Surplus might pay for shortfall

Officials estimate $20 million deficit for budget year

Some discount figure

January 13, 2002|By Lynn Anderson | Lynn Anderson,SUN STAFF

Anne Arundel County officials might have to dip into the county's $27 million surplus left over from the previous fiscal year to cover an estimated $20 million shortfall projected for the budget year that ends June 30.

"It would be wise to use the surplus money," said council member John J. Klocko III, a Crofton Republican. "I'd rather tap into the surplus than our rainy day fund. That's the ultimate disaster fund."

County Executive Janet S. Owens said she would have no problem using the surplus funds to cover the deficit. "That's just what you do."

Still, most elected officials are putting off a decision on where to make up any deficit until they have a more accurate prediction. County officials expect to receive second-quarter income tax figures from the state by the end of next month, and plan to re-examine the financial outlook then.

One of those waiting for more precise data is council member Pamela G. Beidle, a Linthicum Democrat. She's unconvinced that the recession will have a significant impact on the local economy.

"The airport has the same number of passengers as it did last year and we haven't had [significant] job losses," she said. "I can't figure out why we even have a $10 million shortfall. I'm not sure we will."

Budget officer John R. Hammond and his staff predicted in November that the county's general fund revenues would be $10 million short. Recently that figure was doubled. Hammond increased the deficit prediction last month after he received updated income tax revenue estimates from the state.

"Right now we're dealing with estimates," said Hammond, pointing out that the 2002 fiscal year has barely hit the midyear mark. He said revenue gains could ease the deficit dilemma. The county's property taxes are up $2 million over what budget officials anticipated.

"We may not have to use it all," Hammond said of the surplus, which doesn't include $23 million set aside by county officials in case of an emergency. That money - the "rainy day fund" - won't be touched, he said.

According to information Hammond released recently, practically every revenue source available to cover operating expenses is down from what was expected last year at this time. Local income tax revenue is down $12 million; revenue from fees collected for licenses and permits is down $1.7 million; recording and transfer fees are down an estimated $3 million.

To save money during the remaining six months of the 2002 fiscal year, Owens is sticking with a hiring freeze she imposed in May (the police and fire departments are not included in the freeze), and department heads have been asked to conserve funds.

The county executive, who is running for re-election, continues to deflect criticism from county Republicans that she missed an opportunity to collect more revenue when she decided during budget discussions last spring not to increase county property taxes, a move that would have produced an extra $6.8 million this year.

"It was really shortsighted," Klocko said.

Owens has said that she worried that the added cost to senior citizens on fixed incomes would have been unfair.

Whatever the solution, it will certainly affect the 2003 budget.

Already, elected officials know that they will have to be frugal, as revenue is not expected to rally quickly. Some capital projects could be put off until fatter years, and department heads have been asked to prepare three budgets - one reflecting flat growth, and the others with 2.5 percent and 5 percent cuts.

As for 2003 revenue projections, Hammond said he doesn't have time to dwell on the future. "Right now, I've got to try to deal with covering fiscal year 2002," he said. "I think it's much to early to quantify what revenues might be in 2003."

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