'Rainy Day' Fund Draws Heat

Some Question Need For $10 Million Reserve

April 16, 1992|By Elise Armacost | Elise Armacost,Staff writer

When County Executive Robert R. Neall presents his budget May 1, themost controversial element promises to be a new $10 million "rainy day fund."

The fund proposal has union leaders seething. Even some County Council members who support the concept say they question whether so much should be put into a surplus account at a time when moneyfor programs, projects and employee salaries is so tight.

"It's absolutely ludicrous," said Tom Paolino, president of the Teachers Association of Anne Arundel County. "You build a reserve fundwhen you're flush, you don't do it when you're strapped."

Neall, however, says the county must have a cushion against the threat of more cuts in state aid. If, as he suspects, the state has overestimatedits revenues, the county could be in for the same kind of trauma it suffered last year, when it lost so much state money that the budget had to be cut in mid-year and employees asked to take wage concessions.

Under his plan, the fund would be set up entirely with property-tax revenues from Baltimore Gas and Electric Co.'s Brandon Shores power plant, which will not hit the tax rolls until this year.

"Eventhough things were tight, we thought this would be the best way to lock up some money we're not used to having," said County Budget Officer Steve Welkos.

Far from thinking $10 million is excessive, Neallbelieves the county ought to have a minimum of $20 million set asidefor emergencies and to enhance its bond rating.

He said yesterdaythat he "agonized" over the possibility of contributing less to the rainy fund to pay for workers' raises or popular programs.

"The problem is that until we solidify the county's financial position, all programs and all employees will be at risk. The employees should be the most grateful" for the rainy day fund, he said. "This protects them from layoffs and wage concessions mid-year."

"I hate to admit it, but (he has) a point," said Carol Buttrum, president of the American Federation of State, County and Municipal Employees, Local 2563, which represents 370 clerical and technical workers. "Still, it's a tough pill to swallow."

County employees are being asked to forgo raises for a second straight year.

The 3 percent wage concessions Neall requested to help the county make it through fiscal 1992 are just now coming out of teachers' paychecks. That, coupled with Neall's refusal to use new state-granted authority to raise local income taxes to pay for education, makes the rainy day fund idea even less palatable, Paolino said.

The education lobby will protest the fund before the council next month, he said.

The Anne Arundel Taxpayers Association, which opposes the unions on most issues, agrees on this one for reasons of its own.

The group's president, Robert Schaeffer, said Neall should have put some of the new revenues into the general fund and given property owners a tax break.

"This is more self-protection than protection of the taxpayer," he said.

While the rainy day fund itself will be submitted to the council on May 1 as part of Neall's overall budget bill, the details of how the fund will be used will be spelled out in separate legislation, Neall said.

In the past, what has commonly been referred to as a surplus or rainy day fund has, in fact, been a "fund balance" -- money left over from the operating budget that must then be built into the next year's budget. The county now has a $2 million fund balance.

The rainy day fund wouldbe a separate savings account that could accrue from year to year.

Several council members said they support the concept of a rainy day fund but want more information about how it could be used and how much money is enough.

Maybe the county should use part of the Brandon Shores money to improve the troubled Millersville landfill, said Council Chairman David G. Boschert, a Crownsville Democrat. Maybe it owes its employees a token of appreciation, he said.

"They helped us in time of need. Now we ought to be able to work with them," he said.

Neall countered that he owes his workers an economically sound government, not politically motivated handouts.

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