WASHINGTON -- District of Columbia Mayor Sharon Pratt Kelly has failed to adequately control spending, and penalties should be imposed on the agency heads who exceed appropriated budget allocations, the district' s chief auditor said yesterday.

Auditor Russell Smith cited as an example the department of public works, which spent $1.67 million more than its appropriation of about $247 million in fiscal 1993. Penalties ranging from reprimands to termination of agency heads should be adopted, he told the district council.

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