. Every once in a while there is an example that helps us, not of our own making.

Now, both of you were on the Council at the time when the bonds

had to, of course, be let for the ball park. Well, of course, that has

nothing to do with us, but bonds have to be in the appropriation,

even though that is not anything you spend or we spend. That has

to be in the appropriation. That was not in the year-end appropriation, so the Council and the Mayor did what they had to do. They

put it in the supplemental.

The way in which I was able to get mid-year budget autonomy

is that the newspapers don’t understand a lot in the Defense supplemental. It is all about tanks and intelligence. But one thing was

in the supplemental that said District of Columbia ball park stadium, so Members of Congress got all these questions about how

come you are building a ball park for the District of Columbia in

the Iraq supplemental, you rascals, you. At that point I went to the

Chair—I was in the minority—and said, Look what you have done

to yourself. That is really when we were able to move mid-year

budget autonomy.

In other words, it took an embarrassment to the Congress, not

the embarrassment and the trouble that the District goes through

every year.

I think I have asked all of my questions, because I needed to get

out your real life on the table. I think the bond rating point, I am

going to ask you to submit for the Chair greater detail on how

much in interest you pay during that 9-month period because you

do not have budget autonomy. And I would like you to submit examples like the ones that we have discussed and that are in some

of your testimony, the school example, for example, so that we can

lay out for the Congress why legislative autonomy is, in fact, bad

and terrible for you.

I think the hypothetical I offered on Greater Southeast Hospital

is an important one because it is complicated and because it is urgent. I would like you to spell out what it is about Greater Southeast, since it is a pending thing. I mean, I read about what they

found in the emergency room and the nurses and the doctors not

getting paid, and so forth. At some point the city is probably going

34

to have to take hold of that, and I can envision a piece of legislation that has all kinds of things in intelligence, including, interestingly, Chairman Gray, what you said about maybe needing eminent domain and what do you do. Wait? I don’t think so.

So what is the point if you are going to do it anyway because

there is nothing in the legislation that says you can’t do it during

that period? And they put that in there without having 33 years

experience. Now we have it. It is time to bring that experience back

and lay it on the table.

Very helpful testimony. I thank you for all of your excellent work

for the city.

Mayor FENTY. Thank you very much.

Mr. GRAY. Thank you very much.

Ms. NORTON. You have earned budget and legislative autonomy.

Mr. GRAY. Thank you very much for your work on our behalf,

Ms. Norton.

Mayor FENTY. Thank you very much.

Ms. NORTON. The chairman has said I should go ahead with the

next witnesses and he will return.

I want to thank you both. We swear our witnesses. Mr. Gandhi,

we believe everything you say, but you have to stand and be sworn.

I let you testify then, but to give your testimony.

[Witnesses sworn.]

Ms. NORTON. The record shows that each witness has answered

in the affirmative.

We are pleased to welcome Natwar Gandhi, who was appointed

in 2000 as one of the longest-serving officials therefore responsible

for $7 billion in annual operating and capital funds and has had

a great deal to do with the bond rating improvement of the District. One of the reasons that we are seeking to secure him a raise

he has not had—I believe since you have been here?

Mr. GANDHI. That is correct. As a chief financial officer I have

not had any increase in my pay.

Ms. NORTON. Imagine someone who has been with the city for 7

years at the same rate of pay who came to the city when the city

was on its knees and has helped the city now to the point where

it has an A+ rating having to come here and being turned down

for an increase because they did not like the amount of the increase, so we have not been able to get it through. Real life example of what a city shouldn’t have to do.

We are pleased to welcome Brian Flowers, as well, who is the

general counsel for the District of Columbia City Council, who advises the City Council on all matters relating to legislation.

You have heard the chairman’s admonition about green and yellow lights, so please proceed.

STATEMENTS OF NATWAR GANDHI, CHIEF FINANCIAL OFFICER, GOVERNMENT OF DISTRICT OF COLUMBIA; BRIAN

FLOWERS, GENERAL COUNSEL, DISTRICT OF COLUMBIA’S

CITY COUNCIL; AND JOHN HILL, CHIEF EXECUTIVE OFFICER, FEDERAL CITY COUNCIL

STATEMENT OF NATWAR GANDHI

Mr. GANDHI. Thank you, Ms. Norton. Good afternoon.

35

For the record, I am Natwar M. Gandhi, chief financial officer of

the District.

Before I begin, I want to express my view that, both as a citizen

of the District and the District’s senior financial manager, I wholeheartedly endorse expanding the authority of the District to manage its own financial affairs. Not only do I believe that the District’s leadership has demonstrated its ability to follow the principles of fiscal responsibility; I also believe that without greater

budget autonomy the citizens of the District, as well as visitors,

have been and may continue to be denied access to certain public

services in a timely manner.

The chart that appears before you and also attached to my testimony is a history of the remarkable fiscal comeback achieved by

the District over the past decade, as you already mentioned. It is

a great testimony to the financially responsible budgeting and fiscal prudence exercised by the District’s elected leadership.

Our fiscal low point occurred in 1996, when the general fund bal- ance hit a negative $518 million. Through the efforts of former

Mayor Williams, the District Council, and the Control Board, we

were able to put our fiscal house in order. And we also appreciate

particularly your leadership, Ms. Norton, during those days.

The Control Board was deactivated in 2001. Between 1996 and

the end of 2001, there had been a $1 billion increase in our fund

balance.

But the real test for the District was a challenge of sustaining

the fiscal stability in the post-control period. As you can see, at the

end of 2005 the general fund balance had risen to another billion

dollars to $1.6 billion. I believe that it is significant that, of the

$2.1 billion increase in our general fund balance between year 1996

and 2005, the amount of gain since the control period ended was

about equal to the gain during the control period. This is concrete

evidence of the District’s practice of conservative budgeting which

continues under Mayor Fenty’s leadership, as exhibited in his proposed fiscal year 2008 budget.

The District Council, under the leadership of Chairman Gray,

has just yesterday adopted the District’s budget using same conservative budgeting principle and sound financial practices.

A measure of the success is reflected in our bond ratings. As has

been pointed out by Mayor and Council Chair, all three rating

agencies have recognized our improved creditworthiness by raising

our bond ratings from junk bond status to A+ category.

It is notable that, compared to other major cities that experienced periods of financial stress, including New York, Philadelphia,

Cleveland, and Detroit, this turn-around is the fastest.

Now let me turn to the issues of the budget autonomy and point

out that under the current law all of our spending is authorized by

the Congress, irrespective of the source of revenue. In the District’s

2007 gross budget of about $8 billion, about $6 billion, or 74 percent, was comprised of revenues raised locally. Only $120 million

in Federal payments were specifically appropriated from Federal

revenues for programs and projects unique to the District. The balance was comprised of formula-based Federal grants which are

available to all jurisdictions nationwide. Therefore, I would argue

that only the Federal payments that are specifically and uniquely

36

earmarked for District programs or Federal initiatives must be appropriated by the Congress.

Now, the Mayor and the Council Chair already talked about the

benefits to the District of our budget autonomy. I will not dwell on

it more, but simply to point out that the current law already provides the framework for assuring the financial integrity without

the need for imposing the Federal appropriation process on the

local fund budgets.

Congress has created within the District’s Home Rule Act a permanent office of the Office of the Chief Financial Officer. This office

provides an independent assessment of key financial data, annual

comprehensive financial reports, revenue estimates, fiscal impact

statements, and all other consequential financial data.

I believe that the existence of an independent chief financial officer, along with the prudent leadership demonstrated by our elected

officials, that is sufficient to ensure the fiscal discipline without the

added complexity of putting local spending plans through Federal

appropriation process. Thus, there is no question the District has

the financial infrastructure to permit it to manage its local funds

effectively. Moreover, since the deactivation of the Control Board in

2001, District’s elected leaders have achieved an exemplary record

of fiscal prudence. Financial markets have recognized it in the

forms of lower interest rates on our borrowings, and rating agencies raising our bond ratings.

In summary, Ms. Norton, the District’s leadership has the will

and the information necessary to make the informed decision, and

the District has a proven record of functioning in a fiscally responsible manner. Based on this commendable record, we deserve a

greater degree of confidence in the form of budget autonomy.

Ms. Norton, this concludes my oral remarks. May I request to

put my full written testimony in the record.

I will be pleased to answer any questions you may have.

Ms. NORTON. Before I ask Mr. Flowers to come, could I ask John

Hill to come forward, because you are not invited here in your new

capacity, you are really invited here in your prior capacity as the

executive director of the Control Board. So when questions come,

I would prefer to have the three of you here at the same time.

Would you please stand so that I can swear you in?

[Witness sworn.]

Ms. NORTON. The record will show that the witness replied in the

affirmative.

Mr. Flowers, please proceed.

STATEMENT OF BRIAN FLOWERS

Mr. FLOWERS. Good afternoon, Congresswoman Norton. I want to

thank you for introducing this legislation once again and for giving

me an opportunity to appear before you and attempt to persuade

Congress to do what no one else has been able to do in the 30 years

of Home Rule, and that is to give the District some measure of

budget and legislative autonomy.

Before I begin, I want to respectfully request that my entire

statement be entered into the record, because I will be summarizing.

37

I intend to address primarily three areas in this testimony. First,

to offer some insight into the impact that the congressional review

period has upon the District’s legislative process, and then I will

offer some specific comments on the legislation and then conclude

with why the congressional review period no longer serves a useful

purpose.

I have attached a chart to my testimony that reflects that approximately two-thirds of the bills that the Council adopts could be

eliminated if there was no congressional review requirement. The

mandatory congressional review period has resulted in the Council,

and our office, in particular, mastering what appears to a lot of

people as a legislative circus where there are many balls or bills

in the air and we don’t know when they will come down.

We have become masters at counting congressional days. Each

night when I drive home I pass the Capitol dome and I know if the

light is illuminated that is one less day before our laws will become

effective.

The process of counting congressional days is something that

cannot be left to a machine for critical count; it is something that

can only be done by a person, and that is really something that is

unnecessary, and it is done multiple times by multiple people.

The 30 calendar day period of congressional review is never that.

It is more like a 3-month period, and in some instances a much

longer period.

By way of illustration, a recent enactment, D.C. Law 16–305,

which merely changed the word handicap to disability, required a

9-month period before it became effective, due to the adjournment

of the 110th Congress and the fact that it was in the criminal code,

requiring a 60-day review period rather than a 30-day review period.

This situation is not atypical. It happens every 2 years. It happens to a lesser degree over the August recess, in which bills require 5, 7, and 9 months before they become effective.

The unpredictability of the congressional review period requires

the Council to adopt bills on an emergency, temporary, and permanent basis quite often to compensate for these long periods of delay.

It is our office that is, in part, responsible for tracking whether

these bills remain effective, when they expire, and whether there

is a gap in any legal authority.

The Council’s authority to adopt emergency legislation is found

in the District Charter, and it requires the Council to make a determination that emergency circumstances are present. The Council has defined an emergency to factor in the congressional delay,

and the way that we legislate at times is confusing to the public,

because when they hear the word emergency they think they are

thinking that it is a situation that only involves a threat to the immediate health, safety, and welfare of the public, but it also factors

in the congressional delay, and so when we use the term emergency it doesn’t only mean health, safety, and welfare, but it is also

to ensure that bills become effective.

This practice has been scrutinized by the courts, and in my statement I cite some of the judicial precedent. Our practice has evolved

over time, and it has evolved in response to these judicial decisions.

38

I have included a copy in my statement, a copy of the type of

chart that we use to track emergency, temporary, and permanent

legislation. This particular chart has 47 different sets of emergency, permanent, and temporary bills, but, by way of comparison,

during the month of February when the 109th Congress adjourned,

we were tracking 81 sets of these acts. I use the term set, because

we must track the permanent acts that have related emergency,

and temporary acts that contain the same language.

Each emergency also has with it a resolution and emergency declaration resolution, so it is even more legislation that is driven by

the congressional review requirement.

One thing I want to make clear for the record is that neither of

these bills would actually eliminate congressional review; they

would only eliminate congressional review under the provisions of

the Home Rule Act. That would be 602, 603, so they will not eliminate congressional review, in fact.

I won’t repeat in detail the statistics with respect to congressional disapprovals because we have heard them repeated many

times now, but one thing I do want to emphasizes is that, in terms

of the bills that we do transmit to Congress, in the last Council period there were 308 acts that were transmitted, but that does not

translate into 308 transmittals, because we transmit at least seven

copies of each act to Congress, and this year that list of transmittals is 11, so you have to multiply the number of acts times 11 to

actually get the actual number of legislation that we transmit.

That helps to explain the burden that is imposed upon the Council.

So I would just conclude by bringing forth the observation that

the congressional review period is no longer used, hasn’t been used

since 1991. Congress has found a much more efficient way of disapproving, amending, or repealing District legislation, and the recent Public Education Reform Amendment Act is a very good example of that, in which a bill was introduced in Congress and essentially approved in 30 calendar days.

I would just conclude, finally, by stating that this is not a new

request by the Council. We have many records and letters in our

file, congressional testimony in which the Council has requested

the elimination of this review period. I would hope, Mr. Chairman,

that, as a former member of the Chicago City Council and the Cook

County Board of Commissioners, you understand how important it

is for legislation to have to be implemented in a timely basis to respond to local concerns, and I would just respectfully ask that you

move the legislation forward.

Thank you.

Mr. DAVIS OF ILLINOIS [presiding]. Thank you very much. Let me

just thank Delegate Norton for carrying on so that you didn’t have

to wait and be here longer than necessary.

Mr. Hill, you may proceed.

STATEMENT OF JOHN HILL

Mr. HILL. Good afternoon, Chairman Davis and Ranking Member

Marchant and Congresswoman Norton. I am John Hill, and I appreciate the opportunity to testify in support of both H.R. 733 and

H.R. 1054.

39

As you well know, the District has made tremendous strides over

the past decade in terms of improved financial management and

legislative activity. I have personally witnessed this progress, having been GAO’s chief witness before the Congress on issues raised

by the District’s financial crisis in 1994, and having been appointed

as executive director of the District of Columbia Financial Control

Board, which was created by Congress in 1995 to guide both the

financial and the management recovery of the District of Columbia

government.

When the Financial Control Board was created, the District was

truly in a fiscal state of emergency with significant accumulated

operating deficits, cash shortfalls, inefficient management, and no

sign of relief from its financial troubles were in sight.

The Control Board worked closely with city officials to improve

the integrity in budget development and execution to accurately

project revenues, efficiently and effectively collect taxes, and to incorporate fiscal discipline in the enactment of legislation.

By 2001, the District had produced four consecutive balanced

budgets, repaid much of its debt, built its financial reserves, and

regained access to capital markets and improved cost.

The speed of the District’s financial recovery is unique among recoveries by major cities from severe financial crisis. New York City

took 11 years from the start of the control period to the sunset of

the Control Board.

Today the District continues its steady record of balanced budgets, sound financial management, and fiscal discipline under the

leadership of the Mayor, the Council, and the chief financial officer.

As a result, the city enjoys unprecedented prosperity and has a

stellar reputation on Wall Street, as seen through the steady improvement of the District’s bond ratings.

I believe the District, like other major cities across the country,

deserves the flexibility and the authority to implement its budgetary and legislative decisions going forward.

The District of Columbia Budget Autonomy Act will eliminate all

federally imposed mandates over the local budget process, financial

management, and borrowing. Given the fact that the Congress has

not recently demonstrated the need for changing the local budget

approved by the city, providing the District budget autonomy would

simply make the budget process more efficient and straightforward.

While the congressional budget review process would be eliminated by this proposal, two things should be noted. First, nothing

in this proposal would remove the Congress’ Constitutional authority to exercise oversight over the District of Columbia. In addition,

the proposal before you does not eliminate the measures set forth

in the Control Board Act in 1995. The law would continue to provide for the return of the Financial Control Board in the event that

the District slips back toward financial crisis and a control period

becomes necessary.

The city has demonstrated a commitment to maintaining fiscal

control and discipline and other practices that have resulted in the

city’s positive financial health, and for this reason I am supportive

of greater budget autonomy for the District.

By the way, I would like to say I also lived through that control

period, as did many of the people who may have testified, and cerVerDate 11-MAY-2000 14:45 Apr 30, 2010 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 U:\DOCS\55750.TXT KATIE PsN: KATIE
40

tainly they are still on the Council. I know that none of them, especially in my conversations with them over the years, they would

want to do everything possible to make sure that never happens

again. It really was a dark period for the city, and we need to make

sure that doesn’t occur. With the controls that are in place, I believe that it is very, very unlikely that could ever happen again.

I have had the opportunity to work closely with the Mayor, the

Council Chair, and members of the D.C. Council, and I appreciate

the leadership, the collaboration, and the deliberation that they

bring to the legislative process.

In summary, having been a participant in the District’s recovery

from its financial and management troubles during the mid-1990’s

and having been a witness to the substantial progress of the city

under the leadership of the Mayor, the Council, and the chief financial officer, I firmly believe that both budget and legislative autonomy proposed in the two bills before you are in order and appropriate.

Thank you for this opportunity to testify on these important bills.

I will be happy to answer any questions.

Mr. DAVIS OF ILLINOIS. I thank the gentleman very much for

your testimony.

We will just move into some questions.

Dr. Gandhi, let me ask you, the granting the District autonomy

over its budgetary process and over its budget will add what to

your ability to more effectively or to better do your job?

Mr. GANDHI. Thank you, Chairman.

I think it would give the city, first of all, flexibility to manage

its financial affairs far more effectively and in time than is otherwise the case.

What happens here is that we have to start our budget cycle

right from February when we provide revenue estimate to the

Mayor and the Council. Mayors have responded in March. Council

deliberates on it, and we together submit to Congress in June. Indeed, today will be the day we will provide to the committee our

final budget. It will not start, the year will not start until four

more months, October.

So the question here is that if we had our own budget autonomy,

the numbers with which we would be dealing would be far more

current. Right now, from the revenue estimation to the end of the

fiscal year you are talking about 20 months, and in those months

the revenue picture may change. The expenditure picture may

change, as well. And we cannot really take actions to take care of

those emergencies unless we come to the supplemental appropriation process to the Congress.

If you look over the last eighteen years, only three times the

Congress had passed the budget Federal appropriation, our appropriation, on time. That was in 1997, 1995, and 1992. The remaining 15 years we simply had to wait for the final approval by the

Congress and by the signing by the President.

The last thing I would say is what you had asked our Mayor and

Council Chair, that our revenue cycle is more in tune with July

June timeframe than October-September. Two of the major cash

inflows that we do get in real property and income taxes happen

41

in March and in September, while our cash outflows are on a regular basis every month.

As I mentioned earlier to Ms. Norton, only in 3 months out of

the year we will have a positive operating cash-flow. Remaining

months we would have a negative cash-flow such that we have to

borrow on a temporary basis, and we borrow roughly $250 million

every year for which we have to pay interest.

So, given all these things, it would be far more effective, financially speaking, to have our budget cycle more like a city or a State,

which would be more like July June than October-September.

Mr. DAVIS OF ILLINOIS. How much money does the District actually get from the Federal Government?

Mr. GANDHI. Federal Government, we would get basically—the

money that is unique to the District, and only for District, is

around, I would say, $150 to $170 million, which is roughly 1.4 percent of our overall budget. Now, we do get about $2 billion, but those are formula-based

grants that are available to any jurisdiction, like Medicaid. All

right? So that is about, I would say, 25 to 26 percent. So roughly

74 or 75 percent of the city’s budget is based upon locally raised

revenue.

Mr. DAVIS OF ILLINOIS. So the formula grants are the same that

any city, Sweeladeely, Illinois, would——

Mr. GANDHI. Absolutely. They all get it. Yes. Yes, sir.

Mr. DAVIS OF ILLINOIS. Depending on the number of people and

the socio-economic conditions and all of those things that are there.

If some people who suggest or who feel somehow or another that,

should the District have autonomy to handle, in terms of approving

its fiscal operations and all, that there might be this remote possibility of some slippage back to the days of yesteryear. What safeguards are there in place that would unequivocally prevent this

from happening?

Mr. GANDHI. Thank you, Mr. Chairman. That is a very relevant

question, and the question is often asked whenever I mention the

issue of budget autonomy.

Most fundamental fact here is that there is a change in the culture at the District level in our elected leadership. As Mr. Hill

pointed out just now, no one in the elected leadership or otherwise

ever wants to go back to the old ways of doing things, so that is

not in the cards.

Two, Congress has established my office, the Office of the Chief

Financial Officer, whose primary function is to assure the Mayor

and the Council and, of course, the Congress that the city will

never again go bankrupt, that all the budgets that are submitted

to the Hill are certified by the independent Office of the Chief Financial Officer as balanced.

Three, we are among the very few jurisdictions that have to have

a 5-year balanced budget plan. We cannot just plan for 1 year and

shift revenues and expenditures across the years to balance the

budget. We cannot do that. It has to be a 5-year balanced budget

plan.

Fourth, we have, in addition to the Federal anti-deficiency law,

we have our own anti-deficiency law at the local level, which is far

more Draconian than the Federal level.

42

Five, we have now among the largest number of reserve, highest

amount of the reserves in the country. We have 6 percent of our

budget in reserves, emergency and contingency reserves that are

legislated and mandated by the Congress. That amounts to about

$250 million, plus city has provided its own operating reserves of

over $50 million, so you are talking about $300 million of cash reserves available to us.

When you add all these things, there are layers and layers of assurances that are provided by the Congress, by the city, itself, that

my firm conviction is the city will never go back to the old ways

of doing things.

Mr. DAVIS OF ILLINOIS. Mr. Flowers, I am sure that you have

seen other governments. I mean, you have studied other governments. You have studied other processes and all. Is there anything

that you can think of about the way the District operates that

would inhibit or cause it not to be as effective, as efficient, as logical, as sane as any other sovereign municipal government in operating its affairs?

Mr. FLOWERS. The only thing that immediately comes to mind is

Section 602 of the Home Rule Act, the provision that prevents us

from acting on legislation and implementing legislation in a timely

manner. That is what immediately comes to mind, since that is the

subject of this hearing.

Mr. DAVIS OF ILLINOIS. I mean, if there is a need to do something, to change something, to implement something, to cause

something to happen, the length of time that it takes to do it could,

in fact, be a serious impediment to the city’s solving or moving in

the direction of meeting the need or solving the problem that it

had?

Mr. FLOWERS. Yes, sir, it certainly could, and it also at times has

threatened the enforcement of some of our criminal laws, because

there is so much coordination that is required between the emergency, temporary, and permanent act. If there is any gap in the enforcement of a criminal law, then that really creates a cloud on everything in terms of the scheme that we have established for prosecution. It could be prosecuting.

What we recently did was there was a rebuttable presumption

that was in an emergency, rebuttable presumption that a person

should be detained if they were found to possess a handgun. This

was found in one particular title of an act, and that act had been

adopted as an emergency, and that particular title had not been

enacted as a permanent, had not been enacted as a temporary bill.

And so if we have an act that has multiple titles, some of which

have been enacted as permanent, some of which have not, then

there are real issues that are raised in terms of the restrictions

that the courts have placed upon us since we cannot adopt consecutive emergencies unless something has been transmitted to the

Hill. So there is always the risk that even the enforcement of our

criminal laws would be threatened by this process.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Marchant.

Mr. MARCHANT. Thank you.

43

First of all, Dr. Gandhi, there is a financial audit, an independent audit done on the city. Does that audit take place under your

direction? And is it addressed to you or is it to the city?

Mr. GANDHI. No, sir. The audit is an external auditor conducting

independent audit, and that is commissioned by our Inspector General, which, again, does not report to the Mayor or the Council. It

is an independent office, again, established by the Congress.

Inspector General is in charge of that particular audit, and we

are expected to have a clean audit every year. As Mayor and the

Council Chair pointed out, we have had 10 consecutive balanced

budgets with a clean audit over the last 10 years.

Mr. MARCHANT. Do you deal with the particular covenants of

bond issues, yourself?

Mr. GANDHI. Yes, sir, I do.

Mr. MARCHANT. Are there any differences in the bond covenants

with bonds sold by D.C. than any other city in the United States?

Mr. GANDHI. No, sir. They are just plain municipal bonds.

Mr. MARCHANT. And revenue bonds, general obligation bonds?

Mr. GANDHI. Same.

Mr. MARCHANT. Etc.

Mr. GANDHI. Same.

Mr. MARCHANT. So there are no default provisions or no extenuating circumstances in the bonds that would give a caveat to actions of Congress?

Mr. GANDHI. Well, the consequences for District are far greater,

because if you ever default on a bond, debt service, the Control

Board could be back.

Mr. MARCHANT. I am asking it in exactly the opposite direction.

Is there any default mechanism or anything in the bonds that says

if Congress takes a certain punitive action toward the District, that

the bonds, themselves, could be in default?

Mr. GANDHI. In other words, if Congress were to do something,

would that mean the default of the bonds? I, frankly, cannot imagine that. However, what we want to keep in mind is that nothing

the District currently does, that has not had the congressional approval, so when the rating agencies take into account as to how

they want to rate us, they look at many things. One of them is the

congressional oversight, and also the delays that happen in the

congressional budget.

As I pointed out earlier, Mr. Marchant, there have been significant delays in the past in the congressional approval of the city’s

budget.

Mr. MARCHANT. Let me ask it another way. You do not think

that there is any quality upgrade given to the city on its bond rating because the bonding agencies know that there are these additional levels of oversight on this city as opposed to another city?

Mr. GANDHI. Well, bond agencies do look, and they mentioned

this on their report on the District, that there is a congressional

oversight on our bonds. They do look at that.

Mr. MARCHANT. And it would be your testimony that, with removal of some of that oversight, which these bills do, there would

be no adverse effect on the bond rating?

Mr. GANDHI. I do not think so, primarily because, as I pointed

out earlier, there are enough safeguards in the District from the

44

Congress such that the removal of the congressional oversight

would have any substantial impact. The most fundamental of all

that, and important, is the independent Office of the Chief Financial Officer, which again is established by the Congress. Nothing in

the District moves on a financial front without the approval of the

chief financial officer. And then Congress——

Mr. MARCHANT. I am just asking——

Mr. GANDHI. No, the rating agencies have——

Mr. MARCHANT [continuing]. The question of unintended consequences of this freedom.

Mr. GANDHI. Yes.

Mr. MARCHANT. OK. Thank you.

Mr. DAVIS OF ILLINOIS. Ms. Norton.

Ms. NORTON. Thank you, Mr. Chairman.

Let me followup on Mr. Marchant’s question. I can understand

it, because it is such a strange process. Let’s see what it does. Let’s

see if there is any value added here.

Again, I am sorry, the law professor does come out in me, particularly when I am asking questions. But this one is a real life hypothetical. Let’s see if there is any value added in having the Congress here.

We have established that it delays and there is a cloud over the

budget that we don’t have a AAA in part because the bond markets

know that Congress has to be involved in the process.

Now, let’s see if, once Congress gets involved in the process, we

get some value added. Can we agree that the budget has to be balanced and always had to be balanced?

Mr. GANDHI. Yes.

Ms. NORTON. That wasn’t something the Congress put into effect.

When the District of Columbia became insolvent, it was because

the budget was not balanced; is that not correct?

Mr. GANDHI. That is correct.

Mr. HILL. It was also because of the cash shortages, not just the

balanced budget, but it was the cash shortage. On paper, the budget appeared to be in balance, but in actuality it was not.

Ms. NORTON. That is where I want to go. That budget and all

prior budgets and all budgets ever since there has been a District

of Columbia have had oversight by the Congress of the United

States, and yet the Congress approved a budget and the District

of Columbia became insolvent.

The major reasons for that, would you agree that perhaps the

major reason for that was that there was no independent CFO?

Mr. HILL. Well, there were a couple of reasons.

Ms. NORTON. I want to get to the shortages in a moment, because I think that is a separate issue. In terms of the Congress

having said, OK, this was enacted, that budget was enacted by the

Congress of the United States, and I will tell you exactly when because I was up here and had to be the Member to come forward

and say I believe the District of Columbia must have a Control

Board. It was enacted the end of September. By the way, by November nobody in the Congress pointed it out. The Washington

Post ran a story that said we believe that the District of Columbia

is insolvent. In other words, the oversight was done better by the

press than by the Congress, which has an authorizing committee

45

and an appropriation committee here and the same double kind of

oversight in the Senate. Yet, all passed the D.C. budget. Two

months later the District went bankrupt. So much for value added.

I am just looking at the paper. They had hearings. They had

good staff. They looked at the paper. They don’t just pass it

through. They never changed, as long as I have been up here, any

part of the budget. But I can tell you that there is good staff that

goes over the budget, because paper is what you give people.

I want to move to Mr. Hill’s question, because I was going to ask

how did the District recover, given the fact that it ran out of

money, not just out of a balanced budget concept. It ran out of

money.

We know that the District’s recovery for all the credit the District deserves is fast in part because the Congress of the United

States took over the cost of some State functions. I hasten to add

that it did not take over the cost of many State functions, but it

is hard to believe we could have gotten out of insolvency if, for example, the $5 billion pension liability had remained and if some of

the State functions—courts, which we paid for, for example—remained.

So Congress helped a great deal by taking over some costs and

some important costs. Maybe that has more to do with it than I

am giving credit for. Why did the city make such a fast recovery.

Mr. HILL. I think there were three or four different things that

caused that. I think one was the city started to really and accurately estimate the amount of tax revenue that was coming in.

Ms. NORTON. Now, this happened after there was a CFO or while

there was a Control Board?

Mr. HILL. This happened while there was a Control Board.

Ms. NORTON. They didn’t have any choice?

Mr. HILL. And there was an independent CFO in Tony Williams

at the time, and, in fact, Dr. Gandhi was the Director of Tax and

Revenue. If the truth be told, it was also the collection of the taxes

that were owed by the District which had gone uncollected. In

fact——

Ms. NORTON. Why did that happen? If people owed you taxes,

why didn’t you collect them?

Mr. HILL. There was not a tax system. Taxes were in piles on

the floor. Checks hadn’t been cashed. There was not the fiscal discipline that was necessary within a tax operation——

Ms. NORTON. And the CFO’s office straightened that out? The

former Mayor was the CFO before that?

Mr. HILL. That is right. That is right. That was all straightened

out. Right.

Ms. NORTON. He deserves great credit here, as well.

Mr. HILL. Yes. And Dr. Gandhi was in charge of tax and revenue

at the time.

And then also looking at the expenditures, one of the issues that

gave rise to a lack of cash was the treating of expenditures to D.C.

General Hospital as loans, and then the auditor allowing them to

stay on the financial statements as loans, even though there was

no possible way that they could be paid back.

46

That really caused cash to go out the door as an expenditure, but

to not be shown as an expenditure, so you were really over your

budget, but it wasn’t showing as being over the budget.

So correcting that and showing that expenditures and recording

expenditures as expenditures when they occurred was also part of

the discipline that was created by the Control Board and the CFO.

Ms. NORTON. One of you spoke about conservative budgeting.

Politicians don’t just to conservative budgeting to be doing it. This

goes, as well, to I think the good questions of Mr. Marchant, who

wants to know how come—and I think the chairman has asked this

question, as well—what is going to keep this from happening again.

The responses have tended to be, we have learned our lesson kind

of, we are good people. The fact is, we are talking about institutional changes that would make this impossible.

Of course, if it happened, if somehow those institutional changes

failed, you had a crooked CFO who somehow the city went into so

you gave books and there was no good outside auditor, you had

books that showed you in balance, then you would just be back

under the Control Board, which means back under the Congress

again in the worst way, who would then appointment a Control

Board and every member of the Control Board, the way we did it

before. So in a real sense there is no going back, not because you

all are nice, not because you all are good, but because, working

with the city, we have built in institutions that keep you ‘‘budgeting conservatively.’’

Would you please explain how you can make the Congress understand that the Council does not go spendthrift on us and budgets

conservatively. What institutionally makes that happen?

Mr. GANDHI. Ms. Norton, you are exactly right. It is the institutional change of the imposition of an Office of Independent Chief

Financial Officer at the city level is what really makes the difference, if I can be so presumptuous in saying so. Primarily, it is

the CFO’s responsibility that the numbers that are provided to the

Congress, the books, accounts, etc.——

Ms. NORTON. Pause a minute. The Mayor appoints the CFO, so

what is to keep the CFO from being beholden to the Mayor and

getting in a room with him and just kind of fooling us all?

Mr. GANDHI. Again, the Office of the Independent Chief Financial Officer, even though the Mayor appoints the CFO, but the

Mayor cannot fire the CFO without a cause, with two-thirds of the

majority of the Council agreeing to that, and the decision has to

be made on the Hill for 30 days.

Ms. NORTON. I don’t have to do that any more, but the twothirds, the Mayor would have to get two-thirds of the Council to

agree with him to fire. And does not the CFO have a term?

Mr. GANDHI. He has a 10-year or 5-year term, and that, by any

measure, this is the most independent and most powerful chief financial officer at the municipal level in the country.

Ms. NORTON. Does that term overlap the Mayor’s term, or is

it——

Mr. GANDHI. Absolutely. Mayor has a 4-year term, and the CFO

has a 5-year term. And in this case, you can disagree with the

Mayor and you can still be in the office that afternoon. Everyone

else would be sitting at home.

47

Further, what you have to keep in mind here is that the primary

and the fundamental function of the chief financial officer is to assure the Congress—of course, the Mayor and the Council and the

citizens—that city would retain its financial viability and financial

stability by ensuring the balanced budget, by ensuring the cashflows, and, above all, making sure that all the laws that are proposed to the Council are fiscally viable in a 5-year plan.

Ms. NORTON. If the Council tomorrow were to propose to give $1

million to some institution, what role would the CFO have, if at all.

Mr. GANDHI. No. It has a very permanent role. CFO would then

provide a fiscal impact statement to the Council and to the Mayor

and say that this million dollars has this impact on the 5-year balanced budget plan. For a moment, if you were to assume that million dollars would upset the balanced budget, then either the

Mayor and the Council would have to raise a million dollars of

taxes or cut expenditures elsewhere. But the balanced budget——

Ms. NORTON. That is like pay-go.

Mr. GANDHI. Exactly.

Ms. NORTON. That is pay-go, what we are trying to do up here

now. If you want a raise, you either have to have the money there

or you have to take it from someplace else.

Mr. GANDHI. And it is the CFO who basically provides the estimation of expenditures, as well as revenues, independent of the

Mayor and the Council. It is the CFO’s estimation of revenue that

counts.

So at the beginning of the fiscal year in February, to measure

this, we provide revenue estimate to the Mayor and the Council

and say, OK, you have $5 billion to spend. And we will also tell

them what is the baseline budget.

Let’s suppose the baseline budget is $5.2 billion. Then we would

say that he will have to cut $200 million somewhere because you

have only $5 billion in revenue.

So it is the CFO’s numbers that really matter. Mayor and the

Council cannot influence that, those numbers.

Ms. NORTON. They have no role in that. They have no role whatsoever in the estimate?

Mr. GANDHI. No.

Ms. NORTON. Mr. Flowers, I am not sure that our voting Members were in the room, but I was astounded. I did not know this.

You testified that the District of Columbia would not have to pass

two-thirds of the laws it now passes except for this temporary, permanent, etc. process. It is important for Members to hear why they

have to pass redundant bills, just that part.

When you go to the temporary, you pass a bill. When you go to

the permanent, what are you passing?

Mr. FLOWERS. We are passing the same bill. The only requirement is that there be a bill pending in Congress that is substantially similar to the emergency.

I want to clarify a statement that I made earlier in terms of the

congressional review period threatening public safety. This actually

happened at the end of last summer. The Council passed a juvenile

crime emergency bill on an emergency basis in response to a rash

of juvenile murders, I believe, and that bill was good for 90 days.

48

Since Congress was not in session, the Council could not adopt

another emergency bill to maintain that juvenile crime emergency.

Ms. NORTON. Because it takes 60 days?

Mr. FLOWERS. Not because it takes 60 days, but because Congress was not in session.

Ms. NORTON. You are talking about criminal law?

Mr. FLOWERS. That is correct.

Ms. NORTON. Which takes 60 days, not 30 days?

Mr. FLOWERS. Yes. But in this instance it was only because we

could not transmit anything to Congress in order for this bill to remain in effect.

Ms. NORTON. Because we weren’t even here.

Mr. FLOWERS. Yes. I believe it was in an election year, I believe

it was. We take note of those things.

Ms. NORTON. What did you do then, Mr. Flowers?

Mr. FLOWERS. What we did was we adopted a different emergency. It wasn’t quite the same. It was a little bit different.

Ms. NORTON. So what we are talking about——

Mr. FLOWERS. Subject to challenge.

Ms. NORTON. What we are talking about is the upper level here.

The upper level, I take it, would be the original bills, and everything here are the exact same bill that gets——

Mr. FLOWERS. That is correct. They are the same bills. Now,

there is a little bit of wiggle room there, but potentially those emergencies and temporaries are driven by the congressional review period. If there were no congressional review period, we would not

have to adopt those bills.

Ms. NORTON. Occasionally I hear that there is a law that just expired, not because you all missed the period, but it just expired.

Can you recall one of those or how that would happen?

Mr. FLOWERS. They all expire. All emergencies and temporaries.

Ms. NORTON. I am talking about a law that just kind of never

did get—it was enacted, went through the temporary period, but

kind of never did make it through.

Mr. FLOWERS. You are saying there was no permanent law?

Ms. NORTON. Yes.

Mr. FLOWERS. Yes. I think some of that is a result of the culture

that has been created by the congressional review requirement that

some of our laws are only adopted on an emergency and temporary

basis, and some of them are not needed to be permanently in effect.

One example of a bill that has been adopted on an emergency

and temporary basis for several years is a pay differential for government employees who are in the Reserves and deployed in Iraq,

Afghanistan, because the Council, we have no way of knowing how

long that conflict is going to last, and so it is only budgeted for a

short period of time. It is not permanently put into the budget, so

that provision has been enacted on an emergency and temporary

basis for, I believe, 3 years.

Ms. NORTON. So you just keep doing it?

Mr. FLOWERS. That is one, yes.

Ms. NORTON. Just keep doing it. You just keep coming back because you may not need it permanently?

Mr. FLOWERS. That is correct. We hope the war will end.

49

Ms. NORTON. This really belongs in the Valley of the Absurd

when it comes to government.

I would like to ask you about actually Mr. Gandhi and his testimony talks about inter-appropriation transfers and reprogramming

of requests. You say on page 7, ‘‘All re-programmings from one object class of expense to another in excess of only $3 million require

a congressional review period of 15 days before enactment.’’ That

is something I was not even aware of.

Mr. GANDHI. Yes, ma’am. That is a requirement.

Ms. NORTON. So would you give us an example of that so that

the record can show, if we are reprogramming, where you go back

to your legislature and say I need this money over here rather than

there?

Mr. GANDHI. Given that we have a complex government, because

we combine the State, county, municipality, and the school district,

given that we have all kinds of emergencies that arise, we shift

money from one department to another department, one function

to another function, and at that time, whenever we do that, more

than $3 million, we have to come back to the Congress and get the

approval from the Congress.

Ms. NORTON. Do you do a lot of re-programmings and shifts, or

do you just let it be because it is just too much trouble?

Mr. GANDHI. No, we have to because we cannot spend. Money

that is appropriated for a given purpose must be spent for that

purpose only. Suppose we need it somewhere else?

Ms. NORTON. But, Mr. Flowers, this question goes to when you

get that kind of request, because the money is needed one place

and it just happens that you have the money but it is in the wrong

column.

Mr. FLOWERS. Yes.

Ms. NORTON. Do you have any sense of how often that occurs and

whether or not you get sufficient numbers so that to do it just

leaves the city perhaps leaving it be because of the time it would

take?

Mr. FLOWERS. Well, we do have a local reprogramming law, and

we work cooperatively with the Mayor and the chief financial officer. I believe there is a congressional notification requirement for

re-programmings in the Appropriations Act.

Ms. NORTON. It says 15 days in here.

Mr. GANDHI. Yes.

Ms. NORTON. But that is 15 days. In other words, let’s be clear

then. After 15 days if you want to change it is OK.

Mr. GANDHI. Right.

Ms. NORTON. But that is still legislative days?

Mr. GANDHI. That is correct.

Ms. NORTON. Do you have any sense of how many of those come

up a year?

Mr. FLOWERS. I don’t. I could not answer that.

Ms. NORTON. Well, does it require the Council to know in advance, the CFO to know in advance, the Mayor to know in advance

what column everything belongs in and to have to go through gymnastics and to come to the Congress to say I have some money but

I want to change it from Column A to Column B? It is just another

example that needs to be laid on the record.

50

Mr. GANDHI. And may I just give you a number? There are about

100 a year that we have to do this kind of reallocation.

Ms. NORTON. About 100 of those re-programmings?

Mr. GANDHI. Yes, ma’am.

Ms. NORTON. Thank you. That answers my question.

Final question. I would like to get one more thing done, and I

wish you would tell the Congress about what is has done. The District was doing so well that it had a surplus so large that one

would consider it absurd. That is to say, it was a surplus that kept

growing because they couldn’t spend it for any purpose, even to

spend it to pay it back. Would you tell us how high that surplus

got, and would you lay out the bill we were able to get passed

through here which allows the District to spend some of its huge

surplus funds?

Mr. GANDHI. As you can see the chart that is here, we had about $500 million deficit in our fund balance in the mid-1990’s. Currently we enjoy roughly $1.5 billion in our fund balance surplus.

The question for us is that, we are in government in great deal of

need. We have to spend money, and we need that authority from

the Congress throughout the year.

Well, given that, we have to come for every additional money

that we want to spend after the budget is enacted and we have to

wait for an appropriation, supplemental appropriation.

What Congress has done, under Ms. Norton’s guidance and leadership, is that now you would allow us to spend up to 6 percent

of our budget into supplemental appropriations without coming

here.

Ms. NORTON. I am sorry. I am talking about the reserve funds.

I am not talking about mid-year budget autonomy.

Mr. GANDHI. Right.

Ms. NORTON. I am talking about the reserve funds where you

have to pay back at the end of the year, but you can now spend

your reserve funds for needs as they arise.

Mr. GANDHI. That is the supplemental for which we have to come

to you. These reserves that are accumulated here, the bulk of that

is congressionally mandated and for the very specific purpose like

emergency and contingency reserves. But whatever we want to

spend, suppose the CFO identifies additional revenue throughout

the year, the four times a year that we provide revenue estimate.

For example, we just provided another $60 million to the Council

and the Mayor. Now, if similar amount that is provided to the

Council and the Mayor after the budget, we will have to, in the

normal circumstances, come here for supplemental appropriation.

But——

Ms. NORTON. Even though it is already in your surplus?

Mr. GANDHI. Yes. Anything that——

Ms. NORTON. Up to 6 percent you can draw that money down——

Mr. GANDHI. Right.

Ms. NORTON [continuing]. For purposes as they arise in the city?

Mr. GANDHI. Right. Yes.

Ms. NORTON. I appreciate your patience, Mr. Chairman. Some of

this I am learning for the first time. The innards of a city government are really quite their own road map. If I am learning it for

the first time, I know some of it must be astonishing to you. I apVerDate 11-MAY-2000 14:45 Apr 30, 2010 Jkt 000000 PO 00000 Frm 00054 Fmt 6633 Sfmt 6633 U:\DOCS\55750.TXT KATIE PsN: KATIE
51

preciate the time you have given me to lay some of these matters

on the record.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. Marchant, did you have anything else?

Mr. MARCHANT. Yes. I have just got a couple of questions.

Your fund balance number, does the Council have a statutory requirement for the percentage of operation that number is dictated

by, or is it dictated purely by Congress?

Mr. GANDHI. The Congress has dictated 6 percent off of a budget

to be in our contingency and emergency cash reserves. In addition,

we also have a large am the of money in our escrow for real property taxes to make sure that we will have enough money to pay for

our debt services. Counsel and the Mayor also provide some reserves for, for example, affordable housing reserve. We put that

money aside also.

So every dollar in that reserve is earmarked for a given purpose,

and half of that is basically congressionally mandated and the

other half is Council and Mayor earmarking.

Mr. MARCHANT. And, again, I think some of these questions I

have are for informational purposes more than anything else.

When the Federal Government wants to, are there instances where

an ordinance that you might pass would, in the view of the Federal

Government, impede something it might want to do, such as a traffic ordinance, changing a street from a two-way to a one-way, cab

fees, permit fees? Are there day-to-day ordinances that the city

adopts that don’t have the importance that maybe a crime issue

would have that you feel are for legitimate things that Congress

has reserved the right to review before it ends up impacting?

Mr. GANDHI. I would turn to the lawyer to speak about that, but

our Mayor in his testimony talks about alley closing and closing

even an alley would require ultimately congressional oversight,

even though there is no national interest involved in it.

But let me defer to Mr. Flowers on this matter.

Mr. FLOWERS. Thank you.

Under Section 602(a) of the Home Rule Act we are absolutely

prohibited from legislating in certain areas, and Congress, as well,

requires the NCPC to review certain actions and the Council, itself,

reviews about 300 different types of matters, but we do that on a

statute-by-statute basis. It is not a blanket authority.

One other observation about the review period is that it says 30

calendar days and then it goes on to say excluding Saturdays, Sundays, holidays, and certain days, and days of recess. That looks as

though it is something that was added as an amendment, because

we have that sort of thing all the time where there is this peculiar

language in statutes that starts out calendar day but then it goes

on to define something other than that. I think that is another area

that adds to some of the confusion in terms of the review period.

But we are absolutely prohibited from legislating in anything

that would affect Federal functions or property. Of course, we cannot adopt any act that has an adverse—any act that has an adverse fiscal impact will not take effect until its effects are included

in a budget and financial plan.

Mr. MARCHANT. Would either of these bills change that?

Mr. FLOWERS. No, they would not.

52

Mr. MARCHANT. Thank you.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Ms. Norton.

Ms. NORTON. I had just one more question relating to something

that this committee has just had to do. Perhaps Mr. Flowers can

enlighten me on this one. It has caused some confusion in the District. The school restructuring bill, people came up here and they

were very confused about what role Congress had, because it

wasn’t a layover bill. This bill, I had to introduce the same bill—

I could have introduced a different bill, but I would never have

done that—that the Mayor had just gotten passed, and it wasn’t

subject to a layover period.

I don’t have to introduce the legislation we have been talking

about here this afternoon. I had to introduce that bill as I understood it, and it had a layover period that just expired. Can you explain the difference between most legislation, which is what we

have been talking about you pass, temporary, permanent, and the

rest of it, and it somehow finally gets done, and a bill which a

Member of Congress has to introduce in order for a change to be

made such as the school restructuring and why that is so and why

the different layover period and what that involved?

Mr. FLOWERS. The school reform bill, the Public Education Reform Amendment Act, involved an amendment to the District’s

Charter. Any Charter change requires either a Charter referendum

or an act of Congress. There have been 44 changes to the District’s

Charter, and only two have been initiated by the Charter amendment process. I think that demonstrates that there has been some

cooperation or there is——

Ms. NORTON. What do you mean the Charter amendment process?

Mr. FLOWERS. The Charter amendment process requires an act

of the Council and then is put to a vote, the act is put to a vote

by the people. It is a rarely used process and what happened in

this particular instance is that there was a Charter amendment in

2000 that essentially did the same thing, and that is one reason

why the Council determined that there was no need for there to be

another Charter amendment, to go through that cumbersome process. It would cost $1 million to hold an election for something that

the Council actually could have done by ordinary legislation in

terms of changing the composition of the Board, but this gives the

Council much more flexibility in terms of moving forward. But it

was absolutely something the Council could not do because it was

an amendment to the Charter.

Ms. NORTON. So it is an amendment to the Charter, like the Constitution, and then it takes, what, 30 days?

Mr. FLOWERS. Thirty-five days. Well, it is 35 days for a Charter

amendment. A slightly different review period. It used to require

positive congressional enactment, but——

Ms. NORTON. So even after the President signed the bill, there

was still a period of time during which it could not go into effect?

Mr. FLOWERS. Well, that is because there were two separate

pieces of legislation. There is the Charter amendment, and then

there is the local law, which will become effective June 12th. A

judge has just made a ruling today on whether or not there will

53

be a referendum process, but I have not looked at my Blackberry

to see what the result was.

Ms. NORTON. What you have just testified to is that what you

and I, Mr. Chairman, rapidly got through this House with no layover period, signed by the President, still leaves the law that was

passed by the District of Columbia on the very same subject, and

that law is not final until some time later. I think it is probably

fair to say we have trumped that law by passing the very same law

up here, but here you have a dual process going on at virtually the

same time, not even just a layover process.

Mr. FLOWERS. Yes, that is correct. And June 12th, for the record,

will be a Tuesday, because a District law can never become effective on a Monday. That is another one of the arcane rules that we

live with.

Ms. NORTON. That is not arcane, because Congress does that for

its own convenience and we usually weren’t here on Tuesday. Now

we are here 5 days a week.

Thank you, Mr. Chairman.

Mr. DAVIS OF ILLINOIS. Well, thank you very much.

Gentlemen, thank you very much. We appreciate your indulgence

and we certainly appreciate your testimony. Thank you.

It is committee policy that all witnesses are sworn in, so please

rise and raise your right hands.

[Witnesses sworn.]

Mr. DAVIS OF ILLINOIS. The record will show that each witness

answered in the affirmative.

Your entire statement will be entered into the record. Of course,

the green light indicates that you have 5 minutes. The yellow

lights means your time is running down, and you have 1 minute

left to complete your statement. And the red light means that the

time is up.

Perhaps we will just go ahead and proceed and begin with Mr.

Smith.

STATEMENTS OF WALTER SMITH, EXECUTIVE DIRECTOR, D.C.

APPLESEED CENTER FOR LAW AND JUSTICE, INC.; AND

THEODORE TRABUE, EXECUTIVE DIRECTOR, DISTRICT ECONOMICS EMPOWERMENT COALITION

STATEMENT OF WALTER SMITH

Mr. SMITH. Thank you very much.

For the record, I am Walter Smith, executive director of the D.C.

Appleseed Center here in Washington, DC. We are a nonprofit,

public interest organization that addresses issues of importance to

the District and to its citizens. We have been involved in the voting

rights effort for some time, working with Ms. Norton and Congressman Davis and others, and, for similar reasons that we have supported that effort, we support these two bills, as well. Together,

these are steps toward affording District residents the self-government that we think they are entitled to and which will make their

local government more efficient in serving the people who live and

work and visit here.

54

I am going to add only two reasons, reasons that have not been

mentioned up until now, why we think these two bills are a good

idea, because I don’t want to repeat what others have said.

The first reason is that we think these bills are consistent with

and in furtherance of the framers’ own intent when they adopted

the District clause. We also think that these bills are consistent

with and in furtherance of what the Congress, itself, said when it

adopted the Home Rule Act. Let me just elaborate on each of those

points quickly.

The District clause, which has been mentioned here many times

today, as all of you know, gives the Congress exclusive authority

in all cases whatsoever over the District of Columbia. But the purpose of that clause was not intended to give to Congress the need

or the authority and responsibility to manage local affairs of District residents.

As James Madison explained in Federalist 43, the District clause

grew out of a civil disturbance incident that occurred in Philadelphia near the Continental Congress in 1783, and it disturbed the

Members of the Continental Congress that they didn’t have the

wherewithal to address what some of them referred to as an uprising, and the local State government did not assist them in that regard, so the framers wanted to make very sure that the Federal

Government and the national legislature, itself, would not be at the

mercy of whatever State government might be in place wherever

the national capital would be housed. And for that purpose the

framers gave to the Congress exclusive authority over wherever the

national capital might happen to be.

Mr. DAVIS OF ILLINOIS. Could I just interrupt you a second and

ask Delegate Norton if she would continue while I run and vote.

Ms. NORTON [presiding]. Please continue.

Mr. SMITH. All right.

Here is the key point that Madison made on that issue in Federalist 43. He listed the number of reasons why it was appropriate

to give the Congress exclusive authority over the District, and it

would in no way prejudice the citizens who happened to live in the

District, which became the Nation’s capital. This is what he said,

among other reasons it would be appropriate, because, ‘‘A municipal legislature for local purposes derived from their own suffrages

will, of course, be allowed them.’’ So the Father of our Constitution,

in explaining the purpose of the District clause giving the Congress

exclusive authority, said, But of course with regard to local matters

there will be a municipal legislature beholden to the local electorate. These two bills help to further that original purpose of our

framers.

I would argue also to you that what the Congress, itself, had in

mind when it first adopted the Home Rule Act mirrors this same

purpose. Let me just read you from the purpose clause of the Home

Rule Act, itself. ‘‘The stated purpose is to grant to the inhabitants

of the District of Columbia powers of local self-government and, to

the greatest extent possible, consistent with the Constitutional

mandate, relieve Congress of the burden of legislating upon essentially local District matters.’’ That is what the Congress said in the

Home Rule Act.

55

These two bills further that purpose, not only the framers but of

the Congress, itself. And for those and the other reasons that have

been discussed here this afternoon, D.C. Appleseed supports both

those bills.

Ms. NORTON. Thank you very much, Mr. Smith.

Mr. Trabue.

STATEMENT OF THEODORE TRABUE

Mr. TRABUE. Thank you very much, Congresswoman Norton.

My name is Ted Trabue and, for the record, I am the executive

director of the District Economic Empowerment Coalition. We are

here today, as well, to support both of the bills that are the subject

matter of today’s hearing.

I have worked in and around the District’s legislative process for

almost the past three decades. In the late 1970’s, shortly after the

enactment of Home Rule, I worked for the House District Committee, which served in a similar capacity as the current Committee

on Oversight and Government Reform. I also served as the chief of

staff to the Honorable Linda Cropp, and as Vice President of Government Affairs at PEPCO, Potomac Electric Power Co.

Throughout my career I have personally witnessed the effect that

congressional oversight has had on our city and its citizens, and in

my view neither the Congress nor the District government benefit

under the current structure. At a minimum, congressional oversight adds a high degree of uncertainty to the District’s legislative

and budgetary processes.

This leaves me to wonder why a system should continue that

adds such little substantive value to either the policymaker or the

constituents.

Rather than get into a verbatim discussion of the legislative and

budgetary oversight, let me just give you a perspective on what

these do in a practical and a daily basis in the operations of government.

As you may know, I am a member of the Board of Education here

in the District of Columbia. Let me first speak to the budget autonomy piece.

For years, and as you mentioned in your opening statement, the

District’s school system has struggled with its finances, in part because I believe the whole budget autonomy, and not knowing when

money would come in or if it would come in has hampered the

school system’s ability to engage with contractors.

I have only been on the School Board for a limited time now, but

one of the first things we had to do when I got on the Board of

Education was to approve a contract to buy school buses for transportation for children who were in special ed. Well, the first time

we put the contract out for bids nobody bid on it. Nobody. This is

25 school buses. This is a multi-million-dollar contract. The second

time we put the contract out for bids we only got two bidders. This

not only affects the District; this affects the surrounding jurisdictions, the States, as well.

As you well know, buses aren’t made here in the District of Columbia. Buses are made in either Virginia, Pennsylvania, Michigan. We are trying to do business with businesses in other States

and they don’t want to do business with us. And then when we

56

only get two bids, of course, they are not as competitive as they

may have been under normal circumstances, so we probably paid

more for those buses than we should have. This doesn’t inure to the

benefit, clearly, of the citizens of the District of Columbia.

Regarding legislative autonomy, as you just mentioned a couple

of moments ago, if you think there was confusion here on the Hill

about when the school takeover bill would go into effect, I will tell

you there was confusion at the School Board, as well, about when

that bill would actually take effect.

What happened was we thought, as members of the Board, that

we would have a little more time to actually deliberate and close

out our operations, and we found out later on that actually June

12th would be our last official day in business. As a result of that,

at last night’s meeting all of the School Board members who had

anything pending in their offices tried to throw it on to the agenda

for last night’s meeting. As you well know, that is not the way to

operate a deliberative body. It created chaos at last night’s meeting.

These are some of the practical effects of this layover.

Finally, I would just say that the Congress and the taxpayers

that you represent would not be harmed by the elimination of the

congressional review process. The Council’s legislative process includes a bill’s introduction, committee assignment, a hearing process, markup, reading in the committee of the whole, two legislative

readings, and each step maintains its own procedural and notification requirements. Combined, the Congress has a minimum of at

least 10 weeks to review and comment on any legislation that it

deems to be of interest. And, as with any other State legislature,

Congress may affirmatively act to amend or overturn any objectionable laws.

In conclusion, I would like to thank the committee for holding

this hearing on these important pieces of legislation and affording

me the time to present my views. As a fourth generation Washingtonian, as a lifelong resident of the District of Columbia, I have

watched this government grow and mature, and after thirty-plus

years of congressional oversight, I believe it is time to take off the

training wheels and let the District exercise the right which it has

earned—I underline the word earned—to legislate and enact budgets independent of Federal oversight.

We are no longer in the dark days of the late 1970’s, early 1980’s,

when Marion Barry first came in and asked for an audit of the District’s budget and the books were unauditable. We are no longer in

the days when I was working as Linda Cropp’s chief of staff and

the District couldn’t pay its vendors and it couldn’t pay its employees. I was one of those employees who had to take, I think, 10 days

without pay that year. I mean, those were bad times. We are no

longer there. This government, as our chief financial officer, our

Mayor, our chairman of the Council have testified, has taken significant strides to right itself and has earned, in my view, the right

to legislative and budget autonomy.

Thank you, Congresswoman Norton. I know my time is over.

Thank you very much.

Ms. NORTON. Thank you very much, Mr. Trabue.

57

I have questions for both of you. I must say that the administration in which you served with Chairman Cropp and with Mayor

Williams deserves the credit for what we are discussing here today.

That just ought to be said for the record, as well.

Mr. TRABUE. Thank you.

Ms. NORTON. Mr. Smith, you served in the administration, as

well, as corporation counsel; is that right? Correct?

Mr. SMITH. Yes, ma’am.

Ms. NORTON. Which we now pretentiously call Attorney General,

but I like it.

I appreciated your testimony, and your taking us back to original

intent. I have a question for you to solidify in my mind the meaning of your testimony. For much of the time of the debates, the

framers didn’t know where the capital would be; is that not true?

Mr. SMITH. That is correct.

Ms. NORTON. So the capital could have been in New York or

Philadelphia or Richmond or any which place; isn’t that correct?

Mr. SMITH. That is correct.

Ms. NORTON. And is it not inconceivable that, if the capital had

been in a State like that, that it never would have crossed Congress’ mind not only to protect itself, as it did by making us independent, but never would have crossed its mind to deprive that

local capital for the United States of self-government?

Mr. SMITH. I believe that is right, too.

Ms. NORTON. It is important to lay on the record they didn’t just

start out saying—that is why what Mr. Smith testified to is so important. They had an accident. They were afraid that maybe the

State wouldn’t come to their aid. Well, who comes to the aid now

of the Congress of the United States if there is a disturbance in the

District of Columbia, Mr. Smith?

Mr. SMITH. Well, there is an irony there, Congresswoman. It is

the District.

Ms. NORTON. The Congress of the United States has no police

force. The Federal Government has no police force here. We have

the Capitol Police, which pales in numbers beside the D.C. Police.

We have the Federal Protective Service. They are in Federal buildings here and across the United States. But in the event of a disturbance, you can always call in the National Guard, but then the

President has to Federalize it or has to himself call in the National

Guard and they have to get here and get their gear on. So if the

Congress needs help now, it goes to the Home Rule government of

the District of Columbia.

Mr. SMITH. It does.

Ms. NORTON. I think we are carrying out the framers’ intent, as

you said. The Philadelphia local government did not assist. We do

nothing but assist. We stop the traffic so the President or important officials can go through. When there is any disturbance, the

Capitol Police is not left up here by itself. In a moment the police

of the District of Columbia are here. What you say about the framers is very important, because they piled in on the framers every

wish of Members of Congress who wished to keep us under their

thumb.

Did you have something you wanted to say?

58

Mr. SMITH. There are only three paragraphs in Madison’s 43 you

need to read, and it is all there that explains what the purpose of

the District clause was, and it was certainly not for the Congress

to micro manage local affairs. Madison expected that to be handled

by a local municipal government elected by people who lived in the

capital, which, as you say, they didn’t know where it was going to

be, but that was his vision.

Ms. NORTON. In fact, the framers had acute distrust of the Federal Government and trusted only local governments to do what

had to be done. We started out with the Confederate arrangement

and the Continental Congress and all of that. It didn’t work, so

they were driven to the notion of a Federal Government. Even

then, they gave the Federal Government very little power. The only

power that it has taken is the power over the District. The Federal

Government didn’t get any power until the New Deal, and it took

an economic crisis to get that power. So the intent of the framers,

which is often quoted against us, is important, and important that

you laid it on the record.

I do want to, before I ask Mr. Trabue just a couple of questions,

I do want to say that I am informed that the court has ruled

against the appeal on the referendum, and it essentially upheld the

Board of Elections, which recently reversed itself on whether there

should be a referendum.

Would you lay out for us more why there were only—look, if anybody wants to buy 25 buses, I think that is what people wait for.

You are not just trying to buy some buses because one has gone

off the road.

Mr. TRABUE. No.

Ms. NORTON. Restocking buses. Would you please make us understand why people wouldn’t rush forward to bid competitively

with several bus manufacturers wanting to do that, wanting to

take that order?

Mr. TRABUE. As I could best get an explanation from the people

who run the procurement offers over at DCPS, because I was astounded by the fact that we put the bids out and no one bid. No

one bid on the first round in a competitive process. And then we

had to revise the bids, and we only received two. I actually took

it upon myself to call a couple of bus companies and say, why is

there the reluctance to do business with the District of Columbia

Board of Education, and it was a question of questioning whether

or not they would be paid. The school system, not knowing its calendar year or its fiscal year differs from the regular cities. There

was turmoil about who would be in control. They didn’t know

whether they would be contracting with someone with whom they

could actually enter a valid contract.

So all of these things kind of were on the table, and, as I said,

at the end of the day we received two bids.

Ms. NORTON. Yes, and we are talking about a city that has a billion dollars surplus but has such a cumbersome government that

maybe you’d rather not do business with it.

My final question, Mr. Trabue, is I note your service, of course,

in the government, your distinguished service in the government,

but you were also a Vice President of PEPCO. Would you give us

an opinion as to how the local and regional business community

59

might view legislative and budget autonomy for the District of Columbia?

Mr. TRABUE. As you may know, Congresswoman Norton, I also

serve as one of the members of the Board of Directors of the D.C.

Chamber of Commerce. I wouldn’t pretend to speak for the Chamber today, but clearly the Chamber has been supportive of the District’s efforts to move forward in this regard. I mean, clearly we

view this as something which makes the District more business

friendly, more of an understandable place in which—not only understandable, predictable. A predictable place.

Businesses desire predictability. It is one of the things that is

very, very important for them. If you are trying to do business, you

need to be assured of your cash-flow, and particularly for a small

business. And many of the businesses within the Chamber of Commerce are small businesses. Cash flow is very important to them,

so you need to know that you will be able to receive your money

in a predictable amount of time.

Say you have engaged in a contract to do business with the District. You have started to do business with them. Let’s say, instead

of on October 1st the District is getting its money, it gets held up

for whatever reason, as we know those reasons have existed over

the years, fewer and fewer, but they have over the years.

I mean, a small business not getting paid for a couple of months

can put it under, quite frankly. Some of these people don’t have the

ability to go out and borrow at the same rate or at the same favorable rates at which the District can borrow. So for small businesses

these are matters of great concern to them and they would support

this effort that you have engaged in.

Ms. NORTON. Well, we know for sure that our business community has paid a price for the inefficiency of the D.C. government.

To the extent that this is a significant part of that inefficiency, we

do need to take that off of our taxpayers, including our business

taxpayers.

I just want to thank both of you for your testimony. I want to

thank both of you for not only your distinguished service—and both

of you served while I was here and so I know whereof I speak—

your very distinguished service in the government, but I want to

thank you for continuing to be of service to the D.C. government

in your respective organizations that have deep affection not only

from me but from the residents of the District of Columbia, continuing to be of service to the city.

I thank you very much for this testimony, and this hearing is adjourned.

Mr. SMITH. Thank you.

Mr. TRABUE. Thank you.

[Whereupon, at 5 p.m., the subcommittee was adjourned.]

Æ