- The Washington Times - Sunday, September 30, 2001

In 1995, the District long on bureaucracy and short on cash stood perched on the brink of ruin, and the D.C. financial control board was created to put the mess in order. Today, at midnight, the long road back to independence ends when the board ceases operations and D.C. leaders can only hope it's for good.
Many city and congressional leaders praise the body for its role in helping the city's fiscal turnaround. Others are glad for the demise of one more overseer they say too often overstepped its bounds while making few substantial management changes.
Despite the mixed opinions, most agree the board leaves a city with strengthened leadership albeit one facing a troubling economic forecast marked by recession and declining revenues.
"The control board made enormous contributions to the city, laying the foundations for folks like me to get things done," Mayor Anthony A. Williams said. "Now we face the long-term question of our fiscal relationship with the federal government. We could have the best system and still [face revenue shortfalls]."
Six years ago, the District was in a fiscal quagmire, facing a projected deficit of more than $500 million and a bond rating worse than junk level. No lending agency was willing to risk money on the city.
Then the killing blow: The General Accounting Office reported that the District was insolvent and failing to comply with congressional orders to cut its bureaucracy.
"There was a mood of great concern over the city moving towards a crisis situation," recalled current D.C. Council Chairman Linda W. Cropp, who was then in her second term as a council member. "We knew something had to be done differently."
The council had already begun taking steps to slash the budget and trim the bureaucracy, pre-empting a need for an all-powerful oversight body, she said.
But Congress, which had just been taken over by Republicans, had had enough. It approved the District of Columbia Financial Responsibility and Management Assistance Authority, better known as the financial control board, to crack the whip.
"The District was poorly managed and didn't have enough money and wasn't going to be able to borrow more to keep going," said Delegate Eleanor Holmes Norton, the District's nonvoting congressional representative, who was among those pushing for oversight. "It was a drastic step. We had to reassure the residents."
Others say Mayor Marion Barry who had recently been re-elected after being released from prison on a drug conviction was the lightning rod for takeover. "There was no faith on the Hill that he would be able to make the hard decisions necessary," said one city leader privately.
The five members of the control board, appointed by President Clinton in early summer 1995, were charged with helping the city regain its financial footing and institute reforms.
To do so, the board was given the power to reject legislation inconsistent with the city's financial plan and, later, to oversee city agencies.
The first panel, headed by Andrew Brimmer, brought in Mr. Williams as the city's independent chief financial officer. It slashed the city's bloated work force of more than 40,000 and cut the budget.
In 1997, the panel seized control of day-to-day operations. A few residents protested the erosion of home rule, hanging pictures of Mr. Brimmer scrawled with the word "traitor" around the city. But most people realized it was a much-needed if unpleasant dose of medicine, city activist Dorothy Brizill recalls.
"The average citizen in their heart of hearts questioned the wisdom of putting the board in place, but deep down knew things weren't working," she said. "We were willing to have anything because anything was better than what we had: trash not getting picked up, corruption in the police department, a bankrupt city."
By 1998, the city was balancing its budgets and getting decent bond ratings. Mr. Williams was sworn in as mayor, and the District regained control over the operations of the government.
The terms of the first panel expired that year, and Federal Reserve Vice Chairman Alice M. Rivlin was appointed as the new chairman. Mrs. Rivlin, a longtime Ward 3 resident, had written a study years earlier predicting many of the city's financial troubles.
"My chairmanship was the easier part," Mrs. Rivlin said last week. "The city was in better shape. Now it was time for the panel to work its way out of a job."
In May 2000, Natwar Gandhi replaced Chief Financial Officer Valerie A. Holt and helped the city deliver its fourth balanced budget and earn investment grade bonding ratings on Wall Street.
Mr. Gandhi, who oversees the city's $5 billion budget, suffered a setback when an $80 million shortfall was discovered in the school system's budget three weeks before the end of fiscal 2001. Some officials worried the incident would lead to calls for further control board involvement, but it didn't in part, city and Capitol Hill officials say, because of Mr. Gandhi's decisive action to resolve the issue.
"[Maintaining the city's fiscal health] is not about the usual spending pressures but how we resolve them," said Mr. Gandhi, who fired 27 financial staffers in the school system. "I know what it means not to be financially viable. It's having the control board again, next time for good. No one wants that."
City officials, residents, Congress and control board members say they welcome this period in the city's history, with the District on solid fiscal ground and its elected leaders once again able to run things without supervision.
"I am about to grin myself to death," said D.C. Council member David A. Catania, at-large Republican.
Still, the specter of deficits hangs over the city, and the confidence of what many call "a new era" mingles with an urgency to find solutions for an uncertain future.
Just last week, city officials warned they may be unable to balance the budget next year if tourism drops off in the wake of the Sept. 11 terrorist attacks, causing a decline in tax revenues collected from the hospitality industry, which contributes nearly $5 billion annually to the city's economy.
Most city leaders acknowledge the District was able to pull itself out of its mid-1990s fiscal mess and post surpluses partly because of a booming economy.
"Concerns over the fiscal future of the District remain," Mrs. Rivlin said. Calls for federal assistance are intensifying, including a proposal for a 2 percent tax rebate, a restoration of a federal payment and the reopening of Ronald Reagan Washington National Airport.
So far, congressional leaders have been unwilling to consider a commuter tax, which would tax Marylanders and Virginians who work in the city.
"We will soon be looking at streams of revenue to assist the District of Columbia," said Rep. Constance A. Morella, Maryland Republican, who supports reopening the airport.
While there has been some talk of another congressionally created oversight panel as a safeguard, nothing concrete has been put on the table.
"[District leaders] have an up-and-down track record," said Paul Welday, spokesman for Rep. Joe Knollenberg, Michigan Republican and chairman of a subcommittee on the District.
Mr. Welday says the congressman is firmly committed to the District's self-governance, but "we can't ignore when we see shortfalls. There will be more discussion on a future structure, but until then we will keep a finger in the pot."
Rep. Thomas M. Davis III, a Virginia Republican who led the effort for fiscal oversight in 1995, said another oversight body is unnecessary. "They clearly worked their way out of this one," he said.
Others says the District has proven it doesn't need a control board.
"Without them, it forces the government to do what every government does work things out," Mrs. Cropp said.

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