Anne Arundel finds $4 million surplus Raises considered for county workers

October 01, 1993|By John Rivera | John Rivera,Staff Writer

For two years, the county has received nothing but bad fiscal news from the state.

But this week, instead of another cut in aid to local government, the county received a windfall: $4 million more than forecasters had expected from Anne Arundel's share of the state's piggyback income tax.

That, combined with other good economic news that has raised the county's cash reserves to $22 million, may translate to pay raises for county employees. But officials aren't promising anything yet.

After crunching numbers, the county's budget analysts discovered an extra $9.6 million left over from the fiscal year that ended June 30. Add that to the $2 million fund balance the county budgeted and the total budget surplus comes to $11.6 million.

County Executive Robert R. Neall said last month that he would consider a 2 percent pay raise to county employees, the first increase in 2 1/2 years, as part of a package to be negotiated with their unions. The package would include modified health care coverage.

But Steven Welkos, the county's director of finance, said the budget surplus brings county financial reserves to the minimum level recommended by bond rating agencies. Adding the surplus to the rainy day fund of $12.4 million would bring total reserves TC to $22 million, 3.3 percent of the fiscal 1994 budget of $663 million. Bond rating agencies recommend a county maintain reserves of between 3 percent and 5 percent.

"I don't think [a pay raise] is an absolute," said Louise Hayman, a spokeswoman for Mr. Neall. "I think the increase in the fund balance makes it more likely, but it doesn't guarantee it.

"We have to weigh the need to maintain the reserves at the recommended level against the need to increase salaries at this time," she said.

Marvin Redding, president of the American Federation of State, County and Municipal Employees Local 582, which represents 950 of the county's blue-collar workers, said employee unions will fight hard for the pay increase.

"I think politically, [Mr. Neall's] concern is to make himself look good as he runs for governor," Mr. Redding said. "We've provided the best service for the cheapest cost and we've gotten beat on for every year he's been here."

County unions are seeking to match the deal given to school employees last month by the Board of Education, which agreed to a 2 percent raise on Jan. 1, 1994, and a 4 percent raise on July 1, 1994. The 4 percent raise is subject to the approval of the County Council, which is not legally bound to fund contracts negotiated between the teachers' union and school board.

Mr. Neall said in May that he would consider granting employees a pay raise if the county's financial situation improved after the first six months of the fiscal year, but would not commit to it until he knew how much his budget surplus would be.

"We wanted to make sure we ended fiscal '93 with money in the bank before we committed to a pay increase," said Steven Welkos, director of the county's finance office.

When the County Council approved the 1994 budget, it voted to cut enough money from the general county operating budget and the school board budget to give county employees a 3 percent pay raise.

At the time, Mr. Neall denounced the move, saying the council's action, which included dropping the property tax rate by 8 cents, actually jeopardized a pay raise he was planning to give employees in January if there was sufficient revenue.

The 2 percent raise for six months would cost the county $4.5 million. An additional 4 percent raise next year would cost $27 million. As a comparison, Mr. Welkos noted the budget has only grown by $45 million over the past three years.

"So you can see, to do a cost of living increase of this magnitude . . . will place a pretty big strain on the budget and make it difficult to fund some other things that we want to do," he said.

Mr. Welkos said about $5 million of the budget surplus came from savings, mostly from postions that went unfilled during the county's hiring freeze. "The balance is attributed to revenues higher than we anticipated in May," Mr. Welkos said.

Budget analysts expected income tax revenues to rise by 4.5 percent, but in fact they went up 7 percent, from $135 million to $145 million. The recordation and transfer tax also rose by $4.4 million, mainly due to the large number of house refinancings in the past year.

Part of the reason for the sharp rise in income tax is a higher tax for wealthy residents that went into effect this year, putting people with taxable incomes of $100,000 or more, or couples with combined taxable incomes of $150,000 or more, into a new 6 percent income tax bracket.

Mr. Welkos attributed the rest of the increase to the receding recession. "Things, I suppose, are turning around to a certain extent," he said.

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