Bailing Out Washington

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WASHINGTON, D.C.: The Clinton Administration has proposed that the federal government radically alter its relationship with the District of Columbia by assuming responsibility for tax collection, prisons, courts and roads as part of a multi-million dollar effort to rescue the District from its longstanding financial woes. TIME’s Ann Blackman notes that the idea has energized Washington residents who had begun to think that the District could not manage to solve its intractable problems: “There’s a chance to make the city into the gem it should be, instead of the dump it is now. The potholes from last year have yet to be repaired, and are now filling up with this year’s snow.” If Congress agrees, the resulting law effectively would reverse the 1974 agreement which granted the District control over key aspects of city financial and administrative management, the Washington Post reported Tuesday. While the District would benefit from extensive new federal assistance, it would no longer have to submit its annual budgets to Congress. Under the Clinton proposal, the federal government would shell out $773 million in funds to city coffers over the next five years, increasing the national budget deficit by some $339 million. While the Internal Revenue Service would take over income tax collection and the Justice Department would supervise the District's courts and prisons, a $1.4 billion fund would be set up by federal agencies to cover road and bridge repair. At the same time, the federal government would agree to cover the District's $5 billion liability to a municipal pension fund, pay a greater portion of its annual Medicaid bills, and create an incentive plan to stimulate investment in downtown and poor neighborhoods. Despite appearances of a hefty hand-out, the plan will come with strict budgetary strings attached, cautioned White House spokesman Mike McCurry, who touted the deal as a "plan of tough love." The District, for example, would no longer receive its annual $660 million federal stipend, and would be required to balance its multi-billion dollar budget by 1998, one year earlier than presently required by Congress. Mayor Marion Barry, who has repeatedly clamored for additional federal assistance, greeted the plan as one that could “help us become America’s First City.”