[Congressional Record Volume 141, Number 58 (Wednesday, March 29, 1995)]
[Extensions of Remarks]
[Pages E730-E731]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                  D.C. FINANCIAL MANAGEMENT AUTHORITY

                                 ______


                          HON. JAMES T. WALSH

                              of new york

                    in the house of representatives

                       Wednesday, March 29, 1995
  Mr. WALSH. Mr. Speaker, I am pleased to be a sponsor of the District 
of Columbia Financial Responsibility and Management Assistance Act of 
1995 which is being introduced today by the gentleman from Virginia 
[Mr. Davis].
  Mr. Speaker, the crafting of this bill has taken many hours and has 
involved a wide array of individuals. Our colleague, Tom Davis, has 
done yeoman's work and is to be commended for his skill in forging a 
strong bill that has bipartisan support in this House. That is no easy 
feat.
  This bill, Mr. Speaker, will establish a financial responsibility and 
management authority consisting of five members to be appointed by the 
President, in consultation with the Congress, within 25 days after it 
is enacted. The key to the success of our efforts in restoring the 
financial health of our Nation's Capital is the selection of 
individuals who are competent, capable and have a good heart with 
regard to the city. The bill requires that these individuals have 
expertise in finance and management, have no connection with the 
District government that could cause a conflict of interest, and during 
the most recent year have paid personal income or business taxes to the 
District.
  There are a few comments I would like to make regarding the powers of 
the authority. First, all contracts, leases and agreements entered into 
by the District government will be subject to approval by the authority 
to ensure they are in compliance with the financial plan. If they are 
not in compliance, they will be sent back until they are. This is 
important if the District is going to get to a balanced budget anytime 
soon.
  Second, there is no question that the District's financial management 
and information systems are inadequate. To deal with this problem the 
bill establishes a chief financial officer of the District of Columbia 
who will be appointed by the Mayor and, during the control period, 
subject to approval by a majority vote of the authority. The chief 
financial officer can be removed only with the approval of the 
authority and will be responsible for all financial activities of the 
District government from revenue estimates and cash receipts to 
expenditures and cash disbursements.
  This is the most important position in the District government from 
the standpoint of the District finances. And the person in this 
position must have as much independence as possible if the District 
government is to get back on track financially.
  Third, it has become glaringly apparent that the District needs a 
truly independent inspector general. During the control period the 
inspector general will be appointed by the mayor subject to approval by 
a majority vote of the authority, and like the chief financial officer, 
can be removed only with the approval of the authority. The inspector 
general will have subpoena powers and a budget that will be subject to 
change by the mayor or council.
  This has been a problem in the past.
  Mr. Speaker, the next point I want to discuss is crucial to the 
effectiveness of the authority. In the event there is a stalemate 
between what the authority recommends and what the District recommends, 
the bill allows the authority to implement its own recommendations 
whether they are executive or legislative in nature. This power is 
essential if the authority is to be effective and have any impact on 
the efficient operation of the District government.
  The authority created by this legislation, Mr. Speaker, needs to have 
control; and it is our intention that it have control; and this bill is 
drafted so that it will have control over the operations of the 
District government.
  My final comment relates to the concern that has been expressed by 
several members about the mayor's access to the Federal Treasury. The 
mayor is authorized by a statute approved in 1937 to requisition funds 
from the Federal Treasury. This borrowing authority was used primarily 
for cash flow purposes 
[[Page E731]]  prior to the District gaining access to the municipal 
bond market in the early 1980's. It has not been used since; however, 
the bond market has looked to this Treasury window as the ultimate 
guarantor of securities issued by the District. Therefore, it is 
necessary to continue this access to the Treasury to maintain the 
marketability of the District's $3.3 billion in outstanding long-term 
securities. The Federal Government in essence serves as the District's 
``State government'' and therefore provides the necessary assurance 
required by the investment community.
  Any funds borrowed from the Federal Treasury under this bill will be 
deposited into an account controlled by the authority and repaid by the 
District government at the going interest rate plus one-eighth of 1 
percent. In addition, the authority will remain in existence until all 
of the amounts borrowed under the auspices of the authority, whether 
from the Federal Treasury or from the bond market, are repaid in full.
  After the control period ends, The District will continue to have 
access to the Treasury window. However, under section 209 of the bill, 
the authority will be reactivated immediately if certain events occur, 
and one of the events that will trigger the reactivation is the mayor's 
requisitioning of advances from the Federal Treasury. If that should 
occur, the borrowed funds will once again be deposited into an account 
controlled by the authority.
  So I feel comfortable that sufficient safeguards are in place to 
protect the Federal taxpayers.
  Mr. Speaker, I think this is a good bill and deserves the support of 
this House.


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