[Congressional Record (Bound Edition), Volume 150 (2004), Part 6]
[Extensions of Remarks]
[Pages 8327-8328]
[From the U.S. Government Publishing Office, www.gpo.gov]




BI-PARTISAN REGIONAL SUPPORT FOR THE DISTRICT OF COLUMBIA FAIR FEDERAL 
                        COMPENSATION ACT OF 2004

                                 ______
                                 

                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                          Tuesday, May 4, 2004

  Ms. NORTON. Mr. Speaker, today, for the first time, I am not alone in 
introducing a bill for a federal contribution to address the District's 
structural imbalance. I am grateful to my Republican and Democratic 
colleagues who, in generously joining me today, have made this the 
first structural imbalance bill to have critical bipartisan regional 
support. Their sponsorship is particularly valuable because these are 
the members of Congress who know the

[[Page 8328]]

District best because they are from the region--Government Reform Chair 
Tom Davis, Appropriations Subcommittee Chair Frank Wolf, Congressional 
Black Caucus Chair Elijah Cummings and Representatives Jim Moran, Chris 
Van Hollen, and Albert Wynn. Montgomery County Council Executive Doug 
Duncan has authorized me to say that he supports the bill as well. 
These Members recognize the importance of federal support to compensate 
the District for federally imposed requirements in order to forestall 
another fiscal crisis in the nation's capital, while the District 
itself continues on the path of improvement of its finances and 
services that the Congress has acknowledged.
  This bill ranks as one of the most important I have introduced during 
my seven terms in Congress. Because of its significance, I have delayed 
introducing other bills this year until I achieved bipartisan support 
in order to make the Fair Federal Compensation Act my first bill of 
2004. Without this bill, the long-term viability of the District of 
Columbia is at risk. This risk arises from a structural imbalance 
caused by expenditures rising faster than revenues. Notwithstanding 
this dangerous situation, the District is able to balance its budget 
every year and avoid operating deficits by maintaining tax rates and 
debt that are among the highest in the nation. District of Columbia 
Chief Financial Officer Natwar M. Gandhi has issued forecasts that show 
that in the out years, the structural deficit will overtake the city's 
diminished and inadequate tax base, not because of overspending by the 
D.C. government but because of the cost of federal requirements and 
statutes imposed on the District.
  Today's bill is different from structural imbalance bills I have 
introduced in the past. This bill has as its predicate a May 2003 
Government Accounting Office (GAO) report, which made three major 
findings--the first concerning the size of the imbalance, the second 
concerning its federal origin, and the third regarding the 
unavailability of options internal to the D.C. government.
  First, the GAO confirmed that the District has a structural imbalance 
that it found is between $470,000,000 and $1,100,000,000 annually, the 
first determination that is based on a precise methodology for valuing, 
documenting and calculating the imbalance. This congressional report 
confines two prior privately commissioned reports that arrived at 
similar conclusions, a 2002 McKenzie study commissioned by the Federal 
City Council (an organization of regional and local business leaders) 
and a Brookings Institution study under the leadership of former 
Congressional Budget Office Director, Alice Rivlin, who also served as 
a chair of the former D.C. Control Board (Financial Management and 
Assistance Authority).
  The GAO's second finding was that D.C.'s structural imbalance is 
caused by federal mandates and is therefore beyond the reach of D.C. 
government officials and taxpayers. The federal government retains 42 
percent of real property, the most valuable in the city, for its own 
use; requires the city alone to provide costly state services, such as 
special education, although the District is not a state and lacks a 
broad state tax base; requires the District to provide services to more 
than 200,000 federal employees, who earn 66 percent of the income 
produced here; and prohibits taxation of federal workers to help pay 
for these services. These costs to the city trace directly to the 
federal government and only the federal government.
  The GAO's third finding is that the only two options available to the 
District government are raising taxes and cutting services, each of 
which the GAO said it could not recommend. Rather, the options 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,'' according to 
the GAO.
  The bill I introduce today is based on these three GAO findings. The 
bill offsets part, though not all, of the annual structural imbalance, 
by providing for an annual federal contribution of $800 million. These 
funds are to be deposited into a D.C. infrastructure support fund that 
cannot be used for operating expenses but only for the specifically 
stated infrastructure purposes.
  The bill removes some of the harm to the District's investment bond 
rating and the resulting high interest payments by requiring that 
federal contribution funds go only to the District Infrastructure Fund 
to be used exclusively for infrastructure and for debt service, most of 
which is debt from infrastructure costs. The focus on infrastructure is 
deliberate because the District's infrastructure is used by the entire 
region, where 80% of the vehicles originate and includes Metro, used 
overwhelmingly by regional residents. Regional complaints about the 
District's roads, bridges and tunnels are justified, but there is no 
reasonable hope of repair and maintenance if the District's taxpayer-
raised budget is the only source. The focus on debt service is 
calculated to reduce the District's debt, the highest per capita in the 
country. With some relief from the structural imbalance through a 
federal contribution, the District will gradually be able not only to 
reduce its debt but also to lower the high tax rates that the imbalance 
forces on D.C. residents and businesses. This bill also takes into 
account past federal contribution failures. This bill does not allow 
the contribution to wither away by a failure to increase gradually with 
inflation but provides for annual increases tied to the Consumer Price 
Index.
  In 1995 Congress came to grips with the reality that a city whose 
structure assumes it is a state although it lacks a broad tax base can 
no longer be responsible for the full set of costs shouldered by 
states. However, Congress relieved the District of the cost of some but 
not all state functions and left the unique federal structural 
impediments described in the GAO report. The District has made 
remarkable progress by maintaining balanced budgets and surpluses every 
year despite adverse national economic conditions and by improving city 
services. It would be tragic for Congress to allow this progress to be 
retracted because of uncompensated federal burdens. This bill allows 
the District to avoid great risks and to continue to build fiscal 
strength.

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