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Congress reserves judgment

on city plans to spend reserve funds

(Published May 17, 1999)

By REBECCA CHARRY

Staff Writer

The $150 million "rainy day fund" Congress required the District to set aside may not be so required after all.

According to the consensus budget passed by city council May 11, D.C. officials are set to spend more than three quarters of it.

And members of Congress contacted for reaction appeared reluctant to criticize city officialsí spending plans.

The draft budget, which includes a historic $291 million in tax cuts, also calls for spending more than $90 million of the reserve fund ó including $18 million for public schools, $16 million for pay raises for non-union employees, $15 million for childrenís programs and $11.5 million for public works projects.

D.C. Mayor Anthony A. Williams seems optimistic about gaining federal approval.

"The law (requiring the reserve fund) is murky and has some inconsistencies," Williams said. "My general belief is that, yes," spending the reserve would be allowed.

Rep. Ernest J. Istook, R-Okla., chair of the House appropriations subcommittee on the District, declined to comment on the reserve spending. In a prepared statement on the budget, he said, "Iíll continue to remind everyone that tax cuts require them to control spending... and to keep a reserve for security."

Last yearís D.C. appropriations bill required city leaders to set the money aside as a reserve, following the cityís deep financial crisis and the institution of an appointed control board in 1997. But hopes that the District could escape the requirement led the mayor to submit two versions of his first city budget, one setting aside the $150 million and the other spending it.

Williams formally asked Istook to relieve the District of the reserve requirement at a hearing in April. Istook has not made a formal response to that request, said his spokesman Micah Swafford.

Other congressional leaders also are taking a wait-and-see attitude.

A spokesman for Rep. Thomas M. Davis III, R-Va., chair of the House oversight subcommittee on the District, said only that Davis has confidence in Williamsí financial skills and deferred to Istook on the issue of the reserve fund.

Williams said he, the control board and the council agreed to spend reserve funds only on one-time, non-recurring expenses, such as $1 million for the mayorís office to cover costs of assuming the duties of the chief management officer.

The legislation requiring the reserve also includes language allowing the control board and the chief financial officer to create guidelines for spending the money. Those provisions are being put in place, although they have not formally been adopted, said control board chairman Alice M. Rivlin.

Other reserve-spending line items include $4.1 million for the office of the city administrator (a position which has yet to be permanently filled), $4.3 million for human development, $3.7 million for the Department of Employment Services, $5.8 million for the Department of Consumer and Regulatory Affairs, $3 million for the University of the District of Columbia, $1.2 million for city libraries, and $850,000 for the Department of Corrections.

A source in the city budget office said exactly what some of those lump sums will be spent on have not yet been determined.

Copyright 1999, The Common Denominator