WASHINGTON -- Despite a setback in Congress, District of Columbia officials are expressing optimism that they will receive authority before August to issue bonds designed to retire the city's accumulated deficit.

The House of Representatives in late June approved a $700 million appropriations bill for the city's fiscal year 1992 operations, but it deferred action on provisions that would have authorized the deficit bond issue.

The provisions were removed at the request of the House District of Columbia Committee, whose members felt the authorization should be processed through their panel because it requires a change in the city's home rule charter.

City officials and staff members on Capitol Hill last week said Rep. Ronald V. Dellums, D-Calif., the chairman of the district committee, has offered assurances that he will "process this change and put it on a fast track."

Taking Rep. Dellums at his word, city officials said the bond issue could be authorized in time to avoid the need for a tax and revenue anticipation note issue, probably in August.

The bond issue was proposed by Mayor Sharon Pratt Dixon as a means of eliminating both the city's $332 million accumulated deficit over 12 years and its need for costly short-term borrowings.

City officials had launched a two-track effort to secure authorization for the deficit bonds. In line with that effort, city officials sought approval for the bonds in their annual congressional appropriations package.

Taking another track, the Council of the District of Columbia also approved legislation that would authorize the bond sale. But because the city's powers are limited -- the U.S. Constitution vests Congress with "exclusive legislation" over the district -- all legislation approved by the council must undergo congressional review.

The legislation must undergo a review, or "layover" period, generally lasting 30 days, during which members of Congress decide whether to attempt a block of the measure. If they do not vote it down, the legislation becomes law after completion of the review period.

However, because the review period consists only of days when Congress conducts legislative business, the layover can stretch over several months. Consequently, city officials believed that the deficit bond plan would receive authorization sooner if it was included in the appropriation bill.

Though the deficit bond plan ultimately was stripped from the appropriations bill, officials said the move could prove to be a blessing in disguise, since the bill includes language that would allow the city to use locally generated revenues to pay for abortions. Similar language has prompted President Bush to veto the last two district appropriations bills, delaying enactment.

If Congress moves speedily on the deficit bond legislation, approval may come before the President and Congress finish their abortion funding squabble, city officials noted.

The city discovered its accumulated deficit in the 1980 fiscal year, when the district for the first time reported its financial results using generally accepted accounting principles. The report revealed an accumulated general fund operating deficit of $378 million.

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