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energy. The funding level in PY 1986 was $7.2 million, with $6.2 million proposed for FY 1987. All states and
same level proposed for FY 1987. This is a project grant
available to state and local governments. Here,
also, statehood would have no likely impact.
FINANCIAL RESEARCH ASSOCIATES, INC.
John A. Colo, Ph.D.
Lucy J. Reuben, Ph.D.
FINANCIAL IMPLICATIONS OF STATEHOOD FOR THE DISTRICT OF COLUMBIA:
FINANCIAL RESEARCH ASSOCIATES, INC.
THE DISTRICT OF COLUMBIA STATEHOOD COMMISSION
THE DISTRICT OF COLUMBIA STATEHOOD COMPACT COMMISSION
SUMMARY AND OVERVIEW
The objective of this study is to provide an analysis of
certain issues concerning the econonic and financial inplications
of statehood for the District of Columbia.
There issues are
directly related to the potential effects of statehood upon the sources of revenues that may be available to the District of
These issues, also, address the potential incremental
costs of statehood.
The primary topic of this study is the role of the federal
payment in the fiscal integrity of the proposed state of New
The study, also addresses the taxing authority and
responsibility under statehood and the increnental costs of
In each case, the analysis focuses upon the economic
and financial inplications of the issue.
This exanination of the issues concludes that there will
continue to be a significant role for the federal payment under
statehood for the District of Columbia.
There will continue to
exist conceptual rationale for such a payment, and there will
continue to be a need for such a payment.
Further, there needs
to be nore predictability in the amount of any such payment.
Either a formula determination or a tie to a constant dollar
anount would provide such predictability.
However, if the state of New Columbia is granted the full
fiscal and taxing authority of other states, the federal payment
may not have to grow a. large as night otherwise be the case.
Furthermore, u most of the mechanisms of statehood are already
in place, the transition costs, which are one tine costs, may be
adequately borne by the residents.
The only significant
additional aspect of the overall administrative and regulatory
structure is an anticiapated judicial and prosecutorial division.
In general, the government of the District of Columbia already
successfully assumes several of the functions of municipalities
THE FEDERAL PAYMENT
Currently, the District of Columbia rocoivos from Congross an annuel lunp sun appropriation known as "the federal payment."
The primary objective of the federal payment is to defray certain
place otherwise uncompensated denands or limitations upon the State of New Columbia, there will continue to be econonic and
financial justifications for an annual federal payment.
Conceptually, the foderal payment began when the District of
Columbia was established as the nation's capital in 1800.1
paynent was designed to nitigate many of the otherwise unfunded
expenses of the District in its unique role as the capital city.
The federal paynent has been the subject of numerous studies and
roports, beginning with a report issued by the House District of
Colunbia Connittee in 1830.
According to a conpilation of these
studies, The Federal Paynent to the District of Columbia 1790
(1) All recognize and discuss elements of the federal presence that restrict local development and revenue raising capacity, such as those factors stenning ron the planned, grand design of the Nation's Capital (extensive parks, and open spaces, broad avenues and streets, land unavailable for development, height limitations) and the expanding taxexenpt property in the District of Columbia.