Copyright 1999 Federal News Service, Inc.
Federal News Service
JUNE 23, 1999, WEDNESDAY
SECTION: IN THE NEWS
LENGTH:
2893 words
HEADLINE: PREPARED TESTIMONY OF
MAYOR
ANTHONY A. WILLIAMS
BEFORE THE HOUSE COMMITTEE ON
APPROPRIATIONS
SUBCOMMITTEE ON THE DISTRICT OF COLUMBIA
SUBJECT -
DISTRICT OF COLUMBIA FY 2000 BUDGET
BODY:
Chairman Istook, Congressman Moran and Members of the Committee, thank
you for the opportunity to testify before you today. It is indeed an honor and a
privilege to share with the Committee the District of Columbia's fiscal year
2000 budget. This is a budget that we can be proud of on a number of different
levels. This budget reflects all of the strengths of democracy forged out of
intense and thorough negotiations between the Office of the Mayor, the City
Council and the Control Board. This budget is also a product, as is often the
case in this country, of a political movement that resulted in higher
expectations of the District's elected officials. I have tried to live up to
those expectations in the Executive Branch. In the first five months we have
made steady and substantial progress toward a government that works for
everyone.
I am proud of the progress we have made in the past five months,
and I am committed to doing even more. But ultimately, the success of our
efforts will depend not on short-term fixes, but on long-term planning and
strategic investments in our infrastructure. Over the last few years, largely
through the work we did in the CFO's Office, we have stopped the financial
bleeding and stabilized the revenue stream. Through cooperation and hard work we
have put the District temporarily on sound footing. However the fiscal
health of the District needs to be pointed in a long-term
corrective position. The people of the District deserve innovative initiatives
reflecting the results of the election.
The time has come for us to make the
crucial decisions that will put us in a competitive position for the next
millennium -- decisions about what the government can and cannot do, should and
should not do. Decisions that will determine, to a large extent, whether our
city ultimately succeeds or fails.
This budget takes those tough decisions
head on. It will put the District on a path to a stable future, ensuring for
years to come that Washington will be a source of pride for all Americans. Most
importantly, it strengthens our investment in critical areas such as supporting
children, improving government services, rebuilding the human service network,
and expanding the economy.
At this point, I would like to briefly discuss
how the budget affects each of these priority areas, and submit my full
testimony for the record.
As Mayor, I am acutely aware that our government
has a moral obligation to do more for children. The Annie E. Casey Foundation
recently released a report that measured the well being of children. The
District rated worst in the Nation in every category but one, from infant
mortality to the rate of teenage births to statistics chronicling child poverty.
Clearly, we have serious work to do.
Education. In FY 2000, the District of
Columbia Public Schools will begin using the per-pupil funding formula as
described in the School Reform Act of 1995. The use of this formula provides
$526 million, an increase of $67 million and state education costs of $74
million over FY 1999. Regarding higher education, $500,000 is provided for FY
2000 to establish the Institute for Public Safety and Justice in the University
of the District of Columbia.
University of the District of Columbia. UDC's
campus desperately needs an overhaul costing in excess of $125 million. The
proposed move of the University across the river unfortunately diverted the
attention away from the necessary review of its mission. The question is do we
go down the same track allowing it to continue unfocussed or invest so that it
survives and thrives. Two weeks ago, the New York Times has run a series of
stories on the report, by former Yale University President Benno Schmidt, that
recommended the dramatic overhaul of the CUNY system. Once a jewel in the crown
of a public higher education system, the University has fallen off track. The
public officials in charge of its oversight realized that in its present form it
was failing the needs of its constituents. Their willingness to take on
entrenched interests and refocus their mission to save the institution should be
a model for UDC.
The children and youth investment partnership will
distribute $15 million for out-of school programs. This approach allows services
to be competed for by community organizations and government agencies. This is
part of a new paradigm of public-private partnerships that is a core principle
of my administration.
Some people have questioned whether it makes sense to
provide these services through community organizations rather than government
agencies. While I believe that our agencies have a critical role to play in the
lives of our children, we need to make use of the energies and expertise of
service providers in the community. I feel strongly that these programs should
be community based designed by people familiar with particular neighborhood
needs, and implemented by performance-driven, efficient non-profit
organizations.
In addition to the $15 million, I have included more than
$21.3 million for new and expanded District programs. These funds support child
care, foster care programs, youth employment and internship programs, resources
for public libraries, and services for youth in the juvenile justice system.
Investments in foster care and juvenile justice will help better serve children
and meet mandated court requirements and specific performance criteria.
A
second focus of the consensus budget process was to make our government more
efficient and to ensure our ability to deliver the basic government services our
residents deserve and demand. The following investments are part of our proposed
budget.
Managed competition. The FY 2000 budget includes $400,000 for the
development of a managed competition program in the District. These initiatives
are projected to produce almost $45 million in savings over the course of the
financial plan. Because the goal is to improve services through competition,
rather than simply outsourcing or cutting, the current workforce can participate
in the bidding process.
Workforce investment strategies. Beginning in FY
2000, all non-union District employees will receive a 6 percent base pay
increase, which will take effect at the beginning of the third quarter. This
increase narrows the pay disparity between the union and non-union workforce. On
the same timeline as the non-union pay increase, the financial plan includes
over $1 million to provide optical and dental benefits to the nonunion
workforce. These initiatives reflect the efforts of the District's leadership to
reduce the growing disparity between union and nonunion pay schedules.
Savings from improved operations. The District has begun a new era of
accountability and reform, and as such has committed to producing dramatic
improvements in service delivery and in cost efficiency. The efficiencies
achieved are projected to produce over $40 million in savings in FY 2000,
growing to $80 million by FY 2003. To maintain a fiscally responsible and
conservative approach, however, the District is committed to maintaining a
reserve of the same amount in case actual savings fall short of these targets.
Management Report Part of our overall effort to improve government
services is a performance management system that will hold our agencies
accountable to measurable, high standards of efficiency and effectiveness. In
accordance with the Federal Payment Reauthorization Act of 1994 and the
Government Managers Accountability Act of 1995, the District must develop a
performance accountability plan addressing every agency and activity in our
government that uses public funds. The District of Columbia Management Report,
which we provided as part of our proposed budget, sets the performance baseline
for FY 2000 and will be supplemented by regular interim reports throughout the
fiscal year. This is a valuable management tool that will help our government
work more effectively.A third focus of this budget is rebuilding the human
services network. During the financial crisis, and because of many years of
mismanagement and neglect, many of our basic human services have been slashed.
Nearly a third of our human service network has been allowed to lapse into
receivership. The District currently has a 17 percent uninsured
rate and a number of other pressing human services needs. To address these
issues, the budget includes investments in the following areas.
Health Care. The FY 2000 includes local funding increases
for a number of health care investments within the Department
of Health over FY 1999 levels. Investments include increases
for Medicaid, for community based substance abuse services, expansion of
HIV/AIDS services, staff for STD and TB clinics, and funding for a Women's
Health Initiative. In addition to these increases, the FY 2000
budget calls for shifts of $6 million in Medicaid Disproportionate Share Funds
to provide health insurance to 2,500 childless adults and 500
children District residents with incomes under 200 percent of the federal
poverty level. The City Council enacted part of my initial budget proposal to
expand health care to those who are uninsured
and underinsured; however we are only part of the way there. I call on the
Council to pass the second part of my health care plan as part
of the FY 2001 to build on this year's progress.
Greater Southeast One
example of our commitment to both reinvent the way health
services are delivered while maintaining quality care for our most needy
residents is the ongoing effort to save Greater Southeast Hospital. Greater
Southeast is experiencing grave financial troubles that endanger the
health care options of our residents living east of the river.
Under an agreement reached between the District Government, Greater Southeast
Hospital will seek reorganization protection. The District Government has agreed
to extend a loan, loan guarantee, or advance to the Hospital to help them
operate for the next 90 days, while they reorganize and assess--in conjunction
with District officials--how to best meet the needs of residents east of the
River.
Welfare, childcare, and homelessness. The FY 2000 proposed budget
contains an increase of $13 million over FY 1999 for childcare subsidies. This
increased funding supports subsidized child care for approximately 2,000 more
children and increased childcare subsidy rates. The FY 2000 budget includes an
increase of $5.2 million in local funds for homeless services, which includes
$200,000 for homeless shelter maintenance. The FY 2000 proposed budget also
includes $140.3 million for the Temporary Aid to Needy Families (TANF) program.
This budget supports the placement of 8,000 TANF recipients into work
activities.
The fourth focus of the FY 2000 budget is on expanding the
economy. The continued success of our financial recovery depends in large part
on our ability to maintain a robust economy, and create new opportunities for
job growth and small business development. Our strategy is based on fiscal
responsibility and a commitment to revitalization of our neighborhoods and
communities. The following proposals are included in the FY 2000 budget.
Neighborhood revitalization. The FY 2000 budget invests resources in
neighborhood revitalization, which is a multi-agency initiative designed to
improve the District's capacity to address a variety of economic development
issues. The policy invests needed resources in neighborhood initiatives to
ensure that streets and alleys are clean and vacant buildings are stabilized or
demolished. Specifically, the Department of Public Works' (DPW) FY 2000 proposed
operating budget includes an increase of $2.5 million to finance equipment needs
in the FY 2000 Master Lease Program. This funding will be used to ensure the
timely replacement of equipment within critical service areas including Solid
Waste Management, Division of Parking Services, Division of Transportation, and
Fleet Management Division.
Tax Cuts. District leaders have agreed to the
largest tax reduction in the history of our city, one which I believe will
stimulate job growth and bring the District's tax code closer in line with
surrounding jurisdictions. Combined with critical service improvements and
better education, these tax cuts will help reverse the outflow of residents and
businesses from our city. I am particularly proud of the targeted tax relief for
businesses, which will have maximum economic benefit for our city. Even though
returning surplus tax revenue to workers and families is a worthy goal---one
that I fully support--we must continue to safeguard our recovery. We must be
vigilant against the temptation to overpromise on tax cuts while underdelivering
on services. As we move forward, I will continue to insist on sound financial
planning, increased efficiency, and fiscal prudence.
Debt Restructuring. The
FY 2000 appropriation request for Repayment of Loans and Interest is
$328,417,000, which is a decrease of $53,753,000 from the FY 1999 approved
budget. The substantial decrease in debt service from FY 1999 to FY 2000 is
attributable to debt restructuring. This entails refunding certain outstanding
bonds by issuing new bonds that mature at later dates. This has the effect of
reducing the District's debt service expenditures over the next several years
and increasing such expenditures in future years. However, because the
District's existing debt service is heavily front-loaded--i.e., debt service is
relatively high over the next several years and then declines sharply in
subsequent years--restructuring is a prudent option (for further discussion of
debt restructuring, see the Financial Strategy section). The budget includes the
projected debt service on bonds expected to be issued in FY 2000 to finance
capital expenditures.
Pre-payment of debt service. To best capitalize on
current economic growth,.the District has planned to pre-pay $30 million in debt
service during FY 1999. The benefit of this transaction will accrue in FY 2002
and FY 2003, thereby helping to protect against potential economic downturns in
the future.
Metro. In addition, the FY 2000 budget for the Washington Metro
Area Transit Authority includes $2.6 million in additional funding to increase
bus service to the opening Metrorail segments, relieve Metrobus overcrowding,
implement a small bus service plan, and to plan and develop the proposed New
York Avenue Metrorail station.
As a final point, it is important for the
Committee to note that all of the investments that I've discussed were made
despite a great burden placed on the District. The Congress has required that
the District budget a $150 million reserve in each fiscal year, beginning in FY
2000. The District has complied with this requirement, however, I strongly
believe that the provision for the reserve is an excessive requirement for three
reasons:
First, it is unnecessary due to the current financial position of
the District government. Based on the financial results of Fiscal Year 1998 and
preliminary Fiscal Year 1999 revenue and expenditures projections, the District
will have a positive fund balance of more than $300 million at the end of Fiscal
Year 1999. This is over 6 percent of general fund expenditures, which is higher
than the norm of 5 percent for a positive fund balance.
Second, it would
prevent needed investments to improve service delivery in the District. Setting
aside an additional $150 million reserve would severely limit the funds
available for critical initiatives such as health care,
education, and economic development.
Third, it is inconsistent with budget
stabilization practices in other jurisdictions. Many states establish a 'rainy
day' fund and use prior year revenues as a cushion against potential economic
downturns. The District has projected a fund balance that can be used as a
reserve without the need to contribute additional resources. Even though it is
well intentioned, setting aside a $150 million reserve is not the best strategy
for putting the District on stable footing for the 21st Century. I am proposing
strategic investments to train and prepare our workforce, repair our crumbling
schools, and secure our infrastructure. We must address the problems that are
steadily eroding the long-term viability of our city.
At its core, this is a
budget about ideas. Efficient ideas like using managed competition to improve
services. Innovative ideas like partnering with community organizations to
provide programming for children, rather that relying on government
bureaucracies. Fair and just ideas like putting patients first and expanding
health insurance to the working poor. This budget reflects the
commitment of the elected leaders of the District of Columbia to chart a new
course for our city. It demonstrates our ability to work together to develop a
budget that is fiscally responsible, and makes strategic investments in our
future. It is not a perfect budget, but it is a sturdy platform for us to stand
upon as we rebuild the District into the great city it can and must become.
I look forward to working with you, Mr. Chairman, and the other members of
the Committee, to pass this budget as quickly as possible. At this time, I would
be happy to answer any questions the Committee may have.
Thank you.
END
LOAD-DATE: June 25, 1999 
