Surplus won't offset state cuts Most is spoken for, Rehrmann argues

October 18, 1992|By Carol L. Bowers | Carol L. Bowers,Staff Writer Reporter Sherrie Ruhl contributed to this story.

County Executive Eileen M. Rehrmann warns that Harford's healthy $13.7 million budget surplus is not the generous financial cushion it appears to be.

The money will help the county weather the expected loss of $7.6 million in state aid and protect county employees' jobs, Ms. Rehrmann said.

But she said the county can't afford to fully offset such a loss because it must keep much of the surplus to preserve its high bond rating and prepare for a continuing recession and the possibility of more state budget cuts.

"We sat back two years ago and thought the recession hadn't hit Harford County, but we knew we weren't different from anyone else, so we prepared for it," Ms. Rehrmann said at a town meeting Thursday night at North Bend Elementary School.

"We created a rainy day fund. Thank God we did that. But who would have ever thought we would be in a triple-dip recession? I want to know what they're going to call it when it dips a fourth time. We just can't spend all our money [surplus] today because you may need it later when real problems develop."

Ms. Rehrmann announced the unofficial surplus early last week -- a formal audit is to be released next month -- just before state legislators said they were considering cutting off money given to counties to cover some workers' Social Security benefits. That would cost Harford $5,862,615.

Harford has already lost about $1.7 million in state aid this year, including a $533,911 hit the county Health Department took Sept. 30. The cut may force the layoffs of 22 state employees at the department, part of a state agency.

"It is not a surprise, but yes, this is a problem," said Larry Klimovitz, director of administration. "For instance, we certainly can't expect the Board of Education to absorb the whole thing. We will have to hit our fund balance for some. But you have to ask, 'Is this the end of the cuts?' "

The executive and chief administrator also want to avoid spending the entire surplus, leftover from the fiscal '92 budget year that ended June 30, because about $2.3 million of that money is already committed to projects or otherwise encumbered.

In addition, Ms. Rehrmann has advocated keeping about 5 percent of the county's operating budget -- about $7.2 million -- in reserve to protect the county's double-A credit rating, because it ensures low interest payments on the bond market.

That leaves about $4.2 million available to help make up for state budget cuts.

"The easy way out is to take it out of the fund balance dollar for dollar, but it's not a smart thing to do," Mr. Klimovitz said. "If we don't manage that money properly, we won't be able to protect our employees as well as we have."

Harford has avoided the furloughs and layoffs other counties have made.

Ms. Rehrmann met with county union leaders Thursday, reassuring them that her priority is to protect Harford County government employees' jobs, and that she will do what she can for the Health Department.

The Health Department, a state-operated agency that also receives money from the county, needs more than $500,000 more from the county to avoid the layoffs.

But the county Board of Education also will need financial help to meet state cuts this year, and school Superintendent Ray R. Keech has already urged board members to consider asking the county for part of the surplus.

He told the county Board of Education Monday that members should meet with other departments facings cuts, including the Health Department and Harford Community College, and "and decide what the impact on the various units are that are taking the hit and work it out together."

News of the cuts, and Harford's surplus, also discouraged Jean R. Thomas, president of the Harford County Education Association, which represents about 1,500 teachers.

"Mrs. Rehrmann talked about a rainy day fund, and I asked her whether she saw the lightning and heard the thunder because it was raining like hell where I was," Ms. Thomas said.

The comment was only half in jest. Some of Harford's older schools have leaky roofs, and it will cost about $2.3 million to repair them over three years.

"My very real concern is that in the last eight years this county has shown very little in the way of support for education," Ms. Thomas said. "But I know they'll come up with the money for the Social Security benefits because they're required by law to pay it."

But Council President Jeffrey D. Wilson was somewhat encouraged at the news of Harford's financial status. "Last year we swallowed about $6 million in direct cuts whole," he said. "I'd suggest to you there's not another subdivision in a similar position to absorb the state cuts the way we can, so nobody should cry too loudly."

The county's financial health is due, in part, to the council's bTC decision this year to raise many fees for services such as permit reviews, he said.

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