In May 1992, 35,000 people gathered for the “Save Our Cities/Save Our Children” march on Washington. The demonstrators, led by 67 mayors including New York’s David Dinkins, demanded more federal aid to the nation’s urban centers. “A vast, peaceful march on Washington can be as powerful today as was the civil rights call to action by Martin Luther King in 1963,” Dinkins said.

But had the mayors who converged on Washington taken a close look at its municipal government, they might have left town more skeptical about the power of federal aid to solve urban problems. Washington, D.C., is an example of what happens when mayors like these get what they pray for. Because of its unique status as the nation’s capital, the District of Columbia receives more federal money per capita than any other jurisdiction in the country, and more than twice as much as the average state. For every dollar Washington residents pay in federal taxes, their city government gets $4.92 back. Washington’s municipal government is vast and well-funded, but generous federal support seems only to have created a bureaucracy that is not merely inefficient but downright Byzantine, sapping individual and social initiative in the process.

The District’s fiscal 1992 budget was $3.4 billion, an enormous sum for a city of fewer than 600,000 people. (The high municipal budget is due in part to the absence of a state government.) Federal aid accounted for $631 million of the District’s budget in 1992 and could reach $672 million in fiscal 1993.

The city of Washington employs a greater proportion of its residents than any other municipality in America. Nearly one in five workers in Washington is on the District payroll, making it, like New York City’s public sector, a larger employer than any local private-sector industry. The exact number of local government workers is open to question. Estimates published by the District government range from 40,966 to 55,900; the Washington Post recently reported the figure as 47,552. Mayor Sharon Pratt Kelly’s estimate is a much more modest 28,000, but she refuses to count local government employees not under her direct control. Whatever their numbers, district employees are generously paid. In 1990, a paralegal employed by the District earned an average of $34,367, or 22 percent more than for a comparable position in the Federal Government; a “salary and wage administrator” was paid $45,244, or 24 percent more.

In some ways, Washington appears to be a healthy city. Personal income is well above the national average, and the unemployment rate, 8.3 percent as of March 1993, is one of the lowest among major U.S. cities. According to the federal Department of Labor, between 1987 and 1991 (the most recent period for which statistics are available), the District of Columbia had an average unemployment rate of approximately 6 percent, versus 7 percent for New York City and 18 percent for the city of Detroit, which is demographically similar to Washington.

Yet Washington is also a city with deep problems. It has a high poverty rate and vast slums where entire blocks of city-owned apartment buildings sit, abandoned and crumbling. Many of these neighborhoods are in the southeastern quadrant of the District, not shown on most tourist maps. Little economic activity goes on in this part of town: of the 175 biggest private-sector employers in Washington, only four are located in the Southeast quadrant.

With the highest per capita homicide rate of any major U.S. city, Washington is sometimes called the “murder capital of the nation.” During the 1980s, the number of teenagers charged with homicide rose by more than 2,000 percent. In 1991, more murders were reported in Southeast Washington than in the entire city of San Francisco, which has a population more than ten times that of Southeast D.C. At any given time, fully 2 percent of the District’s residents arc behind bars.

These problems persist despite generous federal aid and the sheer size of the District government, which consists of more than eighty different agencies, offices, and commissions. The lesson, it seems clear, is that more federal dollars for bigger local governments is a dubious formula for solving America’s urban problems.

The D.C. Welfare State

Washington has perhaps the most elaborate system of social benefits in the nation. In addition to the standard list of federal programs-Medicaid, Food Stamps, AFDC, and so forth-the District provides a range of other services that extend literally from cradle to grave.

A poor child in the District, whether his parents work or not, is eligible for day care subsidized in part or in full by the local Department of Human Services. The D.C. government spends more than $22 million a year on child-care subsidies.

If his parents own a car, the child can ride in a city-owned safety seat, provided by the District’s Department of Public Works at the subsidized rate of $5.00 for nine months. If either of his parents is among the one in six Washingtonians who is on Medicaid, the seat is free.

When he gets to high school, the District resident can enroll in the summer youth program run by the Department of Employment Services. In 1992, the program recruited and employed more than 15,000 District residents age 14 through 21. “Everyone who registers gets a job,” boasts a spokesman for the program. “There’s no limit.” Ninety percent of the jobs are in government. The spokesman adds that 14- and 15-year-olds in the program don’t get real jobs-after all, “they don’t have the skills”-but they still receive a government salary.

If he decides to further his education, the young Washingtonian can enroll in the University of the District of Columbia. There he can choose from among 74 undergraduate programs, for an enrollment fee of only $415 per semester. “I could pay for a whole year of school by working at McDonald’s for a couple of weeks,” says a former UDC student. If even this modest cost is prohibitive, a student can join the 20 percent of his peers who receive an average of $1,900 a year in financial aid to pay for tuition, books, and other expenses.

Should the resident decide to rent an apartment in the city, he can apply to Washington’s Tenant Assistance Program, which provides rent subsidies averaging more than $500 a month. The FBI is investigating allegations that six employees of the District’s Department of Public and Assisted Housing gave away or sold subsidy vouchers to people who were ineligible and took bribes in exchange for moving applicants to the top of the waiting list.

Throughout his life, the Washington resident will be guaranteed full medical services, including dental care. The Department of Human Services operates 13 dental clinics throughout Washington. They are supposed to charge patients based on their ability to pay, but in practice anyone claiming destitution and a toothache can get free care. (When I called the Adams-Morgan clinic to ask how much a checkup cost, I was told, “Don’t worry too much about the money.”) The Commission on Mental Health Service will cater to the Washingtonian’s psychiatric needs, even offering “special mental health programs to meet the needs of multicultural groups, the homeless, and the hearing-impaired.”

If a District resident is wounded in a crime, he is eligible for up to $25,000 in compensation for lost wages. If he is murdered, the District will pay for his funeral and burial.

As of 1987, the District of Columbia spent $899 per capita on welfare, nearly three times as much as the nationwide average of $329 in combined state and local expenditures, according to a study by the Cato Institute’s William Niskanen. Basic welfare benefits, however, are not unusually generous. In fact, Niskanen found, the average welfare check is slightly lower in Washington than in the rest of the country. There are several reasons for the high rate of expenditures, including the District’s high poverty rate, lenient eligibility requirements, and enormous and costly welfare bureaucracy.

The Culture of Incompetence

The District’s welfare programs are administered by the Department of Human Services (DHS). With a budget of $1.2 billion in fiscal 1993, the department consumes nearly one-third of all District expenditures. But despite, or perhaps because of, all its resources, the DHS is inefficient. By 1990, for example, the Commission of Social Services, the DHS division that dispenses AFDC and Medicaid and oversees adoption and foster care, had lost 11 different lawsuits charging “inadequate or substandard service.” Many more suits were pending. A September 1992 audit found that the department had failed to investigate more than six hundred reported cases of child neglect within the legal time limit of thirty days.

A prime reason for such inefficiency is that the District’s mammoth bureaucracy makes it next to impossible to hold workers accountable. A request to fire an employee must be approved by no fewer than seven separate offices before it can be seriously considered. The District’s governmental structure, with relatively few officials who must face the voters, contributes further to this lack of accountability. The mayor, the 13-member D.C. Council, and the school board are the only city officials elected by popular vote. All others are appointed by the mayor and the council. Moreover, local government employees form a sizable voting bloc, giving the mayor and the council a strong incentive not to reduce their ranks.

As a result, inefficiency is endemic to D.C. government. The Washington Monthly reports that District libraries spend $9.50 in operating costs for every book circulated. Three-fourths of all library funds go to salaries; less than 10 percent is spent on books.

Even the fire department is inefficient. The department responds to all ambulance calls, whether they involve fire or not. And, according to James Fyfe, a professor at Temple University, District regulations require all calls to be answered by five firemen and two pieces of equipment, although nine out of ten could be handled by three men and one piece of equipment. The average fulltime D.C. firefighter works sixty 24-hour days a year, Fyfe says. “That includes time spent asleep.”

Crystal Smith, a former District employee who spoke on condition that her real name not be used, has an insider’s view of Washington’s government. At age 18, after graduating from high school in Maryland, she moved to the District to join the summer youth program. She worked in the Department of Public Works, where she sometimes rode with sewer repairmen as they drove to their assignments. “The guys who drove the trucks used to stop off at the liquor stores over lunch,” Smith recalls. “They’d get back in the trucks and drive them drunk.”

After a year, Smith got a job in the payroll office of the District’s Sewer Services Department, a division of the Department of Public Works, where she worked for four years. Again, she says, substance abuse was rampant. “A lot of people in my office did ’Love Boat’-PCP-at work. At lunch time they’d go and do their thing and come back and sit at their desks. They couldn’t do any work, so they’d give it to someone who could.”

“No one got fired,” Smith continues. “It’s hard to fire people; there’s a lot of paperwork.” Her supervisor had particular difficulty dealing with paperwork: “He could barely read or write,” she recalls.

But Smith says the worst problem in the Department of Public Works was disorganization. “There were piles and piles of papers in the office. Sometimes when I walked by one secretary’s desk, huge piles of papers would fall off and I’d have to pick them up.” Once, she says, she found a stack of workers’ compensation forms that had been misplaced in a bathroom. By 1992, Smith had become so frustrated that she left the government. “People in District government don’t take their jobs seriously,” she says.

But for thousands of local high school students, the District government is a source of lifelong job security. The average employee in the executive branch of the D.C. government makes $29,390 a year and has worked in government for 13 years-appealing statistics to graduating seniors facing tough competition in the private-sector job market. Washington’s public schools do little to dissuade their students from taking this route. All public high schools in the District offer a course called “Civil Service Prep.” The course does not teach students how to be competent public servants, according to Rodney McDaniel, a senior at Washington’s Dunbar High School. It merely “teaches you how to pass the civil service exam, in case you want to work in the government.”

Small Business Blues

Not surprisingly in a city whose biggest industry is the Federal Government, the business community in Washington is relatively small. The District’s largest private-sector employer is the Washington Post, which has about four thousand workers. The second- and third-largest are local utility companies; also on the top-ten list are McDonald’s and the Marriott hotel chain.

Despite Washington’s small private sector, the District government has more than two thousand regulators to police businesses-three times the average for U.S. cities of comparable size. These regulators sit on 167 boards and commissions, under the aegis of the Department of Consumer and Regulatory Affairs (DCRA), and regulate 110 categories of businesses.

Many of the DCRA’s boards are typical of any city, overseeing restaurants and hospitals, for example. Others are more exotic, such as the Advisory Committee on Acupuncture, the Bicycle Advisory Council, the Gas Station Advisory Board, and the Refrigeration and Air Conditioning Board. Some are ludicrously anachronistic. There is a Commission on Baseball, even though Washington has not had a Major League team since 1971. And there is a Nuclear Weapons Freeze Advisory Board-whose stated purpose, as of March 1993, is “to support a mutual U.S.-Soviet Union nuclear weapons freeze as a first step towards arms reduction.”

Almost all of these boards offer some form of compensation to those who sit on them. The D.C. Lottery and Charitable Games Control Board, for instance, meets 11 times a year and pays an annual salary of $18,000 to its chairman and $15,000 to each of its members. Boards like these are natural incubators for corruption and favoritism. In 1988, a former chairman of the Boxing and Wrestling Commission pled guilty to fraud charges stemming from several thousand dollars in falsified expenses she charged to the city while on a junket in San Francisco.

Worse than such corruption is the regulatory burden the DCRA imposes on the District’s small businesses. In 1992, Virginel Herndon opened a card and stationery shop called My Sentiments Exactly. Even before she opened her doors, however, Herndon had trouble getting an occupancy permit; the government lost her application. Then, within weeks of opening, Herndon ran afoul of the Department of Consumer and Regulatory Affairs. “They said we needed a license to sell food. But we only sell baskets with jelly beans or balloons with candy at the bottom.” She completed the paperwork for a permit, and found DCRA officials anxious to verify that her card store met the many regulations pertaining to food sales. “Inspectors come about once a month without warning,” she says. “These are the same people who check restaurants to see if they’re clean. They come to make sure we have the right kind of sink.” Her experiences with city government have soured Herndon on doing business in Washington. “It’s expensive to operate a business here. It’s cheaper in Maryland, but I didn’t know that until after I bought this place.”

If Herndon got too much attention from the DCRA’s regulators, Cecelia Park and her family didn’t get enough. In 1992, the immigrant family took out a bank loan to buy a liquor store. In early November, they submitted an application for a liquor license transfer to the District Alcoholic Beverage Commission. “The longest we thought we’d wait was until the end of January,” she says. When the transfer didn’t materialize, the Parks hired lawyer Roy Kaufman, who called the board to check on the status of the transfer. “Don’t call us,” Kaufman was told. “We can’t even expect to get to yours until mid-March.” In the meantime, the owners of the store were unable to sell it to the Parks, who had no income to cover the loan payments. Across the Potomac in Virginia, Kaufman says, it takes 15 days to transfer a liquor license.

The DCRA’s regulators also make life difficult for those in the construction business. Al Scaldaferri, a supervisor at Pollard Construction, says that fees for building permits can drive independent contractors out of town. “They cost a percentage of the price of the job you’re doing. For a $300,000 bid, you’ll pay the city $3,600. . . . The city checks building sites often to make sure you have a permit. If you don’t, they’ll call the Federal Marshals.” Even the application process is burdensome. “When you go down to get a permit, a man is going to be there for a minimum of eight hours, and then the city will hold the paperwork for a week, if not a month.” One small builder says he has just given up: “I don’t even bother to try to work in the District.”

The Continuing Crisis

The District’s massive government workforce and unfettered spending have caused a predictable fiscal crisis. In July 1992, Mayor Kelly estimated that the city’s budget deficit for fiscal 1993 would be $25 million. Six months later, with apparent surprise, she projected a $336 million shortfall-more than twice the deficit for the state of Maryland, which has eight times as many people as the District. In early 1993, independent analysts were projecting that the budget deficit would reach $1 billion by 1995.

Budget shortfalls are nothing new. For years the District has run low on cash annually during late spring. Since 1984, it has raised money by selling short-term “tax anticipation notes” on the bond market. These are usually offered in June and are based on projected revenues in September, when property taxes are collected. In 1991, the District borrowed $300 million against these bonds. Tax-anticipation bonds are a common device for raising municipal revenue; they contributed to New York City’s fiscal crisis in the 1970s. But their usefulness for Washington may have ended. The District has become such a serious credit risk that Standard and Poor’s may give Washington’s bonds a rating that requires them to be sold at prohibitively high interest.

Not surprisingly, among the remedies Mayor Kelly has proposed for the District’s budget problems are higher taxes and more federal money. When Congress prevented her from taxing commuters from nearby Virginia and Maryland, Kelly added several other tax hikes to her budget, including elevated property taxes and an increase in license fees for street vendors from $130 to $1,500. In February, President Clinton promised the District an additional $28 million in aid. But with the District planning to spend $60.7 million a year on office space alone, and with only 258,000 taxpayers out of a population of 589,000, these new revenues are unlikely to balance the books.

There are signs, however, that D.C. officials are recognizing that the only way to solve their fiscal problems is to cut the size of the municipal government. When Kelly ran for mayor in 1990, she promised to fire thousands of bureaucrats. She recently claimed to have reduced municipal employment by 1,619 jobs as of the end of 1992. But Brenda Box, the press secretary in the city administrator’s office, says that only 671 positions were eliminated between January 1991 and February 1993. About half of these positions were vacant when they were eliminated, according to Box, who says the mayor actually fired only 334 people. And union members were exempted from the firings.

In March 1993, the D.C. Council, in a 12-to-1 vote, approved a far more thorough restructuring of local government: a budget that would cut more than three thousand workers, including union members. Council members recognized that the high tax burden was driving people and businesses out of the District, which has lost some 12 percent of its population since 1980. “We were trying to send a very strong and clear message that we want people to stay in the District of Columbia,” said Councilwoman Linda Cropp. Even former Mayor Marion Barry, who won a seat on the council after serving a term in federal prison, said, “We can’t afford all these people we have on the payroll.” Barry, of course, had hired the great bulk of them.

These are encouraging signs in a city whose government is something of a political time capsule. Its racially polarized electorate and voting blocs of city employees are reminiscent of James Curley’s Boston in the early twentieth century; its political assumptions are an unreconstructed version of the Great Society. The generous flow of federal money has allowed the District’s leaders to avoid reckoning with the hard lesson of both eras-that a government expanding without limit is no more feasible than a perpetual motion machine. But municipal officials in Washington have been forced to take the first steps to restructure an enormous bureaucracy out of touch with the needs of citizens. The leaders of other cities should take note.


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