- The Washington Times - Wednesday, December 8, 1999

The D.C. Council yesterday rejected Mayor Anthony A. Williams’ plan to use the city’s expected tobacco settlement funds to pay bonuses to unionized city employees, refusing to borrow against future funds.
The council’s 11-2 decision means that Mr. Williams cannot make good on his promise to pay $1,700 bonuses to 5,832 city workers by next Wednesday. It also marks the first time the council has completely bucked the mayor on one of his proposals.
“To borrow from the tobacco fund, to borrow from the 2001 budget to pay for 2000 expenses is just irresponsible,” said council member Jack Evans, Ward 2 Democrat. “Would CFO Anthony Williams have taken this action for Mayor Marion Barry? I don’t think so.”
Mr. Williams, who was the city’s chief financial officer before becoming mayor this year, said the council’s decision was rooted in personal differences with him, not in the merits of the plan.
“I am deeply saddened the council is throwing a roadblock in the way of paying these bonuses by Dec. 15,” he said. “I think they are allowing their own personal issues with me to cloud their judgment on this. I do… . This is all posturing. It’s grandstanding.”
The council passed legislation instructing Mr. Williams and Chief Financial Officer Valerie A. Holt to deduct the $9.9 million expense from the fiscal 2000 budget to pay the contractually obligated bonuses.
Mr. Williams refused to say the bonus deadline will not be met, “but this doesn’t help.” He said he plans to meet with labor leaders, residents and others to resolve the matter.
“I’m going to have some real unhappy folks,” said George Johnson, chief negotiator for the unions and president of Council 20 of the American Federation of State, County and Municipal Employees.
When asked if he blames the mayor or the council for the delay, he said, “I blame both of them.”
Mr. Evans, chairman of the Finance and Revenue Committee, likened Mr. Williams’ tobacco plan to former Mayor Sharon Pratt Kelly’s idea to create a fifth quarter to the 1993 fiscal year to temporarily hide the city’s fiscal woes.
“This is a despicable example of bad faith,” council member Sharon Ambrose, Ward 6 Democrat, said of the mayor’s plan, which he submitted to the council late Monday.
Mr. Williams proposed using funds from the upcoming tobacco settlement and replacing those funds later with cash from the city’s $150 million reserve fund or with money in the fiscal 2001 budget.
The tobacco settlement stems from a nationwide legal effort to make six major tobacco manufacturers reimburse states for the health care costs they incurred due to smoking-related illnesses.
Under the city’s 1997 collective-bargaining agreement, the city owed bonuses to some rank-and-file workers because of its improved finances. The amount was not specified; labor and city leaders settled on the $1,700 figure after months of negotiation.
Rep. Ernest Istook, Oklahoma Republican, torpedoed the mayor’s original plan to pay the bonuses with extra federal funds earmarked for cutting the city work force.
Mr. Istook, chairman of the House Appropriations subcommittee on the District, wrote a stinging letter to Mr. Williams that said such a move would be “a serious and illegal breach of the purpose of this funding.”
Most council members yesterday said they supported paying the bonuses, but could not support dipping into the tobacco funds, even temporarily.
“I hold in my hand letters from health agencies from all across the city, saying, Please don’t take away from the tobacco money,’ ” said council member Sandy Allen, Ward 8 Democrat and chairman of the Human Services Committee.
The bonus vote is the first major rift between the council and the mayor. In the spring, the council forced the mayor to expand tax cuts in the city’s fiscal 2000 budget to include residents and property owners. The mayor’s plan would have only given tax breaks to small businesses.
Council member Carol Schwartz, at-large Republican, called the mayor’s plan “unconscionable,” but said she was confident the mayor would find areas “where agencies can be scrubbed.”
An initial $14.6 million payment from the tobacco industry is expected to arrive in the District any time now. Two payments in January and April will total $38.9 million.
The city can spend the cash it expects to receive from the settlement before the money is received as long as the chief financial officer certifies the funds are reasonably expected.
Overall, the city is scheduled to receive $1.2 billion in tobacco funds over 25 years. The tobacco settlement agreement is worth about $206 billion nationwide during its first 25 years.
The tobacco settlement that led to the payments does not restrict how states and the District use the funds. The District requires only that the D.C. Council must approve the spending.
Some states have indicated they intend to use the money for non-health related purposes, such as debt reduction, highway construction, building a dinosaur museum, and tax cuts, according to the D.C. Office of the Budget Director.

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