County surplus biggest in years Total exceeds estimates by nearly $12 million

December 31, 1998|By Larry Carson | Larry Carson,SUN STAFF

A booming stock market and low interest rates that spurred real estate transactions pushed Howard County's budget surplus nearly $12 million over estimates -- the highest total this decade, officials say.

Despite the tempting pot of extra money -- nearly 50 percent higher than last year's unbudgeted surplus -- laws enacted during the depths of the last recession limit the ways county officials can use the money.

"It can only go for one-time expenses," said budget director Raymond S. Wacks, and not for recurring expenses such as hiring more employees or granting pay raises. He also pointed out that because the county's capital budget cannot be increased until this fiscal year ends on June 30, 1999, the surplus must be rolled over into next year's spending plan, barring some emergency.

Howard's surplus is similar, considering the county's size, to those enjoyed by other metropolitan counties for the last budget year. Anne Arundel County reported $22 million extra, followed by Baltimore County with $19 million, Carroll with $9.4 million and Harford with $3.1 million. Most plan to roll the money over into next year's budget for capital projects such as roads and schools.

The total surplus in Howard County was about $55 million, including a $22 million "rainy-day fund." All but the $12 million had been anticipated.

County Executive James N. Robey said that although the surplus is a healthy one, he's already besieged by requests for money both from county agencies and citizens.

"Some department heads and people writing letters obviously think there's tons and tons of money here for their special interest needs. Even if I wanted to, I couldn't fund all their requests," Robey said.

As he said, ideas for spending money aren't hard to find.

County Councilman Christopher J. Merdon, an Ellicott City Republican, said he'd like to see the county's $400 million bonded debt reduced. But he knows the money -- and the prospect of future surpluses -- could also fuel debate on whether the county's trash fee is still needed or could help pay for rebuilding the aging Ellicott Mills Middle School.

Council Chairman C. Vernon Gray, a Columbia Democrat, noted that a cut in the piggyback income tax will mean $5.5 million less in revenues next year anyway.

"I voted against [the tax cut]. We had a lot of unmet needs," Gray said, predicting that an amount equal to or more than the surplus will be eaten up by the inflation and lower revenues from the income tax cut.

Councilman Allan H. Kittleman, a western Howard Republican, is leery of the county's spending its way "into trouble," but he said he would "not be opposed to ensuring that the [western county]library is built."

"We have to be careful how we spend our money," he said, but the surplus could help build the library in Cooksville, which is now $700,000 over budget, next year.

The large surplus could cause some to second-guess budget decisions made this year, when the council and county executive approved cutting the county's piggyback income tax, rejected a proposal to eliminate the $125 annual trash fee and reduced the schools' budget request by $5.7 million.

But even school board President Karen B. Campbell isn't saying, "I told you so."

"I'm not looking back to what should have been," she said.

"I've talked to Robey and told him that we hope he would share with us his best estimates and understand that our role is to present the biggest budget we think the county can afford, and his role is to let us know if that's too much," she said.

Former County Executive Charles I. Ecker defended his choices, saying he still believes that more money isn't always the answer for better schools. "I think the schools have to become more accountable," he said.

The surplus, revealed in an annual audit of county books, "comes primarily from two sources," Wacks explained.

"Capital gains [on stock profits] led to a 14 percent increase in income tax revenues this year, and starting in the spring a drop in interest rates gave a surge to housing. Recordation taxes were the highest this decade," he said.

Wacks said state officials are predicting a 23 percent decline in capital gains for 1999, so using the surplus money for one-time capital expenses next year is the wisest course anyway. "This capital gains stuff is a bubble -- you want to make sure it doesn't get into the operational budget," he said.

Although the extra money wasn't predicted, Ecker says he budgeted conservatively because he wanted to leave his replacement a financial cushion.

"When I took office we had a [$23 million] deficit," he recalled. "It was my hope we would have a sizable surplus and use it to build schools instead of borrowing money," he said.

Building a $10 million school costs $20 million in the long run if the funds are borrowed, he said. He would rather use cash for building projects, eliminating borrowing completely.

"It's my hope that the county will continue to have surpluses and not sell bonds," Ecker said.

Robey agreed that paying cash is better than borrowing, and he's grateful, he said, for the cushion the surplus gives him.

"I'd rather be in my position than be in the position he was in eight years ago," Robey said.

Pub Date: 12/31/98

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