WASHINGTON – Rep. Constance Morella said she wants to foster “regional cooperation” at upcoming hearings on proposals to revitalize the nation’s capital.
But Morella, a Bethesda Republican and the new vice chairwoman of a House subcommittee that oversees the District, said she has serious concerns with D.C. Del. Eleanor Holmes Norton’s key revitalization plan: to give tax breaks to city residents.
“The problem with Eleanor’s plan is the price tag,” Morella said.
And Morella is not the only area congressman raising a red flag.
Rep. James Moran Jr., an Alexandria Democrat who sits on a funding subcommittee for the District, said he opposes Norton’s plan. It proposes a 15 percent, across-the-board, federal income tax for city residents, which Moran said the city can’t afford.
But Moran, also, is hoping for productive discussions, said Moran spokesman Jim McIntyre.
President Clinton, who has proposed a plan of his own, said during his Tuesday press conference that he agreed with Norton about the need for tax relief but wanted to see specifics.
Norton, a Democrat, said Tuesday that only a “dramatic and focused incentive” would slow the exodus of residents and businesses from the District, a problem that is shrinking the tax base to a dangerous low.
The city, with a population down to what it was in 1933, may lose three times as many residents in the 1990s as it did in the 1980s, Norton said. The business sector lost 1,800 businesses between 1990 and 1995.
Norton’s bill, which will be introduced next week, would allow residents to claim larger federal tax deductions on income made in the District. After all deductions are made, District residents would pay the 15 percent federal income tax rate. The maximum income tax rate for 1996 nationally was 39.6 percent.
In order to be considered a resident under the plan, a person must live in the District for more than half the year.
The bill would also lower business taxes and eliminate capital gains taxes.
The D.C. City Council passed legislation last year that would prohibit increases in city sales, property and income taxes. But these changes can’t take effect unless Norton’s bill is enacted.
Although opposed to Norton’s plan as a whole, Morella said she liked the idea of eliminating the capital gains tax.
And, she said, she wants to enact some incentives to attract people to the District.
Donna Brazile, Norton’s chief of staff, said there is a natural tension between the interests of the District and the interests of nearby suburbs. But there is no tension between Norton and Morella, she said.
The two are “personal friends,” Brazile said.
Morella said she and Norton have a history of cooperation in spite of their differences. And, she said, her district’s proximity to the capital is a benefit.
“Those from the region will care more,” Morella said. Her constituents depend on the economic health of the city, she said.
Morella requested her new post after an overwhelming number of reports of D.C. government mismanagement, which affects her constituents, she said.
“You cannot stop issues at boundary lines,” she said.
Her subcommittee, on the Government Reform and Oversight Committee, will begin hearings next week on the plans proposed by Norton and Clinton, as well as another proposed by the Brookings Institution, Morella said.
The Clinton plan would require the federal government to invest $3.9 billion in the city over five years. The federal government would take responsibility for operating prisons, maintaining major roads and bridges and collecting taxes. It also would take responsibility for the pension liability for some city employees.
In exchange, the District would give up the $660 million annual payment made by the federal government. The Brookings plan would eliminate some business taxes, cut property and income taxes and increase federal aid to the District. -30-