[Congressional Record Volume 151, Number 42 (Tuesday, April 12, 2005)]
[Extensions of Remarks]
[Page E626]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       INTRODUCTION OF THE FAIR FEDERAL COMPENSATION ACT OF 2005

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                        Tuesday, April 12, 2005

  Ms. NORTON. Mr. Speaker, the entire bipartisan regional House 
delegation of the national capital region introduces today the Fair 
Federal Compensation Act of 2005 to address the District of Columbia's 
structural imbalance. The original co-sponsors are: Government Reform 
Committee Chair Tom Davis, Appropriations Subcommittee Chair Frank 
Wolf, Democratic Whip Steny Hoyer, Former Congressional Black Caucus 
Chair Elijah Cummings and Representatives Jim Moran, Chris Van Hollen, 
and Albert Wynn. Montgomery County Executive Doug Duncan has authorized 
me to say that he suports this bill as well.
  D.C. residents and businesses are proud of eight straight years of 
balanced budgets that pay for the operations of our government. Yet, 
residents and Congress probably know little about the city's structural 
imbalance, which according to the GAO, is entirely from federal 
sources. However, D.C. taxpayers and Congress are paying for this 
imbalance in millions of dollars in taxes and interest. Residents and 
businesses pay to cover a structural imbalance caused by federal 
mandates and requirements with higher local taxes and the highest debt 
load in the nation. Our bill will help the Congress and city residents 
understand what the structural imbalance is and how it affects 
taxpayers and the D.C. government.
  The goal of the bipartisan bill we introduce today is to prevent 
another fiscal crisis for our city and to relieve some of the 
unsustainable load on the D.C. government and on residents and 
businesses. The structural imbalance is the difference between the cost 
of D.C. government services and operations and the add-on cost to local 
taxpayers that otherwise would be carried by the federal government or 
commuters. According to the GAO, (confirming two other major studies; 
McKinsey, March 2002 and Brookings, October 2002) the resulting 
imbalance is exclusively federal and has three sources: federal use of 
the city's most valuable land; the city's continuing responsibility for 
many costly state functions; and the commuter tax ban, despite services 
the District must provide to 200,000 federal employees. The GAO 
concluded that the only options to relieve the structural imbalance 
are: to ``change Federal procedures and expand the District's tax base 
or provide additional financial support and a greater role by the 
Federal government to help the District maintain fiscal balance.'' The 
Fair Federal Compensation Act of 2005 we introduce today responds 
specifically to these GAO findings.

  Our bill offsets part, though not all, of the annual structural 
imbalance--found by the GAO to be between $470 million and up to more 
than $1.1 billion--by providing for an annual federal contribution of 
$800 million. Unlike the old federal payment, which remained constant 
and therefore lost much of its value through inflation, the federal 
contribution would increase annually. The federal contribution funds 
would go to a dedicated D.C. infrastructure support fund. The District 
does not have an operating deficit or imbalance and these federal funds 
could not be used for operating expenses. The bill provides specific 
uses only for the non-operating and urgent capital needs that are 
delayed each year in favor of keeping the D.C. government operating. 
The federal contribution would be available only for stated 
infrastructure purposes, such as roads and school construction and 
repairs, and for reducing the District's debt--the highest in the 
country. High debt and the interest that results, of course, produce 
excessive taxes. The bill also would improve the District's investment 
bond rating and thus reduce our present high interest payments, all 
charged to taxpayers.
  In 1995 Congress carne to grips with the reality that this city's 
responsibilities assume it is a state, although it lacks a broad state 
tax base and that the District could no longer be expected to shoulder 
the full set of state costs. Congress relieved the District of the 
costs of some but not all state functions and left the unique federal 
structural impediments described in the GAO report. Nevertheless, the 
District has made remarkable progress, maintaining balanced budgets and 
surpluses every year despite adverse national economic conditions and 
improving city services. The CFO has ominously warned, however, that 
looking to the out years, the structural imbalance endangers the city's 
financial future and cannot continue to be carried by the District 
alone. It would be tragic for Congress to allow the progress that has 
been made to be retracted because of dangerous and escalating 
uncompensated federal burdens. The Fair Federal Compensation Act of 
2005 would allow the District to avoid great risks, to continue to 
build fiscal strength, and to relieve D.C. taxpayers ofthis federal 
structural financial burden.




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