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Washington DC fights off the bailiffs

It is now official. Washington DC, capital of the free world, is to all intents and purposes bankrupt. Its population shrinking and its public services crumbling, the city faces a combined budget deficit for 1994 and 1995 of more than $1bn (£600m)

- and the prospect of full-scale takeover by the government.

In a last-ditch effort to preserve the limited "Home Rule" the US capital has enjoyed for 20 years, Mayor Marion Barry this week asked Congress for emergency powers to slash the pay of city workers. Mr Barry, re-elected to a fourth term last November despite serving a six-month jail term on cocaine charges, was yesterday outlining separate austerity measures. These are expected to include layoffs, school cutbacks and reductions in health benefits. But these alone will not suffice.

The extent of the financial crisis has astounded even the District of Columbia's Republican critics in Congress, who have long contended the problems of overwhelmingly Democratic Washington were a monument to corrupt government, failed liberalism, and the excesses of a misconceived welfare state.

Notwithstanding a short-term $250m loan from Wall Street, the 1994 deficit was $335m. If nothing is done, Mr Barry now warns, this year's shortfall will be $722m, more than a fifth of the city's budget. This is a ratio which eclipses the 10 per cent deficit a few years ago in Philadelphia - the last time a major city faced fiscal collapse.

"The city is in shock," said Mr Barry, pointing to the unarguable truth that the crisis is the worst since 1873, when the Congress was first forced to assume direct control of the District. Barring a miracle, the same thing is about to happen again.

Washington's current plight is traceable to several causes, the most recent the vast expansion of the city payroll by Mr Barry during his previous mayoral terms between 1979 and 1990. Washington today has 45,000 city employees (as many as Chicago, which has five times the District's population of 580,000).

Mayor Sharon Pratt Kelly, whom Mr Barry replaced, failed to tackle the problem. It wascompounded by soaring crime rates which drove middle-class residents, whites and blacks, out of Washington to the Maryland and Virginia suburbs. A narrower tax base could not cover the needs of an increasingly poor city, short of jobs.

Other difficulties, however, are not of DC's making. Though only a city, DC must provide services and administration provided by a state.

A federal bail-out would remove the city's limited autonomy whereby since 1974 it has had the right to elect a mayor, levy local taxes and have partial control of its budget.

The last word, however, has always rested with Congress. Since the 1960s, residents have been able to vote in presidential elections. But there will be no senators and representatives from Washington DC until it is granted statehood. The latest fiasco means the chances of that happening, and of New Columbia becoming the 51st state, are more remote than ever.