WASHINGTON - Mayor Sharon Pratt Kelly warned yesterday that the District of Columbia's credit rating could be hurt unless both the federal and city governments agree to pay more to eliminate the district's $5 billion unfunded pension liability.

"The unfunded pension liability is a major concern of the financial markets," Kelly told a House subcommittee. "It has been a continuing source of focus by the ... markets, and as we approach the date when Congress could potentially separate itself from the obligation" there could be "an adverse impact" on the district's rating, she said.

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