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GOP Edges Closer to Turning D.C. Into Test Lab for US Urban Policy

WITH a dapper suit and winning smile, Marion Barry breezes into a meeting of the Washington Urban League. He's in his element now, pumping hands, complimenting dresses, and giving an upbeat speech.

But the applause is tepid. The District of Columbia is caught in a wrenching financial crisis, and Mayor Barry has not, as yet, found a way to resolve it.

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Washington's story is standard urban fare: High taxes, poor services, crime, and poverty are driving residents to the suburbs. But here, the ultimate authority lies on Capitol Hill, and Barry's hesitation increases the likelihood that Congress will step in.

For Republicans, seizing control here means a chance to test long-touted conservative remedies like privatization, tax-free zones, and school vouchers.

The approaching round of reform has huge implications for Washington, its controversial mayor, and perhaps, the future of urban policy in America.

''Washington is one of the major seats of Democratic liberalism,'' says Dwight Cropp, a former city official who teaches urban affairs at George Washington University. ''If Republicans can show that liberal policies led to ruination, and that their ideas salvaged the nation's capital, it would go a long way to showing other cities that these programs have validity.''

For Washington, these are troublesome times. The city ran a $722 million deficit last year, and a leading investor's service announced last week it may downgrade the city's bond rating, which is already at ''junk'' status. Schools, nursing homes, hospitals, prisons, and juvenile centers are in disarray, and the city's infant mortality rate is among the nation's highest.

There are two commonly cited culprits. First, the mayor. Despite a prison term for cocaine possession, Barry has held his post for 13 of the 22 years since Congress initiated ''home rule,'' which gave local officials most of the control over city affairs. Critics accuse Barry of sloppy management, padding the city payroll, and corruption: He is currently the target of two probes in connection with spending for his 1994 mayoral campaign and possible ethics violations.

But Barry and others say the city's problems are structural. Each year, Congress kicks in 15 percent of the city's $5 billion budget to cover tax losses from the presence of government and other tax-exempt entities. Critics say that's not enough, because Washington, like a state, must pay for its own prisons, pension liabilities, and entitlements, and is not allowed to tax commuters who live in the suburbs.

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Last spring, after an audit revealed deep distress, Congress created a financial control board to oversee the mayor's downsizing plan. Last week, as the deadline to submit the plan passed, Barry threw up his hands, saying the cuts needed to balance the city budget would be too vicious to the poor. One board member called the mayor ''irrelevant'' and vowed to proceed without him.

This squabble has added momentum to a move afoot in Congress to impose receivership and take control of the city. The one person preventing this action: House Speaker Newt Gingrich.

Although the Georgia Republican and Mayor Barry are as different as politicians come, the two men seem to share a desire to save the District - and reap the political advantages of doing so.

In several public forums, Mr. Gingrich has made overtures to Barry's constituents. He realizes, observers say, that by finding ways to rescue cities, Republicans could woo black voters. Although he could fire Barry tomorrow and craft Washington to his liking, analysts say Gingrich is more interested in hearts and minds.

Such congressional attention to the District, says James Gibson, a fellow at the Urban Institute here, is not new. Democrats have long engaged in tinkering, although with far more popular support. Sometimes the city has benefitted, Mr. Gibson says, citing Washington's ''model subway system.''

So far, Gingrich has not mentioned receivership but has kept a close eye on District matters. Last week, as the House narrowly approved a $4.99 billion funding bill for the District, the Speaker came to the floor to rally support.

The bill has some controversial provisions. It provides $5 million for a school-voucher program in which some District students would each receive $3,000 coupons allowing them to attend any city school: public, private, or secular. The idea, Republicans say, is that vouchers will create competition among schools for students, sparking improvements in quality and efficiency. They note that Washington spends more money per pupil each year ($10,000) than any state, yet produces some of the nation's lowest test scores.

''I'm very pleased,'' Gingrich said after the vote. ''This is a great day for Washington's kids.''

But the program faces strong Senate opposition, a likely presidential veto, and opposition in the District. Critics say vouchers will further erode the public-school system here, where 80,000 students already grapple with everything from book shortages to filthy bathrooms.

In addition, Democrats strongly oppose provisions in the bill that would deny city funds for low-income abortions, except to save the mother's life or in cases of rape or incest. It also mandates that couples be married to adopt a child and cuts off funding to implement the city's domestic-partners law: two provisions opposed by homosexuals.

But the bill does provide a taste of what Republicans would do if they ran the city. Other changes bandied in Congress include closing public hospitals, privatizing schools, ending rent control, opening tax-free enterprise zones, and weakening city labor unions.

Ironically, some conservative ideas have already taken root. Barry himself plans to privatize street-cleaning, tree-removal, and water-treatment services. Last year, the City Council capped benefits to discourage welfare mothers from having more children.

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