Taneytown's Embarrassing Riches CARROLL COUNTY

March 19, 1993

Taneytown suffers from an embarrassment of riches. The town has more money than it can spend.

Last fiscal year, which ended June 30, 1992, the town needed only $636,719 to meet its expenses. But its tax collections amounted to $895,612 -- giving it a surplus of about $260,000. With the surplus from last year, the town now has a nest egg of about $970,000. That is the kind of budgeting likely to make H. Ross Perot break into a huge grin.

There may be some town residents who aren't smiling, however. Those huge surpluses mean the town's tax rate -- at 78 cents per $100 of assessed value -- is probably too high. To have a surplus nearly equal to the annual tax collections is not good government. A conservatively run municipal government should aim for a small surplus, but local governments ought to try to operate on a pay-as-you-go basis. Tax collections should roughly equal expenditures. For Taneytown to have such a large surplus borders on mismanagement.

Running a surplus certainly is preferable to running a deficit that requires cuts in services -- an increasingly common condition of government atall levels. However, the excessive amount of money in Taneytown's treasury may encourage inappropriate spending, as revealed in an independent audit of town finances.

The audit showed that about $72,000 was taken from the town's general fund, which is financed primarily by the real estate tax revenues, and transferred to the utility fund, which pays for the town's water and sewer system.

The expenses of Taneytown's sewer and water system are supposed to be covered by user fees. It appears, however, that general tax revenues are being used to cover losses in the utility fund.

This subsidization of the utility is more than simply taking money out of one pocket and putting it in another. While the taxpayers also use the water and sewer services, some residents may be paying for the extravagant water and sewer use of others.

In assembling this year's budget, town officials ought to give serious thought to lowering taxes and increasing user fees. It doesn't make sense to impose heavy taxes on town residents just to build an immense surplus.

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