and we ought to be talking about those fundamentals and the major, necessary changes that you want and the Council wants. The House and Senate would like to get some agreement on those major points.

We sit here and look at line items on each budget detail and that is a waste of time in my opinion.

INVITATION TO TOUR CITY

Mayor BARRY. Let me just say that in terms of the way the city is developing, I'd like it very much if one day we could take a trip around the city for 3 or 4 hours. I think you will find that in the Barnard areas, 14th Street and 7th Street, you will see major construction going on. We just opened up a new supermarket, the first one in 10 years at 8th and 0 Streets, N.W. We are looking at neighborhood development, as to how you can get more businesses there; how you can build more housing. I think you will see the face of our city, with the exception of H Street, which has not changed nearly enough, but we have some plans to move that ahead too, that we will look back in 5 years and see a significant amount of new housing for people

The other thing, Mr. Chairman-

NEED FOR LONG RANGE PLANNING

Mr. PURSELL. You don't have to defend that; I am making the point that we ought to see that development here before this committee, what the long range 5, 10 year plan is and how we are making progress in phase one, phase two. We need to see how we can fundamentally support a federal budget to support those increments in order-within our scarce resources to make those things really happen.

Then we can go back to the floor and say, fundamentally this is what is happening in D.C. and gain support for a substantial policy rather than this continual bickering back and forth of who has more positions than Detroit, Houston or someplace else. I tend to share that overall philosophy.

RECENT AUDIT BY ARTHUR ANDERSEN With regard to one other point earlier you indicated the need for an audit.

The previous Mayor, if I remember, had one central financial operation and you have broken it out into three separate agencies. I do not object to how it is done.

Are you talking about an internal or external audit?

Mayor BARRY. External audit. Arthur Andersen and Lucas Tucker, the auditors, in 1979 did what is called a balance sheet audit. They took our figures, and gave us a balance sheet audit. This year, they are doing it externally.

CURRENT AUDIT BEING PERFORMED If you mean by an outside auditing firm, they are now doing a full-fledged audit of the District's books.

Mr. PURSELL. When would it be completed?
Mayor BARRY. I would have to ask-I assume 3 or 4 months.

Mr. GERARDI. By law, it has to be done by February 1, following the year end.

Mayor Barry. This is Mr. Gerardi, a managing partner. Mr. PURSELL. Too late for this budget process? Mrs. Mack. That's right. They are going to audit the Fiscal Year 1980 actually.

Mr. PURSELL. Doing a complete, detailed audit of the entire operation?

Mayor BARRY. We could give the committee the financial report, balance sheet that they did and we would like to enter it into the record.

Mr. PURSELL. Are you asking for that as Mayor in conjunction with the Council or with Congressional encouragement?

Mayor BARRY. All three. The Temporary Oversight Commission mandated that by a certain date we have three successive audits before the Commission goes out of business. I am a member of that commission.

FINANCIAL REPORT FOR FISCAL YEAR 1979

Mr. Chairman, this is a copy of the Annual Financial Report for fiscal year 1979. With your permission I would ask that it be entered into the record.

[The report referred to follows:

GOVERNMENT

OF THE

DISTRICT OF COLUMBIA

ANNUAL FINANCIAL REPORT

FY 1979

MARION S. BARRY, JR., MAYOR

FEBRUARY, 1980

DISTRICT OF COLUMBIA

ANNUAL FINANCIAL REPORT FY 1979

TABLE OF CONTENTS

Page

Letter to the Honorable Arrington Dixon, Chairman from

Marion S. Barry, Jr., Mayor

Letter to the Honorable Marion S. Barry, Jr., from

Colin F.S. Walters, Assistant City Administrator for

Financial Management

111

Comparison of Actual to Budgeted Receipts and Expenditures

and Reconciliation of Consolidated Costs of Services and

Revenues to Budget

Exhibit III - Combined and Consolidating Statement of

Changes in Accumulated Deficit

26

Exhibit IV - Notes Applicable to General Purpose

Financial Statements

27

3

In accordance with Section 448(4) of the District of Columbia Self-
Government and Governmental Reorganization Act, Public Law 93-198, I am
herewith transmitting the District's financial report for the year
ended September 30, 1979.

I am pleased to mark the significant milestone that has been achieved
with this 1979 Annual Financial Report. For the first time, an independent
audit of the financial position of the District of Columbia government has
been conducted. The auditors have issued their unqualified opinion that
our fiscal year 1979 consolidated balance sheet fairly presents this
position.

The District's financial statements have been prepared on a consolidated
basis in accordance with generally accepted accounting principles. The
District's recognition of the liability for pension costs and other non-
cash expenses accrued prior to Home Rule in 1975 has resulted in a $285.9
million deficit for fiscal year 1979 and an accumulated deficit of $1,045.0
million. This deficit position, though, reflects an improvement attribu-
table to the District of Columbia Retirement Reform Act, November 17, 1979
(Public Law 96-122). Under the Act, the Federal government is responsible
for $1.3 billion of prior service pension costs over a 25-year period
(1980–2004). On a present value basis, the Federal contribution is
$649 million of the total $2 billion pension liability at 1975.

25

26

17

With regard to the appropriated budget, on the basis of the budgetary
financial plan for the fiscal year, the District ended 1979 with an
uncommitted authorization balance of $5.9 million.
In related developments, the joint Federal-District Temporary Commission
on Financial Oversight of the District of Columbia, established in
September, 1976 by Public Law 94-399, has shown significant progress in
accomplishing its objectives for financial planning, reporting and control