WASHINGTON -- Congress cleared the way for the District of Columbia to issue $332 million of bonds this month when the Senate late Friday approved a host of legislation requested by city officials.

The approved bonds would help the city finance its accumulated deficit.

The deficit bond proposal is the cornerstone of Mayor Sharon Pratt Dixon's plan to get city finances in order. In addition to retiring the accumulated deficit over a 12-year period, the bonds will eliminate the need for costly short-term borrowings.

District officials could not be reached for comment Monday, but have said in the past that the city will need money later this month.

The House had already approved the measure in July, and President Bush's signature is expected. Had Congress, which now is on a monthlong recess, not approved the deficit bond plan last week, the city would have had to resort to a tax and revenue anticipation note issue.

The district government, which under former Mayor Marion Barry Jr. was often at odds with the federal government, has found a more receptive audience on Capitol Hill with Mayor Dixon at the helm.

In addition to approving the deficit bond plan, the Senate also approved: a $700 million fiscal year 1992 appropriations bill for the city; legislation that would allow the mayor and city council to lay off city workers; and legislation that would provide the city with a predictable, annual payment from the federal government.

Congressional approval of the deficit bond and firing plans was necessary because the city lacked the necessary authority under its home rule charter.

The federal payment legislation was seen as necessary to provide the district with some predictability. The city receives an annual payment to compensate it for hosting the federal government. But in recent years the payment has stagnated at about $430 million, though Congress earlier in the year approved a $100 million emergency appropriation for the district.

Under the formula approach, the city will receive from the federal government a payment equal to 24% of city revenues. In 1993, the payment would be an estimated $652.5 million.

With the financing and reform legislation now in place, district officials now can turn their attention to the city's unfunded pension liability. The unfunded liability currently stands at about $5 billion and could nearly double by the year 2005.

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