- The Washington Times - Friday, May 21, 2004

In 1997, Congress ended its practice of allotting an annual payment to the District. The move was part of a bipartisan revitalization plan that increased federal funds for Medicaid, pensions, prisons and other costs that cities ordinarily do not pay for. The tradeoff appeared to many in City Hall, on Capitol Hill and in the White House to be a reasonable one, especially since the central goal was to aid the District’s fiscal recovery. Now that the city’s fiscal house is in order comes a sensible legislative road map.

D.C. Delegate Eleanor Holmes Norton recently introduced the D.C. Fair Federal Compensation Act of 2004, which calls for restoration of an annual federal payment. Addressing what commonly is called the city’s structural imbalance, the bill would mandate that Congress annually appropriate funds for the capital to help pay for infrastructure (such as homeland security technology improvements), transportation projects (including Metro) and school construction projects. The annual payment also would cover debt servicing on bonds and notes. The funds would be maintained in a dedicated infrastructure account, but could not be used for operating expenses.

Since we support the government giving an annual payment to the District in lieu of federal taxes, that latter stipulation, which prohibits its use for operating expenses, is encouraging. Earlier ideas from Mrs. Norton — with levying taxes on commuters chief among them — moved in the wrong direction. In fact, the General Accounting Office (GAO), in its critical report in May 2003, even ruled out increasing taxes on D.C. residents and businesses. It said federal alternatives are: 1) to “change federal procedures to expand the District’s tax base” — i.e., a commuter tax; or 2) to “provide additional financial support.”

The elimination of the federal payment came three years after the capital was declared cash-poor and Congress installed a control board and independent chief financial officer to run the city. Since then, city leaders have delivered balanced budgets, cut taxes and improved relations with the business community. (Business leaders are in the forefront of the push for a federal payment.) While red tape continues to strangle the school system and frighten middle-class families, the District is experiencing a re-population of young professionals and homeowners.

The GAO estimated that the structural imbalance ranges between $470,000 and $1 billion. The bill has bipartisan co-sponsorship around the region, including Republican Reps. Frank Wolf and Tom Davis of Virginia and Democratic Reps. Steny Hoyer and Elijah Cummings of Maryland. The D.C. Fair Federal Compensation Act is a fresh start toward developing a permanent solution to an issue not of the District’s making.

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