Reserve Fund

MARYLAND FINISHED the last fiscal year $120 million in the black, and expects to double that this year. But state government isn't the only one with a sizable surplus.Better times are bringing reserves to local coffers, too, in stark contrast to the recession of the early '90s. Fiscal year 1997 surpluses include $11.3 million for Baltimore County, $11 million for Anne Arundel, $12 million in Howard and $2.9 million in Harford. Income tax receipts exceeded expectations as the regional, state and national economies rolled forward.

Some state legislators in Annapolis are furious that Gov. Parris Glendening is running through a new $20 million "sunny day" economic development incentive fund as though the money will never end. They see it as irresponsible spending. In fact, these lawmakers should be applauding what's been happening because it is good news for the state's future.Even critics concede that the money from the sunny day reserve fund is going for worthwhile business projects. The payments -- some in the form of loans that will be repaid eventually -- should lead to nearly 900 new jobs and keep another 650 workers in Maryland.

Anne Arundel County officials, rebuffed in their efforts to implement a new managed health care system for employees, will try once again to get the program rolling.Notices will soon be mailed out to 4,100 workers to inform them of a system that county officials hope will slow escalating health care costs. The program is scheduled to begin July 1.Anne Arundel County Professional Firefighters, Local 1563, had caused a delay in efforts to implement the program when it obtained a court injunction last month that prevented the notices from going out until federal arbitrators ruled on two union grievances.

The organizers of First Night Annapolis describe their New Year's Eve celebration as a night "when the city becomes a stage." Now, some City Council members are saying its time for First Night to pay the stage hands."

County officials, rebuffed in their efforts to implement a new managed health care system for employees, will try once again to get the program rolling.Notices will soon be mailed out to 4,100 workers to inform them of a system that county officials hope will slow escalating health care costs. The program is scheduled to begin July 1.Anne Arundel County Professional Firefighters, Local 1563, had caused a delay in efforts to implement the program when it obtained a court injunction last month that prevented the notices from going out until federal arbitrators ruled on two union grievances.

An article in yesterday's Anne Arundel edition incorrectly reported the amount of money in the Annapolis Housing Authority's reserve fund in 1989. The correct figure was $245,000.4( The Baltimore Sun regrets the error.AHA accountant resigns, will join private companyMatthew Whitney, who took over accounting for the troubled Annapolis Housing Authority in 1989 and boosted the depleted reserve fund from $245 to more than $1 million, is resigning.Mr. Whitney, the authority's accountant for the past four years, said yesterday that he is joining a private firm in Annapolis.

For the first time in its 56-year history, the Housing Authority of Baltimore City is financially troubled because its reserve fund is $7 million below the level considered safe under federal standards, according to Daniel P. Henson III, the authority's executive director.The U.S. Department of Housing and Urban Development has not officially designated the authority as financially troubled and will not evaluate it until December, said Vivian Potter, a spokeswoman for HUD in Washington.But last week, Mr. Henson described the authority as financially troubled because it ended fiscal 1993 on June 30 with only $4.9 million in reserve.

The county commissioners approved a proposed $118 million 1993 operating budget, but Commissioner Julia W. Gouge said she worries that eliminating the reserve fund could jeopardize the county's ability to cope with fiscal emergencies.The commissioners' 2-1 vote wouldn't increase property tax or income tax rates, but would raise about $500,000 through new fees.A public hearing is scheduled for 7 p.m. May 14 at Westminster High to discuss the budget, which maintains the current tax rate of $2.35 per $100 of assessed property value.

ANNAPOLIS -- Haunted by memories of Maryland's 1985 thrift crisis, which cost the state more than $200 million, a Senate committee made a rare reversal yesterday and voted to pull the plug on the insurer of Maryland's 12 remaining state-chartered credit unions.But officials of Credit Union Insurance Corp. complained that proponents of the bill to terminate the company are ignoring the glowing health of CUIC and its small member credit unions.The move would send those institutions into a much weaker federal insurance system, the CUIC officials said.

The U.S. Supreme Court has rejected arguments made by education agencies in Maryland and other states that they should not be required to return to the federal government millions of dollars of their college loan programs' reserve funds.In Maryland, the ruling applies to $10.8 million in reserves from the Maryland Higher Education Loan Corporation, and officials are worried that it might also apply to additional reserve funds.The high court yesterday rejected the states' appeal of a ruling that a federal law requiring them to return reserve funds to the federal government did not violate property or contractual rights of state agencies that help run the program in Maryland, North Carolina and South Carolina.

Senators on a budget subcommittee proposed on Tuesday reducing money for stem cell research - one of several differences from what their counterparts in the House of Delegates recommended. The House's full budget committee wants to keep $18.4 million in funding for the research, while the Senate's budget subcommittee on education suggested cutting stem cell grants to $5 million. But senators asked to leave more in the coffers of the University System of Maryland than delegates recommended last week.

State officials are considering a $366 million budget fix that could spare difficult spending cuts by transferring money in an unused reserve fund kept by the Maryland comptroller's office. The fund is maintained for accounting purposes and could go a long way to reducing a $1.9 billion shortfall that Gov. Martin O'Malley and state lawmakers must close to balance the next annual budget. O'Malley, a Democrat, is considering various ways to pare the budget he will submit to the General Assembly that convenes next week.

CEG credit line is reduced, delayed A $2 billion line of credit that Constellation Energy hoped would shore up its liquidity has been reduced to $1.25 billion at the most and might not be available until Nov. 26, the company said late yesterday. The cash-strapped Baltimore-based energy giant planned to close on the $2 billion deal no later than yesterday with RBS Securities and UBS Loan Finance. Now it says it expects to receive "total commitments from the banks of approximately $1.0 billion to $1.25 billion."

By the time the Reserve Fund reported last Tuesday afternoon that its Primary Fund money market fund series had "broken the buck" - that is, was no longer worth a dollar a share - investors had pulled billions of dollars out of the fund. A lawsuit filed late last week by Ameriprise Financial claims the Reserve Fund tipped some big customers about its crisis in advance so they could get their cash out before its losses became public. According to the complaint, two senior Reserve Fund executives acknowledged during a conference call last Thursday with Ameriprise that big investors had received an early warning.

Regional brokerage Ferris, Baker, Watts has moved to redeem its clients' money from what were once considered ultra-safe investments in money market funds and warned the investors not to seek to withdraw money or make trades from their accounts. The notice on the company's Web site late Thursday comes a day after it warned clients who had money in the Reserve Fund's Primary Fund that their investments had lost value, an almost unprecedented occurrence for such a fund. A soured investment in Lehman Brothers Holdings Inc. had caused the Primary Fund, the largest of the Reserve's funds, and two others to "break the buck," meaning the fund no longer had assets of $1 for every dollar invested.

Florida's public counsel said yesterday that he plans to challenge portions of Florida Power & Light Co.'s new plan to raise more than $1 billion through a bond issue to recover losses from two hurricane seasons and rebuild a reserve fund for future storms. "The work already is under way toward filing motions with the Public Service Commission," Harold McLean said in Tallahassee. "I intend to hire experts to determine how much of what FPL wants is justified." Parent firm FPL Group Inc. is in the process of merging with Baltimore-based Constellation Energy Group Inc., parent of Baltimore Gas and Electric Co. The effect of that transaction on Maryland consumers is to be reviewed by Maryland's Public Service Commission.

A small group of parents and education advocates urged the city school board yesterday evening to spend its nearly $10 million reserve fund on increased staffing and security across the school system this year. The request from the Baltimore Education Network, and from parents and students, echoed other calls for funding that have been made to city school and state officials this school year, as complaints of understaffed and dilapidated schools have surfaced. Other groups have asked for additional state and city funding.

To help the city school system achieve the financial respectability it so badly seeks, Mayor Martin O'Malley is proposing to lend it money from a fund that has helped city government accomplish the same goal. Taking $8 million from the city's so-called rainy day fund to help the system avoid extensive classroom layoffs indicates how seriously O'Malley views the schools' budget crisis. The fund, painstakingly accumulated over the past several years, is typically used for emergencies such as weather-related costs and is crucial in maintaining the city's creditworthiness.

Frustrated with Anne Arundel County Executive Janet S. Owens' unwillingness to give teachers $1.8 million in pay raises, schools Superintendent Eric J. Smith turned to the people last night. "We are looking at a very disruptive and difficult spring, and a very difficult next year," Smith told a group of parents and school principals he had convened to discuss the school system's financial problems. "Some of the fundamental questions of where we want to be as a school system are at stake."

THE CANDIDATES for governor of Maryland may have achieved a record this year for promises in a political campaign: Both say they will handle the state's projected $1.7 billion budget deficit with little disruption. But they should worry about the difficulty of running the state under the restrictions they are placing on themselves: no cuts to education, no cuts in local aid, no layoffs of state employees -- and no new taxes or general tax increases. Each candidate hopes to avoid a deficit reduction plan that costs them votes.