A Public Accounting

Our View: Fuller Explanation On Lost City Money Makes Sense

Spending It Doesn't

April 22, 2009

Having overcome a momentary fit of Powerball fever, the Baltimore City Council has decided it will seek a proper accounting of how $39.7 million in tax revenue was lost for a decade before it figures out how it can spend the newfound money. Questions from the public about the accounting error also prompted the April 30 oversight hearing. Whatever the council's motivation, city residents deserve to hear for themselves how the mix-up occurred.

During a Monday luncheon meeting with city Finance Director Edward J. Gallagher, several council members were as eager to find out how they could legally spend the money as discover the reasons for the embarrassing bookkeeping mistake recently made public in a city audit.

Mr. Gallagher, who discovered the discrepancy last summer and alerted city auditors, told the council that the city charter requires him to use the surplus funds to offset the amount of money the city borrows annually to finance municipal projects. But that didn't satisfy some members who, according to a report by The Baltimore Sun's Annie Linskey, want city lawyers to come up with the legal means to use the money to restore cuts in recreational and child welfare programs instead of debt reduction. The council members feel this way: If the money had been properly accounted for in the 10 years it was collected, it could have been used for city operating expenses. And they have a point. Finance officials may be overly conservative in their read on the charter. But what's bothersome about some council members' interest in a little creative financing is that paying down the city's debt is not a bad use of the surplus money.

Considering the country's economic plight and the spending sprees that helped put America there, holding down spending would help the city meet future budget needs if the economy doesn't improve. And borrowing less money would amount to a savings for the city, about $70 million over 20 years, by Mr. Gallagher's count.

Asking city lawyers to find a way to allow using the $39.7 million to plug budget holes suggests the council doesn't really care whether the spending can be justified, just that it should be allowed. The city law department - as well as city auditors who didn't find the misplaced money on their own over these many years - will likely participate in the public hearing. But city lawyers should offer the council their best advice on the use of the money and not tell members just what they want to hear.

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