[Senate Hearing 106-395]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 106-395
 
        DISTRICT OF COLUMBIA APPROPRIATIONS FOR FISCAL YEAR 2000

=======================================================================

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                                   on

                     H.R. 2587, 3064, 3194/S. 1283

  AN ACT MAKING APPROPRIATIONS FOR THE GOVERNMENT OF THE DISTRICT OF 
 COLUMBIA AND OTHER ACTIVITIES CHARGEABLE IN WHOLE OR IN PART AGAINST 
THE REVENUES OF SAID DISTRICT FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 
                      2000, AND FOR OTHER PURPOSES

                               __________

                  Council of the District of Columbia
                          Office of the Mayor
      Financial Responsibility and Management Assistance Authority

                               __________

         Printed for the use of the Committee on Appropriations




 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                                 ______

                     U.S. GOVERNMENT PRINTING OFFICE
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                      COMMITTEE ON APPROPRIATIONS

                     TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi            ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania          DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico         ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri        PATRICK J. LEAHY, Vermont
SLADE GORTON, Washington             FRANK R. LAUTENBERG, New Jersey
MITCH McCONNELL, Kentucky            TOM HARKIN, Iowa
CONRAD BURNS, Montana                BARBARA A. MIKULSKI, Maryland
RICHARD C. SHELBY, Alabama           HARRY REID, Nevada
JUDD GREGG, New Hampshire            HERB KOHL, Wisconsin
ROBERT F. BENNETT, Utah              PATTY MURRAY, Washington
BEN NIGHTHORSE CAMPBELL, Colorado    BYRON L. DORGAN, North Dakota
LARRY CRAIG, Idaho                   DIANNE FEINSTEIN, California
KAY BAILEY HUTCHISON, Texas          RICHARD J. DURBIN, Illinois
JON KYL, Arizona
                   Steven J. Cortese, Staff Director
                 Lisa Sutherland, Deputy Staff Director
               James H. English, Minority Staff Director
                                 ------                                

                Subcommittee on the District of Columbia

                 KAY BAILEY HUTCHISON, Texas, Chairman
JON KYL, Arizona                     RICHARD J. DURBIN, Illinois
TED STEVENS, Alaska, (ex officio)    ROBERT C. BYRD, West Virginia (ex 
                                         officio)
                           Professional Staff

                          Mary Beth Nethercutt
                        Terry Sauvain (Minority)

                         Administrative Support

                         Liz Blevins (Minority)




                            C O N T E N T S

                              ----------                              

                        Wednesday, June 9, 1999

                                                                   Page
Council of the District of Columbia..............................     1
Financial Responsibility and Management Assistance Authority.....     1
Office of the Mayor..............................................     1


        DISTRICT OF COLUMBIA APPROPRIATIONS FOR FISCAL YEAR 2000

                              ----------                              


                        WEDNESDAY, JUNE 9, 1999

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:38 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Kay Bailey Hutchison (chairman) 
presiding.
    Present: Senators Hutchison and Durbin.

                          DISTRICT OF COLUMBIA

                          Office of the Mayor

STATEMENT OF HON. ANTHONY A. WILLIAMS, MAYOR

                  Council of the District of Columbia

STATEMENT OF LINDA W. CROPP, CHAIRMAN

      Financial Responsibility and Management Assistance Authority

STATEMENT OF DR. DARIUS MANS, MEMBER

               OPENING STATEMENT OF KAY BAILEY HUTCHISON

    Senator Hutchison. I would like to call this meeting to 
order. I am very pleased to get the budget from the District 
and see the good working relationship that seems to be going 
forward between the Control Board and the District.
    Let me start with a brief opening statement and then, if 
Senator Durbin or Senator Kyl arrive, I will ask them also, and 
then I will look forward to having opening statements from each 
of you.
    Of course, this is the hearing to review the District's 
consensus budget for fiscal year 2000 and to examine the new 
tax cut package. We recognize that both the consensus budget 
and the tax cut package are the result of long and I am sure 
strenuous debate between the Mayor and the District Council, 
and I am pleased that all of you are in agreement. I look 
forward to hearing a few more of the details of some of those 
issues.

                        fiscal year 1998 surplus

    At the end of fiscal year 1998, the District boasted an 
annual surplus of $445 million. That surplus allowed the 
District to eliminate its deficit and realize a $112 million 
positive fund balance. Certainly it is a very good thing that 
the balance is now over 6 percent of the year's gross budget. 
By the end of fiscal year 1999, it will be $282 million, which 
is another good sign.

                              bond rating

    I hope that we continue to see improvements in the bond 
ratings because, of course, the debt for the District is still 
high, and I would hope that any restructuring would have the 
improved bond ratings to lower the costs of debt.
    However, I would have to say that, while the economic 
condition really is good, still there are many problems that 
confront the District and the elected leadership. The school 
system, particularly the special education system, is still 
largely dysfunctional, and there are three agencies under 
receivership or court supervision. The District continues to 
lose some of its tax base to surrounding suburbs, which are 
booming, and I think, while the District is on the road to 
recovery, we still need to do more.

                             federal funds

    More Federal spending, however, is not the answer. I will 
say that in the Appropriations Committee on the Senate side, 
while every other subcommittee budget took a cut from the 
President's budget, the District did not. The District was 
fully funded at the President's budget request, and we are 
going to stick to that number, which I think should be a good 
number.

                        in-state college tuition

    I think the management that I have seen in the District is 
really creative, and I am very pleased to see that. I want you 
to know that I have introduced two pieces of legislation that 
will directly affect the District. One is to give college 
students in the District the ability to pay as an in-state 
resident of the colleges and universities in Maryland and 
Virginia, in fact, throughout the country. Budget constraints 
are probably going to put limitations on that, but I would 
still like to see it go forward as a pilot project, so that a 
District student who qualifies will have the chance to pay in-
state tuition in Virginia and Maryland by scholarships that 
would make up the difference.

                  community revitalization tax credit

    Second, I have introduced the community revitalization tax 
credit, which would offer tax credits to business owners that 
are located in enterprise zones toward the cost of renovating 
buildings and upgrading the value of property. That will not be 
in the District bill, but I hope to get it in the overall tax 
cut bill that we hope will go through Congress. I believe 
upgrading property will create better and safer neighborhoods, 
and I applaud you for the efforts you are making also in your 
budget along that line.
    So I think that we have come a very long way since I became 
a member of this committee and I applaud the leadership of the 
District, both the new Mayor, Mrs. Cropp as the Chairman of the 
Council, and Dr. Mans representing Mrs. Rivlin and the Control 
Board. I think this is a team effort that is working. I do have 
some questions about some of the specifics, but I think in the 
bigger picture there really is light at the end of this tunnel, 
and I am very pleased with the hard work that has gone into 
this effort on the part of all of you.
    So with that, Senator Durbin is on his way, but I want to 
continue with the hearing, so I would call on you, Mayor 
Williams, to--right on cue.
    If you are ready to make your opening statement.
    Senator Durbin. Go ahead, I will waive that.
    Senator Hutchison. Then I would call on you first, Mayor 
Williams, and welcome you to this committee for the first time 
that I have been able to chair it. I have really enjoyed our 
previous ability to work together and look forward to the 
future.

                 statement of mayor anthony a. Williams

    Mayor Williams. Thank you. Thank you, Chairman Hutchison 
and Senator Durbin and members of the committee. I want to 
thank you for the opportunity to testify before you and, more 
broadly, for the opportunity to work with you to make our 
Nation's capital the best city in our country.
    Indeed, I am very proud of the progress. I will say, 
incidentally, that I have submitted my full statement for the 
record, so I am just going to paraphrase and characterize my 
statement in the interest of time.
    I am proud of the progress that we have made over the last 
5 months, and I am committed to doing even more. Ultimately, 
however, the success of our efforts will depend on the short-
term fixes, getting points on the board, and on long-term 
planning and strategic investments in our infrastructure.

                       stabilized revenue stream

    Over the last few years, through the work of our elected 
leadership, through the work of our Financial Authority, and I 
would say through the work of our financial sector in the CFO's 
office, we have stopped the financial bleeding and stabilized 
the revenue stream. Through cooperation and hard work, we have 
put the District temporarily, I would say, on a sound footing.
    However, the fiscal health of the District needs to be 
pointed in a long-term corrective position. The people of the 
District deserve innovative initiatives reflecting the results 
of the election. So the time has come for us to make the 
crucial decisions that will put us in a competitive position 
for the next millennium, decisions about what the government 
can and cannot do, should and should not do, decisions that 
will determine to a large extent whether our city ultimately 
succeeds or fails.
    I believe that this budget has taken these tough decisions 
head-on and will put the District on a path to a stable future, 
ensuring for years to come that Washington will be a source of 
pride for all Americans. Most importantly, it strengthens our 
investments in crucial areas such as supporting children, 
improving government services, rebuilding the human service 
network, and, as the chairman was saying, expanding our 
economy.

                    annie e. casey foundation report

    At this point I would like to turn briefly to discuss these 
different areas and how they affect our budget. In education, 
for example, the Annie E. Casey Foundation recently released a 
report that measured the wellbeing of children. The District 
rated worst in the Nation in every category but one, from 
infant mortality to the rate of teenage births, to statistics 
chronicling child poverty. Clearly, we have serious work to do.

                       per pupil funding formula

    In education, in fiscal year 2000 the District of Columbia 
public schools will begin using a per-pupil funding formula as 
described in the School Reform Act of 1995. Under this formula, 
the proposed amount of $526 million represents an increase of 
$67 million, and State education costs of $74 million over 
fiscal year 1999.

                 institute of public safety and justice

    Regarding higher education, $500,000 is provided for fiscal 
year 2000 to establish the Institute of Public Safety and 
Justice at the University of the District of Columbia.

                               udc campus

    The University of the District of Columbia campus 
desperately needs an overhaul, in excess of $125 million. The 
proposed move of the university across the river unfortunately 
diverted the attention away from the necessary review of its 
mission and status. The question is whether we go down the same 
track, allowing it to continue unfocused, or invest so that it 
survives and thrives?
    This week, I would add, the New York Times has run a series 
of stories on the request by former Yale University President 
Benno Schmidt that recommended the dramatic overhaul of the 
City University of New York system. Once a jewel in the crown 
of public education, the university has fallen off track. The 
public officials in charge of its oversight realize that in its 
present form it was failing the needs of its constituents. 
Their willingness to take on entrenched interests and refocus 
that mission for the future to save the institution I believe 
should be a model for UDC.

                     children and youth investment

    Another area, the children and youth investment partnership 
that we have created will distribute $15 million for out-of-
school programs. This approach allows services to be competed 
for by community organizations and government agencies. This is 
part of a new paradigm we want to push of public-private 
partnerships that is a core principle of my administration.

                      making government efficient

    A second focus is the whole area of making our government 
more efficient. The areas we are focusing on there, briefly, 
are managed competition, work force investment strategies, and 
the savings to be derived. The simple point to be made, 
Senator, is that what we are doing is a two-pronged approach. 
On one level it is to do an assessment of work force in each of 
our service areas, to make sure that our workers have the very 
best teams as a group facing the competition we all must face, 
to invest in our workers with investment in our non-union 
employees, investment in our union employees, and working 
conditions and systems and enablers. All these things to allow 
them to do a job, to compete, but to recognize that to face 
that competition, we must introduce what we call managed 
competition throughout our government.
    I am not a pessimist but an optimist. I happen to believe 
that if we invest in our workers, if we give them the 
consulting tools with which to bid and compete, we will find, 
as we found in Philadelphia, as we found in Indianapolis, as we 
found in many, many States, that our workers will not only 
survive that competition, they will prevail in that 
competition. They will end up being proud of their jobs because 
they will be doing a better job for our people at less cost.

                           management report

    I am also very proud of the fact that, as part of the 
anthology, if you will, of this budget we have included a 
management report of our overall progress to build a 
performance management system in our city. As you know, our 
city has had a troubled history, I will put it that way, with 
this committee in terms of management reporting. We believe 
that we have established a very good baseline with the 
investments that our city and the Authority have made in our 
government operations. This will give this committee, the 
Council and the Financial Authority, and all the folks involved 
in supervision and oversight, a great tool kit to use to judge 
where we have started, where we want to go, and our progress 
along the way to get there. So I am very proud of the 
management report that we have submitted as part of this 
proposal.

                           health care system

    Briefly, in terms of improving the human service network, 
the key feature is our health care system. As evidenced by the 
troubles that we have seen with one of our hospitals, Greater 
Southeast, we have a number of problems with our health care 
delivery system right now. Right now it is very, very costly. 
Right now it is not serving all of our residents, and right now 
we have a situation where supply and demand are mismatched.
    We have a situation where many of our hospitals are 
struggling. As we work with Greater Southeast to put it on a 
sound financial footing and to get it out of what I call the 
financial emergency room, the Financial Authority, the Mayor, 
and the Council, recognized that we had to look at a longer 
term strategy of balancing our needs and balancing our 
interests. That was important so that we could move to a model 
where our health care dollars were following our patients and 
our citizens and their choices, as opposed to strictly 
following the needs of our institutions.
    We do not believe, I do not believe, that in the first year 
we can expect our institutions to change overnight to a new 
competitive service delivery model. But we do believe that, 
while allowing our institutions to be put on a sound 
competitive footing, they have to compete. We cannot ensure the 
survival of all of our institutions against any thought of 
competition. I do not think our hospital association expects 
that. I do not think our clinics expect that. Our patients do 
not expect that.
    That is the motto under which we are proceeding, and I 
think it holds great hope. I think Greater Southeast has been a 
wakeup call for us in the work that we need to do.

                             receiverships

    Madame Chair, you have mentioned our situation with our 
receivers. We consider one of our most important objectives to 
be to rebuild the human service network. One of the real 
tragedies over the last 10 years is that much of our human 
service network has been dismantled. It has been lost to 
receivership, it has been lost in mismanagement, it has been 
lost to underfunding, it has been lost to a lack of 
competitiveness.
    We are determined--and I mention this in a number of areas 
in my testimony--we are determined to rebuild this human 
service network as part of our legacy for the future and as 
part of being the great city we must be.

                         expanding the economy

    The fourth focus of our budget is on expanding the economy 
and, very briefly, the components include: neighborhood 
revitalization and an investment by the Mayor and the Council 
in public works, in nuisance management and elimination, in 
coordinating public works and public safety. In other words, to 
make a more customer-friendly, more business-friendly, and a 
cleaner city recognizing that our neighborhoods are a 
foundation for bringing back the kind of city that we want.

                              tax cut plan

    Tax cuts are a big part of this economic revitalization 
program. The democratic process sometimes is bumpy. The 
democratic process is often not very pretty. But we have come 
to a consensus on a tax cut plan that we believe addresses my 
need and my objective to focus our tax reduction on the needs 
of small business and business in general and to match that tax 
reduction with overall economic development aims and the 
broader need stated by all the elected officials, and 
particularly the Council, to make sure that our District is 
competitive from a tax vantage point with o