County reports surplus

School projects, tax cuts among proposals for the $20.4 million


Howard County's roller coaster revenue ride is headed sharply higher again, with officials reporting a surplus of $20.4 million for the fiscal year that ended June 30, compared with less than $1 million two years ago.

About two-thirds of the surplus, $14.4 million, is available under county law for emergencies or one-time expenditures, and $6 million has been set aside to bolster the government's Rainy Day Fund, a hedge against bad times. The amount available for spending is 2.5 percent of the total budget.

Sharon Greisz, county finance director, said the big increase results from the improving economy and reflects "fiscally prudent" budgeting based on two previous years of recessionary shortfalls.

County Executive James N. Robey said the $14.4 million will probably be rolled over into next year's budget. "I'm quite pleased, because it was very difficult last year," he said. "It will be used."

He would not make a commitment to cutting taxes, vowing to carefully review county finances at budget time to determine whether reductions are possible.

Some officials were startled at the news.

"You're kidding," school board Chairman Courtney Watson said upon hearing of the surplus.

Last week, the board approved a nearly $100 million capital budget request - up $13.5 million - and is looking for ways to pay for it.

"We would certainly be interested in talking to the executive about that," Watson said.

Howard's annual final tally has veered from a surplus of $12 million in fiscal 1999, Republican Charles I. Ecker's last year in office, to a low of $100,000 in 2001. The national recession then led to several years of shortfalls that resulted in job freezes, construction delays and, last year, a major increase in Howard's local income tax rate.

The current upswing appears to result mainly from higher revenues from income taxes and real estate transfers, signs of an improving economy that county budget officials began predicting last year, despite a year-end surplus of $750,000 in the year that ended in June 2004.

Last fiscal year, by contrast, the county collected $12.5 million more than projected in income taxes, $4.2 million more in property taxes and $4.9 million more in real estate recordation taxes.

An additional $6 million came from real estate transfer taxes. Under county law, that money does not go into the general treasury but is divided by formula among schools, recreation and parks, agricultural preservation and housing programs.

Despite the good news, some worry that if the real estate market goes bust, revenues could decline again.

Raymond S. Wacks, Howard's budget director for 30 years and now a top budget official in Baltimore, compared the economic situation to the technology stock boom of the late 1990s.

"This is analogous to what happened to capital gains. We said sooner or later there's going to be a slowdown, but it took longer to come than predicted," he said.

There are few indications of that.

"This has been my best year ever," said Melvina Brown, president of the Howard County Association of Realtors. "People are still coming here because they want the schools and the amenities this county has to offer."

The pace of sales has slowed a bit lately, she said.

Democrats said a tax cut is tempting.

Council Chairman Guy Guzzone, a North Laurel-Savage Democrat, said, "The day we raised taxes I said there may be a time we'd be in a position to lower them." He said any income tax rate cut might not be huge, adding, "We need to keep playing this out and learning more about our financial situation."

Councilman Christopher J. Merdon, an Ellicott City Republican who is running for county executive, said the surplus "presents us an opportunity to catch up on classroom space that's desperately needed." At the same time, he said, the surplus "confirms that we overtaxed the citizens."

Western county Republican Councilman Charles C. Feaga and tax protest leader James Oglethorpe said a tax cut should be enacted.

"My feeling has always been that if we have an unbelievably high surplus, then we've taxed too high and we may need a tax break," Feaga said.

Oglethorpe said, "This points back to that tax increase. Had they elected to hold the line on spending that year, they would not have needed the tax increase."

Watson said that in addition to next year's school construction request, the board is looking at major renovations needed at older buildings, starting with a $21 million makeover for Mount Hebron High School in Ellicott City.

Guzzone pointed to postponed road repaving, storm water projects and bridge repairs that the county needs to catch up on.

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