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House panel approves D.C. bailout board

WASHINGTON, March 29 -- A House subcommittee approved legislation Wednesday to create a five-person authority to assume broad control over the District of Columbia's finances, a move the chairman said will help polish off a deep debt that has tarnished Washington's image. It is expected to be voted on by the full Government Reform and Oversight Committee on Thursday. Subcommittee Chairman Rep. Thomas Davis, R-Va., said Washington is a national 'symbol that has been tarnished' by financial problems, including predictions that the city will be broke by May without an infusion of funds. 'It's needs to be polished by local government, the authority and Congress together,' Davis said, adding that the city could no longer struggle 'paycheck to paycheck.' Under the bill, President Clinton would select five citizens, subject to Congressional approval, to form the Financial Control Authority. The authority would control the city's finances and have the power to reject or modify budgets plans of Mayor Marion Barry and the City Council. Overseeing much of the financial recovery would be a chief financial officer nominated by Barry and approved by the authority. The authority would be suspended after the city has managed to balance its budget for four consecutive years and has repaid funds borrowed with the authority's assistance. City Council Chairman David Clarke was disappointed with the measure, especially after he said an agreement had been struck the previous evening to better balance those powers divided among Barry and the council. In particular, Clarke was angry about the lack of language requiring the chief financial officer to report to the council as well as the mayor, a move he said cuts the council out of important decisions.

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Clarke said it was 'amazing Congress would go and empower a mayor as much as it has' and also said he was displeased with language that cuts off funding if the city bucks the authority. Barry, other city officials and the district's congressional delegate, Eleanor Holmes Norton, also voiced some concern over the 146- page proposal. But Norton described it as a desperate remedy for a desperate problem. House Speaker Newt Gingrich said the bill inserts a necessary buffer between the debt-ridden city and the U.S. Treasury, dismissing assertions the board takes away too much power district officials over their own affairs. 'Where other cities report to a state government, here the U.S. Treasury is open to the District under a 1934 statute that says the District can show up on any morning and the treasury gives them money to cover their debts,' he said. 'That is a remarkable level of vulnerability for the American taxpayer. Controls are appropriate to protect the taxpayer, who is paying the bills,' he said.

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