Neall Proposes Establishing Permanent Rainy Day Kitty

Budget Chief Says Exec Wants To Keep Regular Surplus Too

May 07, 1991|By Samuel Goldreich | Samuel Goldreich,Staff writer

County Executive Robert R. Neall introduced a new wrinkle last week in the annual "What surplus?" game when he proposed creating a permanent rainy day budget fund.

* Library budget under review Page 4

Although the county charter prohibits surpluses, the County Council has built them into every budget since 1984, after the $1.8 million deficit former Executive O. James Lighthizer inherited forced him to renege on contracted union raises.

Discussion of the surplus is usually shrouded in confusing lingo like this definition from the annual report on county finances: "Fund balances have generally materialized as a consequence of unexpended departmental appropriations . . .and from conservative revenue estimation."

Without the accounting euphemisms, that means surpluses owe their existence to some departments' getting more money than they need and the Office of the Budget low-balling its guess on tax collections.

Neall intends finally to recognize the surplus for what it is when he proposes the new emergency fund. When surpluses "materialize" beginning in fiscal 1993, the money would be put in a bank to make sure the county can pay its billseven if the bottom falls out of the economy.

"This is basically pure unadulterated surplus," budget director Dennis Parkinson said yesterday. "The purpose is to use it when there's an economic downturn or an event when you have to think taxes or dig into current services."

The charter allows the county to authorize additional spending, up to 5 percent of the operating budget, for such emergencies, in effect borrowing against the next year's budget.

The proposal immediately raised questions because Parkinson said Neall intends to maintain both an annual budget surplus and a rainy day fund.

Lighthizer was attacked by tax reform advocates when he financed his 1991 budget with a $39.5 million surplus, about $8.7 million higher than the amount Wall Street bond raters have set as a test of creditworthiness.

But Council Chairwoman Virginia Clagett said last week, "It has gotten us through thick and thin."

With the recession sapping county revenue, Neall has only a $7.7 million surplus (1.2 percent) to help him pay for a $616.6 operating budget for fiscal 1992.

During an interview, Clagett said Neall will have to explain why the emergency fund is necessary.

"How restrictive will it be? What will it do thatthe reserve fund doesn't?" the councilwoman asked.

The county's Spending Affordability Committee report issued in March proposed a rainy day fund as a possible replacement for the surplus.

"It would be a different way to store the money instead of immediately turning it into expenditures the next year," chairman Bennett Shaver said yesterday.

But the surplus should be pegged to the size of the emergency fund, he said, with the surplus limited in size as the fund grows.

Parkinson said the bill Neall proposes probably will follow Shaver's reasoning, with the total surplus divided between the rainy day kitty and the fund balance.

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