- The Washington Times - Tuesday, May 16, 2000

Mayor Anthony A. Williams and the District of Columbia Council took at least one meaningful step closer yesterday to reaching an agreement on the city's $4.8 billion budget but are still far apart on the crucial issue of what to do with tobacco funds.

Mr. Williams and council members emerged from a more-than-two-hour meeting yesterday afternoon, seemingly upbeat about prospects that the city could have a consensus budget to submit to the financial control board and ultimately Congress by the June 15 deadline. However, the two sides remained at odds on how the city will use millions of dollars it expects as payment in the first two years of the tobacco-company settlement.

"I thought we made some progress on the basic budget," Mr. Williams said. "I think there is emerging agreement that this exchange of letters with Sen. [Kay Bailey] Hutchison … frees up $150 million in budget authority each year now into the future.

"On the tobacco fund, I think there's still some disagreement," he said.

Last Monday, Mrs. Hutchison, Texas Republican and chairman of the Senate Appropriations subcommittee on the District, sent written confirmation to Mr. Williams clarifying that the city does not have to add $150 million to its reserve fund each year, but must keep a $150 million balance in reserve. The council held that the city shouldn't rush to spend the rainy-day reserve funds.

Yesterday, the two sides agreed that the city can spend some of its $132 million reserve account on services and programs, but only on a contingency basis. The chief financial officer first must verify that the city will not need the emergency funds before the fiscal year ends Sept. 30.

Yesterday's agreement removes one of two big obstacles in the budget process, and the consensus is a far cry from a testy exchange of letters last week, when Mr. Williams said he would veto a council budget.

In a letter to council Chairman Linda Cropp, at-large Democrat, Mr. Williams initially threatened to veto any budget that does not commit $100 million of the city's reserve fund to improving the infrastructure and services to residents, or fails to designate 65 percent of the city's first two installments of the tobacco settlement for health and education.

Although the reserve-fund issue is solved, the two sides are no closer to an agreement on whether to spend most of the tobacco funds. No meetings are scheduled between the mayor and council before the first of two votes Friday.

"What I will recommend right now is 75 percent [of the tobacco funds] for saving and 25 percent for spending," Mrs. Cropp said about Friday's vote.

Before the meeting, Jack Evans, Ward 2 Democrat, said both sides have "drawn some real lines in the sand," and one side will have to move if anything is to get done.

"I'm looking at a bigger picture than the mayor," Mr. Evans said following the meeting with Mr. Williams. "The mayor is still wedded to the idea of spending most of the tobacco fund.

"The economy will not remain strong forever … . Why not take it and invest?" Mr. Evans said.

But Mr. Williams remained firm in wanting to spend the funds on health care and charter schools, "to equalize the benefit for a generation of children today versus a generation of children in the future."

"I welcome the council's interests of trying to stabilize our finances," Mr. Williams said after yesterday's meeting. "But I think there are other ways to do that other than creating this huge fund when we have some real needs now."

The tobacco settlement stems from a nationwide legal effort to force six major cigarette manufacturers to reimburse states and the District for the health care costs incurred because of smoking-related illnesses. The District expects to receive more than $48.9 million this year and $1.2 billion overall in tobacco money over 25 years.

The council was supposed to vote on the budget today, but the vote was delayed after the council and the mayor failed to reach a consensus during a two-hour meeting last week. Yesterday's session lent itself to more tempered responses from the mayor and council members.

"I think we left the meeting with the idea that we will listen to each other and that's important," Mrs. Cropp said.

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