Balto. Co. expects $22 million surplus Money earmarked for schools, other projects, not tax cut

December 11, 1997|By Larry Carson | Larry Carson,SUN STAFF Sun staff writers Lisa Respers and James M. Coram contributed to this article.

The strong economy is expected to give Baltimore County a $22 million budget surplus this year, but residents shouldn't count on a tax cut.

Nearly all the money is already spoken for, County Executive C. A. Dutch Ruppersberger said yesterday, and will be spent for school construction or other projects, such as creating a Catonsville community center.

"We're putting money back into the basic infrastructure, like any good business," Ruppersberger said, resisting the temptation to consider a property tax cut as he heads for an election next year.

In fact, the county will need nearly $17 million of the extra revenues -- which come mainly from income taxes -- to help match the millions in state school construction money that Ruppersberger is seeking. The county is asking for state funds to help with 76 school projects, including major additions or renovations at Catonsville, Franklin and Parkville high schools.

County officials also are awaiting the results of a yearlong school maintenance study and have other projects in line for funding -- such as the proposal to buy a Dulaney Valley Road property where a controversial $1.5 million golf academy was planned.

The economy has increased revenues for other governments, too. State officials predict a surplus of up to $310 million this year, and Baltimore officials expect a $20 million windfall.

John Hammond, Anne Arundel County's budget director, refused to quote a figure. "Those numbers jump around a lot," he said, though he acknowledged that the economy is strong.

Harford County expects added revenues of $2.9 million, said director of administration Larry Klimovitz, but all the money will likely be spent on the school board's $40 million construction request.

A similar amount is expected in Howard County, said budget administrator Raymond S. Wacks, though he refused to cite an exact figure. Carroll County officials said gains from income taxes might be offset by lost revenues because of a slump in real estate sales and homebuilding.

The counties are being cautious with the expected funds, recalling the midyear budget cuts they suffered from state government during the 1991-1993 recession.

In the past several years, Baltimore County has pumped $60 million in cash into capital projects -- mostly long-neglected schools. Using cash instead of selling bonds reduces borrowing and keeps interest expenses lower.

In Baltimore County, whose annual budget is $1.5 billion, strengthening infrastructure means more school construction and projects in older neighborhoods -- such as the planned $6.3 million Bloomsbury community center in a former Catonsville middle school.

Ruppersberger said it's too early to think about lowering taxes, especially using a one-time windfall. "A tax cut in this year will have ramifications for the next four years," he said, while pledging not to raise the tax rate.

The county executive made his feelings clear about token election-year tax cuts in 1994, when he opposed a 1-cent reduction.

Ruppersberger, who was a county councilman during the last recession, remembers its lessons well, he says. Ten years ago the county spent big surpluses to hire more employees and to pay higher salaries -- cumulative, long-term expenses that hurt the locality when the recession hit.

Now, the county keeps 3 percent of its annual budget in permanent reserve for emergencies and has nearly another 3 percent in surplus -- a total of $58.6 million.

That's still less than the $79.3 million surplus the county had in 1988, when the budget was well under $1 billion. But budget director Fred Homan is keenly aware that by 1992, that big surplus was down to $6.2 million.

Howard County adopted a charter amendment in 1992 limiting the use of one-time surpluses to one-time expenses. In Baltimore County, that's now the policy, though not the law.

Almost all the unexpected revenues are coming from income taxes, Homan and other budget officials say, and result both from job creation and from capital gains on the sale of soaring stocks.

The money for school construction in Baltimore County is needed because of expenses the state doesn't pay, Homan said. For example, if the state pays to replace a school roof, the county must pay related costs -- such as replacing water-damaged ceilings or floors, or removing asbestos.

Pub Date: 12/11/97

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