Thursday, September 18, 2008



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Published: April 8, 1995

Congress today approved legislation to create a financial control board for the District of Columbia, a measure that would effectively end home rule for the city for at least eight years. President Clinton is expected to sign the bill into law shortly.

Like similar boards established to guide New York, Philadelphia and other cities through earlier fiscal crises, the five-member financial control panel, whose members are to be appointed by Mr. Clinton, would have vast authority over municipal spending, financial planning, borrowing, hiring and contracts.

It would also have authority to overrule decisions of Mayor Marion S. Barry Jr. and the City Council, a power that would give unelected officials the largest influence over the District since limited home rule was granted by Congress more than 20 years ago.

Further, the legislation all but kills the campaign of statehood for the District, a leading goal of the city's Congressional delegate, Eleanor Holmes Norton.

The board, the only authority that would be allowed to borrow money from the Federal Treasury on the District's behalf, is viewed by its creators in the House and the Senate as a means of salvation for a city facing insolvency by next month, a deficit that could reach $722 million in this year's budget of $3.2 billion and a continuing decline in municipal services.

"For the city, it is the ultimate way to start revitalizing itself," said Representative Thomas M. Davis 3d, a Virginia Republican whose House subcommittee drafted the legislation. "It has to become financially stable, and this is the first step."

After weeks of resisting demands by Congress to reduce the size of city government and add to the cuts he had already made in spending, Mayor Barry said that as a result of the legislation, he felt "excited and positive" about the District's future.

"We are going to have the best-run city government with the best citizen services in the nation," he said in a statement issued by his office.

The Mayor made no reference to the new reduction in his role other than to say, "My administration will respond vigorously and enthusiastically to this next period of home rule."

For Mr. Barry, the legislation provides political cover, since he can now justify any painful spending cuts by declaring that the board insists on them.

The Senate passed the bill on Thursday, adding several amendments to a version earlier passed by the House, which approved the Senate's changes today.

One of those amendments does away with the earlier bill's requirement that all board members be District of Columbia taxpayers. Instead, it requires only that they have either a "primary residence" or "a primary place of business" in the District.

That will presumably allow Mr. Clinton, in appointing the board, to consider executives or Government officials who work in Washington but live in Maryland or Virginia.

In essence, the control board will oversee and approve all fiscal operations of the city government, the growth of which during Mr. Barry's previous terms as Mayor, from 1978 through 1990, played a leading role in giving rise to the current crisis. In addition, the board will have the power to help city officials develop strategies to improve services, streamline the government and restore a balancing of the budget.

The legislation requires that the budget be balanced within four years and remain balanced for another four years, after which the board would be disbanded.

The bill provides not only for the creation of the board but also for a new chief financial officer and, to insure integrity, an inspector general. While Mr. Barry would have the right to appoint these two officials, the board's approval of the appointments would be required. Further, only the board would have the authority to dismiss the two officers, who as a result would essentially have more power than the Mayor.

The board would recommend long-term solutions to keeping the city financially stable, like creating enterprise zones to attract new business, eliminating Federal taxes for city residents as a way to reverse middle-class flight and returning the operation of the expensive municipal prison system to the Federal Government.

The dilution of his authority was not the only blow the Mayor suffered this week. The United States Attorney's office said it was investigating accusations by a former housekeeper of his that Mr. Barry's wife, Cora Masters Barry, was involved in a money-laundering scheme during his election campaign last year.

The housekeeper, Barbara Mouring, who worked eight months for the Barrys, has told the authorities that Mrs. Barry arranged for Mrs. Mouring's 17-year-old son to receive a $2,000 check in October from a political action committee that supported Mr. Barry. Mrs. Mouring said that she and her son had been told to cash the check and give the money to Mrs. Barry's brother, Walter Masters, and that they had done so.

The housekeeper also contended that two officers on Mr. Barry's security detail had intimidated her in trying to get her to recant. Today the District Police Chief, Fred Thomas, said the two officers had been reassigned.

Mrs. Barry has denied the accusations, and Mr. Barry has said that he welcomes the Federal investigation and that his wife has done nothing wrong.



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