- The Washington Times - Friday, March 17, 2000

The media focuses on tax-reduction proposals advocated by the majority of the D.C. Council, ignoring major aspects of Mayor Anthony Williams' $4.8 billion fiscal year 2001 budget proposal and the serious flaws that continue to exist in the city's financial management and planning processes.

This latest push for $30 million in tax reduction would benefit small businesses, elderly home owners, and low-income residents who would get an earned income credit. Legislators want to repeal the gross receipts tax on dry cleaning and newspaper sales, and provide an exemption from sales taxes for one week on clothing, footwear and school supplies. The council passed last year, with agreement from a reluctant mayor and financial control board, a five-year $300-million plan that largely affects rich and middle-class residents. Mr. Williams says he might be willing to support this new earned-income tax credit proposal, if council members rethink their previous tax reduction package, shaving off portions of it to allow for the poor and working class to get in on the action.

Not a bad strategy when weighed against the modest growth in revenue and continued expenditure increases in city government, including new positions on the payroll and an overall 13.8 percent hike in government direction and support agencies like the council, the Office of the Mayor, the city administrator, the Office of Personnel, and the Office of Property Management.

But tax cuts shouldn't become the mantra of the mayor's fiscal 2001 budget. There are far more alarming concerns: In order to fund his new initiatives, which include increased support for schools, hiring of more police officers, health care benefits for uninsured adults and children, and the creation of neighborhood improvement managers, Mr. Williams is tapping 90 percent of next year's $79 million tobacco settlement payment and projecting $62 million in savings from nebulous reforms; $37 million comes from "management reform productivity savings." Mayoral aides say to reach this mark, the mayor plans to cut 1,000 jobs. But the personnel cuts come as Mr. Williams' budget proposes to increase by 200 the number of full-time positions on the payroll. So the net reduction of 800, is almost insignificant when compared to the projected payroll of 32,946 positions.

As chief financial officer (CFO) from 1995 through 1998, Mr. Williams repeatedly rebuffed efforts by then-Mayor Marion Barry to include and fully count these kinds of ambiguous savings. Now in the executive seat, the former CFO, clothed in the garb of a popular politician, seems to have disabused himself of his conservative fiscal leanings.

Finally, except for the new initiatives, the Williams administration's second-year budget is a rehashing of last year's figures, with a modest inflation rate. The more rigorous exercise of determining what government should and shouldn't be engaged in is absent. For example, Mr. Williams, following the hue and cry of the masses, has placed more money in the school system's budget. But does the system need more money or better management?

The complicity of the new CFO, Valerie Holt, in all of this does not bode well for the strength or the independence of that office. The CFO by congressional law is supposed to offer independent preparation and analysis of the city's financial plan and budget. Considering Ms. Holt's responses to questions raised earlier this week during a news conference where the mayor released his document, it seems apparent that the chief executive drove and dominated the process.

Let's return to the $37 million in reform savings. At the Monday press conference neither Mr. Williams nor the CFO cited a specific plan to achieve this goal; a draft plan arrived a day later. Further, according to the revised fiscal 2000 budget, the city was supposed to achieve $7 million in Management Reform Productivity Savings. Thus far, two quarters into the year, Ms. Holt says the government has not realized any of those projected savings.

In his defense, Mr. Williams says skeptics should ignore history: "I'm the mayor now. We've spent hundreds of millions of dollars on management reform and we ought to be able to achieve some savings. Our track record this year may not be what I would like it to be. But, that's no reason not to redouble our effort."

In fairness, none of this stuff is easy. The city is entering its fourth year of a "reform" agenda instigated partially by a near fiscal collapse and a congressionally mandated financial control board. It is engaged in an intense attempt to invest in service delivery and infrastructure improvements while simultaneously pushing to reduce the cost and enhance the overall efficiency of government, expand its tax base, reduce onerous tax burdens, and successfully attack intractable social issues like crime and declining education. And all of this with a marginally professionalized labor force and severely frayed management systems.

But elected officials signed on to the job knowing there was tough traveling ahead. They knew too that there still were tougher, unpopular decisions to be made if the District is to fully recover. Residents elected their former CFO mayor because he demonstrated a willingness to make hard choices when others seemed too timid. This budget suggests that Mr. Williams may have forgotten his mission.

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