County amasses a record surplus

Robey earmarks bulk of $38 million for retiree debt

Schrader critical

October 25, 2006|By Larry Carson | Larry Carson,sun reporter

Howard County's surplus for the fiscal year that ended June 30 is a record $38 million, county officials announced yesterday, swelled by higher-than-expected income, property and real estate tax collections.

County Executive James N. Robey said that the bulk of the surplus -- $30 million -- should go to begin paying a $477 million debt on future retiree health benefits under a change in federal accounting standards that is affecting every state and local government in the United States.

"Being able to hand the next administration this small piece of insurance is reassuring as I complete my term as executive," Robey said later in a statement.

But the outgoing executive and state Senate hopeful -- who has clashed over the issue of taxes and revenues with incumbent Republican Sen. Sandra B. Schrader, whose General Assembly seat he is trying to win -- was criticized by Schrader.

"That just goes to show you that in the past five or six years, our taxes have gone way up, and now we have a surplus -- so why did he raise our taxes?" she said.

Robey defended the surplus, saying he had made cautious revenue estimates that were exceeded by economic conditions -- a lucky circumstance given the debt the county faces.

"The notion of the surplus is moot," he said, compared to the retiree debt.

At a Howard County Chamber of Commerce candidate forum breakfast in Clarksville yesterday, Robey sat next to Schrader and mentioned the money to the three candidates for county executive also at the podium -- Democrat Ken Ulman, independent C. Stephen Wallis and Republican Christopher J. Merdon.

"It's $30 million to help you get started paying that expense," Robey said. Later, he said he would designate the money for that purpose, though the final decision will be made by the new executive and council.

County officials said the surplus is larger than expected but not out of line.

Finance Director Sharon Greisz said $19 million came from higher-than-expected income tax revenues, $12 million from higher property tax collections and $5 million from real estate recordation taxes. The surplus, as compared with overall budgeted revenues, is in line with the surplus left to Robey when he took office eight years ago, she said.

The back-and-forth over taxes has been a feature of political discussion in the Robey-Schrader campaign.

In a recent campaign mailing, Schrader included photos of "average" tax bill summaries mailed to homeowners in 1998 and 2006 to compare the bills and the tax burden borne by county residents.

She also referred in the mailer, printed to resemble a tabloid newspaper, to "a massive 30 percent increase in the local income tax rate" that Robey pushed through in 2003, a frequent point of contention between county Democrats and Republicans.

"County Executive Jim Robey balanced Howard County's budgets by massively raising local taxes on the average taxpayer from $3,339 to $5,780," her ad read -- "a 73 percent increase."

But Robey said it is not fair to compare the two examples because they include different ingredients.

This year's example included the county's fire tax, which was listed at $395 on a house worth $300,000. In contrast, the older example left out the fire tax levy, and the "average" home value used then was $200,000, with a lower assessment increase.

Robey has argued that most of the property tax increase is due to sharply higher home values, which nearly doubled the size of the county's assessable base in that eight-year period.

At the forum, Robey said the county built 12 schools, two large parks and two senior centers during his terms, but he said he never proposed a budget "that had one penny of property tax [rate] increase."

Howard's separate fire tax is dedicated to paying for fire and rescue services, and Robey opposed a 1999 2-cent property tax increase that the County Council enacted over his objections.

At the same time, he said, the recession hit after the tech stock market crash. In response, the county froze more than 100 vacant positions and postponed purchases while losing state highway funds and open space money.

Over Robey's eight years as county executive, population growth led to the hiring of 2,146 more teachers and other education employees, plus 62 more police officers and 76 more firefighters, according to Raquel Sanudo, the county's chief administrative officer.

But Schrader said Robey "doesn't understand ... that we've got people living paycheck to paycheck, and he's balancing the budget on the backs of my constituents."

In his remarks, Robey acknowledged that whoever replaces him will face a major fiscal headache because of a change in federal accounting rules that requires every government to put money aside for future retirement medical benefits instead of paying the costs as they arise -- the current practice.

"I'm going to leave a real stinker behind for someone," Robey said, looking at the executive candidates on the panel.

Ulman said that other counties have put money aside for the purpose -- something New York bond rating agencies emphasize in issuing bond ratings to local governments on their borrowing status.

"I think it's great news," Ulman later said about the surplus.

Merdon and Wallis also agreed that most of the surplus should go toward a down payment on the retiree debt.

"It's a staggering number. And it shows the health of the local economy," said Merdon. Wallis said the big surplus called the earlier tax increases into question.

larry.carson@baltsun.com

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