County Executive Robert R. Neall has quietly decided on a bookkeeping trick that would pour millions of dollars into Anne Arundel cofferswithout raising taxes.
The administration wants to keep all real estate transfer taxes for the general fund and stop sharing the revenue with the Department of Utilities.
The 30 percent share of the money given to utilities was slightlyless than $4.8 million last year and $5.1 million in fiscal year 1989. But the revenue could grow substantially once the county recovers from the recession and real estate activity increases.
Neall's plans first surfaced last week when county Controller Joseph Burrows spoke to the Spending Affordability Committee voters created last year.
"When we were in New York last week, we put the (bond) rating agencies and our financial adviser on notice that we will sever the transfer tax (subsidy) into the water/waste water (fund)," Burrows said, according to minutes of the meeting.
Sewer and water projects are supposed to be self-supporting, but the General Assembly gave the county approval to use some of the transfer taxes to help the department pay off long-term debt.
But since the utility debt service fund has mushroomed from $800,000 in 1982 to a projected $70 million this year, Neall wants to keep all of the transfer tax money for the generaloperating budget.
The change in bookkeeping would help secure thecounty's AA bond rating -- the second highest -- even though the operating budget surplus is expected to drop from $40 million in fiscal year 1990 to $17 million this year.
But the change requires approval of the County Council, which the administration has not yet informed.
"I encourage maintaining a double-A bond rating and would liketo see it improve to triple-A," Councilman David G. Boschert, D-Crownsville, said yesterday. "But I don't want to jeopardize the utilities fund."
Boschert, whose burgeoning West County district will put the greatest demands on utilities expansion in the next 15 years, would not comment further on Neall's plans for transfer taxes. But he said that Wall Street should not be ahead of the council in learning about the administration's fiscal policy.
"It's prudent to advise the council about what's going on and they really should have rendered that courtesy to us," he said.
But Boschert said that although thechange would be presented to the council as a fait accompli, lawmakers would nonetheless have to adopt Neall's policy to preserve the county's bond rating.
"If we're not notified in advance, we're going to have to resolve that and take necessary steps to stop that from happening in the future," he said.
Neall's press secretary, Louise Hyman, said yesterday that the administration would wait until it presents its budget in May to discuss the use of transfer tax money.
The county might not be able to afford to cut off transfer tax payments to utilities, Bruce Emgee, assistant county auditor, said yesterday.
"Historically, our projections have been that (the debt service fund) is going to need as much money as we can put into it," he said."You have to consider that every year they borrow more money."
Emgee, whose office advises the council, said the debt service fund will be depleted as loans come due.
"Just because you're sitting there with a little bit of money doesn't mean that you're sitting pretty," he said.
When Burrows spoke last week to the Spending Affordability Committee, he said that the department's other revenue sources have made it strong enough to do without transfer taxes.
Sewer and water hook-up charges accounted for most of the debt-service fund's growth under Neall's predecessor, O. James Lighthizer.
Connection charges doubled to $9.9 million during his first six years in office, when most of the utilities expansion occurred. After the council increased fees in 1988, revenue almost doubled again in 1989 and soared to$28.7 million last year.
Under the ambitious utilities construction program of the last eight years, annual loan and interest paymentswent from $13.2 million in 1982 to $26.4 million last year.
The utilities debt service fund will continue to grow through 2004, Burrows said, when it will taper off as construction plans are completed.
But Emgee suggested that the department might have built in future demands on the fund that it cannot afford without the transfer tax subsidy. The growth in connection-charge revenue might not be sustainedover time, he said.
"What they're doing is speeding up connection-charge collections," Emgee said. "They used to be spread out over 30years."