The assignment had the following objectives: (1) to review recent economic developments in the District of

Columbia

and

to discuss future economic prospects, (2)

to assess the main sources of revenue and to examine the

outlook for new sources, (3) to discuss the bases of the

regular

Federal payment to the District of Columbia and

the likelihood of its continuation, and (4)

to determine how statehood might alter access to funding under Federal programs applicable to states, cities, or

curtailing

a

Federal employment

has
had

moderating the District economy. At the same time, the

sector

profile. For example, between May, 1980, and May, 1986, employment in services increased by 44,300 jobs, while government employment declined by 18,600 jobs, and all

state of Maryland has generally been keeping pace with the nation, while Virginia has consistently grown faster

continue to experience slower growth in years than is anticipated for either of

the

Columbia will not be significantly altered by statehood.

In addition to having to live with a slower rate of

earnings generated within the District. A large share of

earnings

in the District. In contrast, all other states

same way as other states and local governments. Yet, its

5

of

position differs from that

other jurisdictions because, (1) it receives a Federal payment regularly in compensation for costs associated with the presence of

the Federal government, and (2) it is subject to special

from all sources have been providing over 70 per cent of

total revenues in 1982 and 1983, but has been a steadily

declining

share

since.

Miscellaneous

nontax revenues 6

(including

charges,

fines,

etc.) provided about 5 per

cent

of total revenues in 1986. The D.C. Lottery is now

providing about 2 per cent of the revenue total.

Total

tax

revenues increased at an average annual

rate

of 9.1 per cent from FY 1982 through FY 1986. Over

the

same four years, the regular Federal payment to the

District increased by only 5.2 per cent. Largely because

rate. The collective growth rate for all tax revenues is

forecast at 7.6 per cent for the next five years.