WASHINGTON - District of Columbia Mayor-elect Marion Barry yesterday proposed $156.1 million in spending cuts and $97 million in revenue-raising measures that are designed to convince Wall Street that the district will be creditworthy under his watch.
"We will find out on Monday" whether the new proposals will persuade credit rating agencies to affirm the district's ratings and banks to provide credit enhancement for $250 million of short-term notes that the city plans to issue by month's end, Barry said at a news briefing.
If the district doesn't borrow the money, it probably will run out of cash this month, Barry said. He said he is not "at liberty" to talk about the district's strategy - including whether he would need to borrow from the U.S. Treasury - if the paper isn't sold.
Barry is scheduled to meet with the rating agencies and numerous banks on Monday in New York City accompanied by Mayor Sharon Pratt Kelly and district council chairman David Clarke.
What Wall Street will "want to know is, do you have a mayor who is prepared to face up to this problem" of the district's worst financial crisis since limited home rule was granted by Congress in 1973, Barry said.
"I am prepared to face up to it ... but I am not going to promise something if I can't do it," Barry said. Moreover, "I am not going to use the budget cuts as an excuse for inefficiency," he said, promising adequate trash pickup and police and fire protection.
The budget proposals are in addition to $140 million in congressionally mandated cuts that the district council is scheduled to vote on this month. "We still have a $100 million problem," Barry said.
Barry said he agrees with a recent assessment by the Kelly Administration that the district faces a budget shortfall of $431 million, including the $140 million in legislative cuts, and a $91 million cash shortfall in fiscal 1995, which began Oct. 1.
To raise revenue, the mayor-elect proposed restructuring debt to save $40 million, and either furloughs or renegotiation of pay increases for city workers to save $30 million. A proposed health care provider tax would raise $15 million and tax amnesty for delinquent taxpayers would raise an estimated $12 million, he said.
To reduce overspending, Barry proposed a total of $73 million in cuts in police, fire, corrections, human services, public hospital, public works, and other departments.
He proposed an additional $83.1 million in cost savings through changes in the public school system, wage adjustments, Medicaid restructuring, lease savings, agency consolidations, city council staff reduction, neighborhood committee funding cuts, phaseout of the district law school, and other initiatives.
As part of agency restructuring, Barry would create a finance department that would include the current offices of the deputy mayor for finance, budget, financial management, finance and revenue, and grants management.
Barry said he could not comment on whether the district is exposed to investment losses similar to Orange County, Calif.'s derivatives losses. He said he would consult with district Treasurer Maria Day-Marshall on the district's investment activity.