WASHINGTON -- Congress appears likely to approve Mayor Sharon Pratt Dixon's proposal for issuing $332 million of bonds to erase the District of Columbia's accumulated deficit, but city officials are still worried.
The question is whether legislators will act on the city's appropriations bill, which contains the proposal, in time to avoid a costly short-term borrowing. "We've got some serious concerns about that," an official said yesterday.
Delays are possible because of the cumbersome nature of the legislative process on Capitol Hill and because of a potential showdown over the issue of abortion funding, the officials said.
The city's last two budgets were both held hostage to the abortion issue. Lawmakers included language in the district's appropriation that would allow the city to use locally generated money to fund abortions for poor women, and each time the measures were vetoed by President Bush.
Delays in approval could prove costly to the district government. As part of her fiscal year 1992 budget proposal, Mayor Dixon called for the issuance of $332 million of bonds in August, traditionally a period when the city faces a cash shortage.
If the city is unable to issue the bonds, however, it may have to re- sort to a tax and reveue anticipation note issuance. Robert Pohlman, the city's deputy mayor for finance, said a $100 million issue of tax and revenue anticipation notes, if necessary, could cost the city $1.1 million to $1.2 million in interest and issuance costs.
The mayor's proposed 12-year bond issue is designed to pay off the city's accumulated deficit and at the same time eliminate the need for short-term note borrowings.
In an analysis presented to the Council of the District of Columbia late last month, Mr. Pohlman said the use of deficit reduction bonds rather than annual short-term borrowings could save the city millions of dollars even if the city were to run $20 million surpluses each of those years. He estimated that the city could save $40 million over the life of the bonds, assuming short-term interest rates of 6%.
Mr. Pohlman also told the council the plan would reduce the risk of default or the unavailability of credit by eliminating short-term borrowings; eliminate "onerous" escrow requirements attached to Tran issues; and help the city position itself for a bond rating upgrade. He said the time was particularly good to issue the deficit bonds because the city could lock in relatively low long-term rates.
The council has given the deficit bond proposal tentative approval and is slated to take a final vote June 18. But because the city's limited home rule charter does not give it full autonomy, the district could not then go out and issue the bonds.
Normally, legislation approved by the council and signed by the mayor heads to Capitol Hill. The legislation must lay over a specified time period, usually 30 legislative days, during which members decide whether to try to block the measure. If they do not vote it down, the legislation becomes law after completion of the layover period.
But only days when Congress is actually conducting legislative business are counted for the layover period, meaning it can stretch over several months.
In an attempt to bypass that byzantine process and avoid potential delays, city officials incorporated language into their revised fiscal 1991 and their fiscal 1992 budget request that would authorize the city to issue the deficit reduction bonds.
But the measures are moving at a snail's pace. The House Appropriations Committee's District of Columbia subcommittee has just completed hearings on the measures, but no vote has been scheduled. And on the Senate side, no hearings have even been scheduled.
"The timing element on the Hill is the problem," Mr. Pohlman said. "It's not that Congress has very often turned down what we want to do. It's the delay, and when it's exacerbated with vetoes, it really becomes a factor in our financial management."