WASHINGTON -- The Council of the District of Columbia yesterday gave final approval to Mayor Sharon Pratt Dixon's proposal to issue $332 million of bonds to erase the city's accumulated deficit.
The vote, together with special language in the district's budget request, represents a two-track effort to garner final approval for the deficit bonds before August, when the city traditionally hits what officials call its annual "cash trough," or shortage.
Under the city's limited home rule charter, most legislation that is approved by the council and signed by the mayor heads to Capitol Hill.
The legislation then must lay over a specified time period, generally lasting 30 days, during which members of Congress decide whether to attempt to block the measure. If they do not vote it down, the legislation becomes law after completion of the review period.
Mindful that only the days when Congress actually conducts legislative business are counted for the review period -- meaning the layover could stretch over several months -- district officials also decided to include in their revised fiscal 1991 and proposed fiscal 1992 budget requests language that would authorize the city to issue the deficit-reduction bonds.
The two-track approach is intended to help the city get final authorization for the bonds in time to avert a costly short-term borrowing.
City officials have estimated, for example, that a $100 million issue of tax and revenue anticipation notes, it necessary, could cost the district $1.1 million to $1.2 million in interest and issuance costs.
The mayor's proposed 12-year bond issue is designed both to pay off the city's accumulated deficit and to eliminate the need for short-term note borrowings.
The accumulated deficit was discovered in the 1980 fiscal year, when the city for the first time reported financial results using generally accepted accounting principles. The report revealed an accumulated general fund operating deficit of $378 million.
Beginning in fiscal 1983, Congress began requiring the city to pare the deficit by $20 million annually, which the city was able to do until fiscal 1988 by running budget surpluses. In 1988, the city ran a $14 million deficit.
After posting a $118 million deficit in fiscal 1990, which ended Sept. 30, the accumulated deficit stood at $331.5 million.