[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




 
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


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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     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   KENNY MARCHANT, Texas
    Columbia                         JOHN M. McHUGH, New York
JOHN P. SARBANES, Maryland           JOHN L. MICA, Florida
ELIJAH E. CUMMINGS, Maryland         DARRELL E. ISSA, California
DENNIS J. KUCINICH, Ohio, Chairman   JIM JORDAN, Ohio
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
                      Tania Shand, Staff Director


                            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


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.
    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:]

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    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 
self-government, 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.
    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 autonomy, 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.
    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.
    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.]
    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 budgetary 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 2\1/2\ 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 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 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.
    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 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 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, 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.
    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.
    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 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 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.
    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 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.
    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 balance 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 
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.
    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.
    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.
    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 certainly 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 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.
    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.
    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 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 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.
    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 two-
thirds, 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.
    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 cash-flows, 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.
    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.
    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.
    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 appreciate 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.
    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 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.
    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.
    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 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.
    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?
    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 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.]

                                 
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