The nation's capital in crisis

The nation's capital is in a fiscal and political crisis. By 1995, the District of Columbia was effectively shut out of the capital markets, did not have the cash to pay its bills, faced a growing operating deficit, and had at least three agencies in receivership.(1) Now, on any given day, the tap water is likely to be announced as unfit to drink, 30 percent of the police vehicles are in the shop for repairs, 25 percent of the school buses are inoperable, DC firefighters say they can respond to no more than two two-alarm blazes at once (due to shortages of spare parts), and the property assessors are making up the rules as they go along, improperly valuing the tax base.(2) In April 1995, the U.S. Congress, beginning to come to grips with the situation, placed the fiscal control of the nation's capital in the hands of a presidentially appointed Control Board.(3) This paper reviews the fundamental facts of this crisis and attempts to set out the direction of the eventual solution. It assumes that the survival of the nation's capital is in the national interest and is a matter of national concern. Section one provides background to understand the present situation. The second section focuses on the fiscal crisis. The final section, building on the first two, tries to point the way ahead for the nation's capital to achieve structural financial balance.