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The D.C. Lobby

Private business group acknowledges active role in officialsí budget talks

(Published September 23, 2002)

By KATHRYN SINZINGER

Staff Writer

Representatives of a powerful private business group Ė often characterized as the Districtís "shadow government" Ė accompanied top city officials to a meeting at the White House last month to lobby for more federal financial help for the city government.

Facing a projected $323 million budget shortfall for fiscal 2003, largely due to reduced revenue estimates, the D.C. government has been scrambling in recent weeks to head off threatened congressional intervention to balance the cityís budget.

"Absent some federal assistance, the District is really going to be in the soup again," said Robert Liberatore, vice president of the Federal City Council, a charitable organization whose list of approximately 200 members reads like a Whoís Who of the Washington metropolitan areaís business elite. Members of the group are invited to join by a nominating committee headed by Donald Graham, chairman of the Washington Post Co., whose father founded the group in 1954. Since the early 1960s, the group also has invited powerful federal officials to be "honorary members."

Liberatore, who heads the Washington lobbying office of automaker Daimler/Chrysler, and Kenneth Sparks, the Federal City Councilís executive director, acknowledged the local business groupís leadership in a variety of public policy areas Ė including current political efforts to fix the cityís budget Ė during the annual fall luncheon of the League of Women Voters of the District of Columbia on Sept. 19.

"The people in the White House we have visited regularly as the Federal City Council Ė and about six weeks ago, with the mayor, chairman of the city council Linda Cropp and (D.C. Delegate) Eleanor Holmes Norton Ė seem at least willing to look at some annual formula," Liberatore said. He acknowledged that an annual "federal payment" to the District was stopped in 1997 as part of a deal his group helped broker that saw the federal government take control of several D.C. government functions, including the cityís local courts and its prison system.

Items on the table now, Liberatore said, include the federal government assuming much of the cost of maintaining the Districtís transportation infrastructure, which is heavily used by federal workers. Among these costs could be the cityís approximately $160 million annual share of payments to support the Metro system and its estimated $30 million a year for road maintenance. City leaders also have asked the Bush administration to increase the federal governmentís coverage of Medicaid costs from 70 to 75 percent, which Liberatore said would save the D.C. government about $60 million a year at current levels.

"Weíve given them a Chinese menu," Liberatore said of the options being discussed with the White House and congressional leaders. "Ultimately, there needs to be a political will to do it."

The Federal City Council last year commissioned a study, known as the McKinsey Report, that predicted the city is headed toward a $500 million deficit by 2005, failing some form of federal assistance to compensate for a flat local economy and burgeoning expenditures to meet Medicaid and special education needs of a highly distressed population. Sparks said the study was a joint project of his group and the Districtís independent chief financial officer, Natwar Ghandi.

"We started approaching the federal government about six months ago with the McKinsey Report in hand, saying a major crisis is coming," Liberatore said. "We made approaches to the White House and to the leaders in Congress who oversee the Districtís budget."

He identified White House Deputy Chief of Staff Josh Bolten and Reuben Jeffery, a member of the Presidentís Domestic Policy Council, as being among the presidential aides who have met with Federal City Council representatives. He said others from the Office of Management and Budget (OMB) and the administrationís intergovernmental affairs office also have been involved in the negotiations. On Capitol Hill, Liberatore said the Federal City Council is talking to the chairmen of the four congressional committees that have budget and oversight authority over the District Ė Rep. Joseph Knollenberg, R-Mich.; Rep. Connie Morella, R-Md.; Sen. Mary Landrieu, D-La.; and Sen. Richard Durbin, D-Ill.

Doxie McCoy, press secretary to D.C. Delegate Norton, said the McKinsey Report "wasnít presented to Congresswoman Norton as a joint project" with city officials. She said Norton believed that Federal City Council representatives were included in the August meeting at the White House because they were providing "the only independent study that corroborated the cityís standpoint that thereís a structural imbalance" in the D.C. budget that requires additional federal assistance.

Tony Bullock, a spokesman for Mayor Anthony A. Williams, acknowledged that the Federal City Council "did the McKinsey Report at our request." The mayor was unavailable for comment, on what Bullock termed a "working vacation" in Greece.

Bullock responded "Why not?" when asked if the presence of a private business groupís representatives at a White House meeting with local elected officials to discuss the D.C. budget was appropriate.

"In some instances, the Federal City Council helps to broker such meetings," he said. "The involvement of people like (former U.S. senator and former Federal City Council president) Bob Dole and (former OMB director) Frank Raines helps on occasion to get us into meetings with members of Congress and White House officials."

Bullock said he "was not saying" that federal officials would not meet with D.C. elected officials to discuss the cityís budget, which requires congressional approval, without the Federal City Councilís intervention.

D.C. City Council Chairman Cropp did not respond to a request for comment.

During the League of Women Voters luncheon, the Federal City Councilís Sparks repeatedly denied that his organization is involved in lobbying activities, which he acknowledged are restricted by Internal Revenue Service rules. Charitable organizations like the Federal City Council are prohibited from expending substantial resources, including volunteer labor, on efforts that "affect legislation," according to an IRS spokesman.

"We donít, as a general rule, lobby on behalf of business organizations," Sparks said during initial remarks in which he described the Federal City Council and its priorities, which included a 13-year effort to get the Districtís first convention center built.

During a question-and-answer session, League of Women Voters members questioned the Federal City Councilís failure to seek full voting rights in Congress for D.C. residents, a national priority for the League, and whether lack of D.C. residency among the business groupís membership might be responsible for its lack of interest in the issue.

"You did have to lobby for the convention center and for the control board," asserted one of the questioners. "If the Federal City Council would lobby for this, you know and I know it would make a big difference." The comment was met with applause.

"You do what you can do well as an organization," Sparks said. "There are a lot of people who are not supportive of that being a priority for the Federal City Council."

Sparks said "better than a third of our members are residents of the District of Columbia" and about two-thirds of the groupís members maintain business offices in the District. Sparks, who has headed the groupís staff for 32 years, lives in Springfield, Va. Liberatore noted during his remarks that he lives in the District.

Copyright 2002, The Common Denominator