Baltimore Co. surplus becomes political issue Ruppersberger wants it used for school repairs

challenger wants tax cut

September 05, 1998|By Larry Carson | Larry Carson,SUN STAFF

Thanks to a summer of fast-rising personal income from a booming stock market, Baltimore County officials reported a surplus yesterday that is $19 million higher than expected for the fiscal year ended June 30, fueling a political argument over how to use it.

County Executive C. A. Dutch Ruppersberger insists that the windfall -- part of an overall $130.7 million surplus -- be set aside to cover huge repair bills for older schools.

But former Del. John J. Bishop, the Republican who is challenging Democrat Ruppersberger for the executive's seat, argues that income taxes should be cut instead. School repairs can be paid for with borrowed money, he said, since interest rates are low.

The county typically builds in a large surplus in setting its annual budget, which totaled $1.6 billion in the last fiscal year.

For example, the $130.7 million surplus left over from the last fiscal year includes $41 million slated as a down payment on school repairs and a $30 million "rainy day" or emergency fund, which helps to secure the county's AAA rating with New York bond houses.

The remainder can go for schools or be used as an additional financial cushion, officials say.

But Bishop takes a different view, saying some of the surplus should be given back to taxpayers.

"There's a generational disparity when you take all this cash and spend it on one-time projects," Bishop said. "Seniors already built those schools once. To have them spend their cash, instead of using longer-term debt -- they won't get any use out of" the schools.

Ruppersberger and budget director Fred Homan strongly disagree.

"When we came in, this county was falling apart," the executive said, referring to the layoffs and tight budgets during the recession of the early 1990s and what he called years of neglect. "We decided our focus would be to put money into infrastructure. That philosophy so far has done very well."

Homan argued that a one-time windfall should be used only for one-time expenses. To borrow money to fix schools while cutting taxes would create "a structural imbalance" in later years when the surplus is gone and the interest bills pile up, he said.

County officials said 86 percent of the windfall came from two income tax distributions from the state in June and August that were up 15 percent and 30 percent over what was projected when the budget was put together.

Capital gains in Maryland grew 50 percent in 1997, according to the Congressional Budget Office, on the heels of 54 percent growth in 1996 and a 23 percent increase in 1995.

Homan cited the sharp stock market declines of the past two weeks as a reason for caution in spending the windfall, saying, "It would be very risky for anyone to assume that such large growth rates will continue indefinitely."

Officials also warn that the county must prepare for some big-ticket projects, including school repairs. They already say that the cost of repairing old elementary schools alone is expected to be nearly 20 percent more than originally estimated.

Officials say such repairs must be made to help stop young families from moving to Harford, Carroll and Howard counties and southern Pennsylvania.

Pub Date: 9/05/98

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