District of Columbia Mayor Sharon Pratt Kelly and city council chairman David Clarke last week introduced legislation to eliminate the city's $5 billion unfunded pension liability.

The liability, if left unattended, could grow to $6.1 billion by 2005 and absorb an escalating amount of the district's revenues in the next 10 years, posing a threat to the city's credit ratings, city officials said.

The legislation would eliminate the liability largely by increasing the federal government's annual contribution to the pension fund by 5% a year to more than $300 million and extending the federal contribution through 2035 from its current expiration in 2004.

The district currently pays about $308 million in pension benefits a year.

Clarke and Kelly said Congress would get stuck with the biggest share of the burden because it originally enacted the district's liberal pension provisions but provided no way to fund them when it turned responsibility over to the district.

Their assertion has been seconded by such independent bodies as the U.S. General Accounting Office, which says that the federal government is responsible for 75% of the unfunded liability, and the Rivlin Commission, which originally proposed the 5% increase in the federal contribution as part of its inquiry into D.C. finances.

Getting Congress to approve such a large increase is nevertheless expected to be difficult. James Tydings, head of the D.C. Retirement Board, said last week that he expects the deficit-minded Congress to balk at the proposal.

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