Large county surplus is seen

Merdon puts figure at $25 million, but Robey says amount is to be determined

September 17, 2006|By Larry Carson | Larry Carson,sun reporter

Howard County likely will see a $25 million or higher budget surplus for last fiscal year, according to County Council Chairman Christopher J. Merdon, and outgoing County Executive James N. Robey wants to use any extra money to help satisfy a huge looming debt for retiree health benefits.

Meanwhile, Jonathon Seeman, county budget director since July last year, left his job Friday to take the same position in Prince George's County, where he lives. Gale Benson will be acting director until a new executive takes office in December, Robey said. Seeman left because of the security of the Prince George's job, where the incumbent executive, Jack B. Johnson, won his primary Tuesday.

Robey would not confirm the surplus amount, saying final calculations on the year that ended June 30 are incomplete.

Merdon, the Republican candidate for county executive, mentioned the $25 million figure at a candidates forum in Columbia sponsored by county Realtors during a debate over tax policy with the Democratic nominee, Councilman Ken Ulman, who represents west Columbia, and C. Stephen Wallis, an independent candidate. Candidates for all five County Council seats also attended the session at the Meeting House in Oakland Mills.

Merdon said he had informally heard a figure of $25 million to $30 million for the surplus -- at least $5 million more than the previous year -- but has not been formally told by the Robey administration.

"That amount has yet to be determined," Robey said later when asked about the reference. "Until I get the numbers, I don't think it's appropriate to say what it's going to be."

However large it is, Robey said he planned to designate it for the accounting reform that has identified huge unfunded debts for every government in the country, though the final decision will rest with the new executive and County Council. The change requires the county to count as a liability the entire amount owed for retirements of thousands of workers still employed by the county.

County law requires that surplus funds be used for one-time expenses. The amount of the annual surplus has varied from less than $1 million during the last recession to $25 million during the stock market bubble of the late 1990s.

Robey said the latest estimate for the county's debt is $477 million, and added that "it's absolutely essential" to begin putting money away.

"It has to be done," he said. "It's critical that we get started to show the [New York bond] rating agencies and the world that we've got a plan, and we've started on it."

When the County Council was briefed on the issue in November, members were told that the next executive must come up with $50 million for the debt -- more than the budget grew last fiscal year. The choice is to fund the liability or eliminate the benefits, Sharon Greisz, the county finance director, told the councilmen.

The change is being forced by the Government Accounting Standards Board (GASB), which is holding governments accountable for these future unfunded debts now -- matching what private businesses had to do in the 1990s.

If Howard does not act, the county could lose its treasured AAA bond rating that allows the sale of public bonds at the lowest interest rates.

Merdon mentioned the figure in response to a question from the Realtors on what steps he would take, if elected, to achieve a balanced budget next year.

"It's too early in the process to answer that question," he said, noting that the county likely would have a $25 million surplus.

In his answer, Ulman mentioned the GASB accounting rule change as a priority. Robey did not include any money for the debt in the current year's budget.

After the forum, Ulman said, "I do think our first priority needs to be putting aside some money" for the debt, but he said he also has other priorities, which could include targeted tax relief.

Ulman and Merdon traded familiar jabs over taxes and spending during the forum.

Asked about their philosophies of taxation, Merdon said he has and will vote for higher taxes in some situations, but not when the county is receiving large year-end surpluses.

"I voted for a tax increase for school construction," he said. "Where it makes sense to increase taxes, I'll vote for that."

But Ulman then pointed out that if Merdon's opposition to the income tax increase that Robey and council Democrats pushed through for 2004 had been sustained, the county would be out $130 million in revenue over four years and have a $36.8 million hole in the school budget this year.

Cuts proposed by Merdon and former Councilman Allan H. Kittleman would have removed 11 percent from libraries, cut the community college budget, removed the police aviation funding and not funded construction of a public safety training center, Ulman said.

"It's easy to stand up and talk about surpluses, but those types of cuts have costs," Ulman said.

larry.carson@baltsun.com

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