House panel OKs plan to put D.C.'s finances under outside board

March 30, 1995|By Los Angeles Times

WASHINGTON -- Taking the first major step toward staving off bankruptcy in the nation's capital, a House panel unanimously approved legislation yesterday that will sharply restrict home rule in the District of Columbia by entrusting the city's finances to a presidentially appointed control board.

With the House and the Senate expected to pass the measure soon, lawmakers who oversee the district said they expect the city to be under new financial management by the end of April.

At the same time, House Speaker Newt Gingrich of Georgia announced that other congressional committees soon will begin drafting legislation to turn the troubled capital into a laboratory for more far-reaching -- though as-yet untested -- GOP social and economic reforms.

These could include privatization of the city's crime-plagued school system and the creation of enterprise zones meant to lure businesses back into Washington's blighted inner city with special tax breaks -- both proposals strongly favored by Mr. Gingrich.

But other GOP lawmakers charged with working out the proposed reforms said that these were only some of a number of options under consideration and implied that there could be opposition, even among other Republicans, to some of the ideas.

The control board approved yesterday by the House Government Reform and Oversight Committee's District of Columbia subcommittee is patterned after the oversight boards that helped financially strapped cities such as New York and Philadelphia overcome their fiscal crises a few years ago.

But the five-member panel being created for the district, which faces a $722 million budget deficit and has already been declared insolvent by federal examiners, will have broader powers than either of those models.

Besides controlling virtually all facets of the district's $3.2 billion annual budget, the control board will be empowered to force thousands of municipal job cuts, regulate all borrowing by the city, and veto labor and service contracts.

Although Washington Mayor Marion S. Barry Jr. still would be allowed to draft the city's annual budget proposals, the control board would have sign-off authority and would be empowered to impose its own budget plans.

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